In some ways, the history of student housing is a classic coming-of-age tale. What remains to be seen is whether this tale is more Pollyanna or Catcher in the Rye.

The sector started life modestly as the niche-est of niches, an undisciplined and decidedly uninstitutional sector. It was a mom-and-pop operation, a purely local game, characterized by a series of large houses and small apartments scattered outside and around the gates of the university. It was Animal House with a few bells and whistles. It was elementary.

Then, in the late 1980s and early ’90s, the sector lost its baby fat. Multifamily and military housing developers saw an untapped market segment and started tapping it with gusto. Sprawling garden apartment complexes, many featuring four-bedroom–unit layouts, started populating the landscape.

The sector had graduated to a secondary phase (or, at least, its puberty was over). It grew up and started taking itself seriously.

The turn of the 21st century brought a third wave of development, a sophistication marked by high-quality construction, bundled utilities and services, and the by-the-bed leasing model. A proven commodity, student housing was now an adult. The sector’s REITs started going public, the capital markets smiled upon it, and, in general, it was strong enough to withstand the slings and arrows of outrageous recessions, such as the one we recently escaped.

But now what?

A student housing developer I know named Brent Little gave me this quick history lesson. A veteran of the industry, Little believes the sector is quickly becoming a victim of its own success, as more commercial real estate firms—mall developers or design/build firms expanding into collegiate housing—put on the rose-colored glasses and search for a piece of the ­action.

“The irrational exuberance with which some of these firms deploy both human and real capital is unnerving,” Little says.

The big difference between now and 20 years ago, he explains, is that all the low-­hanging fruit is gone—finding a great site within a mile of a high-growth campus is just about impossible these days. And it gets more impossible every day, as more hungry investors circle the sector and lick their chops.

For Little, and for many of the professionals who watched this industry grow up, it’s a bittersweet progression. Just like with your own children, you’re protective, but you also have to let them make their own mistakes, as painful as it is to watch.

No doubt there is plenty of opportunity yet to be had, as the largest generation in our nation’s history sends wave upon wave of freshmen into the world.

And yet, nothing lasts forever. “Build it and they will come” might have worked in an Iowa cornfield, but it doesn’t hold much water at the University of Iowa.

Like Dustin Hoffman in The Graduate, the student housing sector is not entirely sure what it wants to be when it really grows up. It can’t go back to the way it was—basking in the infinite potential of a promising debutante. But, then, it’s not sure of what lies ahead as that potential, day by day, comes into focus and turns out to be finite after all.