I'm sure there's a reason (probably related to lawsuits, liability, or negative publicity) for universities cracking down on student-run housing options, but it flies in the face of the idea of "residential education" - that students could actually learn something by being in charge of their residences.

Since university administrations can just wait for undergraduate cohorts to graduate, it's up to alumni, graduate students, faculty and staff to push back, but they rarely do. The point about eliminating certain houses during the pandemic makes sense - the administration had the advantage of undergraduate turnover (and loss of institutional memory) as well as pandemic stress and amnesia.

If we look at Yahoo! or Google, which originally were hosted on Stanford's network (though Excite was hosted off campus?), or Cromemco, a computer company that was actually started in a graduate engineering dorm at Stanford in the 1970s, we can see that ultimately it may be in the university's (financial) interest to sometimes let students do what they want.

Then again Facebook originated as an abuse of Harvard's undergraduate face book, so maybe some cracking down isn't entirely a bad idea.