Off-campus student rentals are experiencing a down year, with increasing vacancies and flat rents reflecting both cost-consciousness and a movement toward buying rather than leasing.

Market observers and participants reported a softening of demand for rentals; at the same time, University of Michigan on-campus undergraduate housing is full to capacity, a university official said.

Alice Ehn, executive officer of the Washtenaw Area Apartment Association, said members of the group have been telling her that demand is down for off-campus housing this year. 

She said it wasn’t clear whether the change was because of the three new student high rises that recently opened:  Zaragon Place on East University, 4Eleven Lofts on Washington, and the second phase of the Courtyard apartments on North Campus.

“But I know that across the board, leasing is down,” Ehn said. “There are quite a few vacancies (near) campus.”

She also said association members are reporting that parents of university students are buying homes for their sons and daughters because real estate prices are so low, rather than renting.

Even for landlords who haven’t seen significant increases in vacancies, lease rates have been flat.

That’s the case with Arch Realty, said president Francis Clark. He said he’s seen a drop-off in demand for higher-end apartments, and more renters crowding into smaller spaces -- such as three students in a two-bedroom apartment when previously it was rented to two.

“People are looking a lot harder,” Clark said. “There’s a lot more price consciousness than there has been in past years.”

He also said renters are expecting more of a turnkey product as well, with amenities such as bundled utility bills.

Meanwhile, while the U-M is advertising available rooms at its Northwood graduate and family apartments on North Campus, housing spokesman Peter Logan said residence halls are at capacity. He chalked that up partly to a large freshman class, and a recognition on the part of returning students of the universities efforts to upgrade the dorms, including a recently completed renovation of Stockwell Hall.

“We had a good return of students who lived in residence halls last year, and a fairly good-sized freshman class,” he said.

First-year students typically live in residence halls.

The dorms are full even though the total number of undergraduate units on campus has increased from 9,500 last year to 9,900 this year, with the reopening of Stockwell.

He said the new high rises have apparently not had an effect on the residence halls.

“Thus far, at least, it hasn’t impacted us that we can tell,” he said.

Current occupancy rates were not available for the 248-bed Zaragon or the nearly 600 beds coming on line this year at Courtyards. Zaragon did still have vacancies for this term, with two-bedroom apartments starting at $2,700 per month. Courtyard two-bedrooms are priced at $809 per person.

A reported two-thirds occupancy rate at 4Eleven in June prompted one developer to express optimism that demand for the high rises -- which lease for about $1,000 per bed -- is strong.