38. The author of this article argues that, to reverse declining revenues from campus
housing rentals, campus housing officials should decrease the number of available
housing units and reduce rent prices on the units. The author's line of reasoning is that
fewer available units will limit supply while lower rents will increase demand, thereby
improving overall occupancy rates, and that the resulting increase in occupancy rates
will, in turn, boost revenues for the campus. This reasoning is unconvincing for several
reasons.
To begin with, the author assumes that boosting occupancy rates will improve
revenues. All other factors remaining unchanged, this would be the case. However, the
author proposes reducing both the supply of units and their rental prices. Both of these
actions would tend to reduce revenues. The author provides no evidence that the
revenue-enhancing effect of a higher occupancy rate will exceed the revenue-decreasing
effect of reduced supply and price. Without such evidence, the argument is
unconvincing.
Secondly, the author assumes that lowering rents will lead to higher revenues by
increasing demand. However, it is possible that demand would decrease, depending on
the extent of the rent reduction as well as other factors—such as overall enrollment and
the supply and relative cost of off-campus housing. Moreover, even if demand increases
by lowering rents, revenues will not necessarily increase as a result. Other factors, such
as maintenance and other costs of providing campus housing units and the reduced
supply of rental units might contribute to a net decrease in revenue.
Thirdly, in asserting that lowering rental rates will increase demand, the author
assumes that current rental rates are causing low demand. However, low demand for
student housing could be a function of other factors. For instance, the student housing
units may be old and poorly maintained. Perhaps students find the campus housing rules
oppressive, and therefore prefer to live off-campus; or perhaps enrollments are down
generally, affecting campus housing occupancy.
In conclusion, the author of this editorial has not argued effectively for a decrease
in the number of available campus housing units and a reduction in rental rates for those
units. To strengthen the argument, the author must show that a rent reduction will
actually increase demand, and that the revenue-enhancing effect of greater demand will
outweigh the revenue-reducing effect of a smaller supply and of lower rental rates.
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