Besides the other commenter's point (that had the apartments, luxury or otherwise, not been built, prices would have gone up), I think college towns are an exceptional market, especially depending on what type of college it is. If it's an elite, highly selective university, a lot of the students going there are largely price-insensitive. Same for universities with a lot of foreign students.

And in general, college towns are highly desirable places, with a blend of small-town feeling and cultural amenities that punch way above their weight due to all the students. It's hard for prices to fall in situations like that.