Town versus Gown: The Effect of a College on Housing Prices and the Tax Base
This paper investigates whether the presence of college increases house prices and the tax base. Colleges provide cultural and recreational amenities to the surrounding area but lifestyle choices of students may create negative externalities that depress property prices. In addition, colleges are exempt from property taxes. While the property tax exemption reduces the tax base, the amenity value of the college may cause more development on the remaining land. Previous literature considers the impact of a wide range of amenities including open space, however, none try to capture the effect from a college in a given area. We find that the presence of a college is associated with house prices that are about 11 percent higher. However, the interaction of the college dummy and enrollment is also significant and negative. Taken together, the results suggest that small colleges have the largest effect on house prices and the positive effect on house prices disappears once the college enrollment reaches about 12,500 students. We also find that the effect on house prices is stronger for four-year colleges (14 percent higher) and that the source of the differential is the degree to which the college is residential. For the tax base, the story is simpler. The presence of a college is associated with a tax base that is about 24 percent higher. As is the case with house prices, the effect of a four-year college on the tax base is stronger (about 32 percent) than the effect of a community college. However, neither the size of the college nor the degree to which the college is residential has an impact on the tax base.
|Date of creation:||07 Jul 2009|
|Date of revision:||30 Nov 2009|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dietrich Earnhart, 2001. "Combining Revealed and Stated Preference Methods to Value Environmental Amenities at Residential Locations," Land Economics, University of Wisconsin Press, vol. 77(1), pages 12-29.
- Ian Davidoff & Andrew Leigh, 2008.
"How Much do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality,"
The Economic Record,
The Economic Society of Australia, vol. 84(265), pages 193-206, 06.
- Ian Davidoff & Andrew Leigh, 2007. "How Much Do Public Schools Really Cost? Estimating the Relationship Between House Prices and School Quality," CEPR Discussion Papers 558, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Katharine L. Bradbury & Helen F. Ladd, 1987. "City Taxes and Property Tax Bases," NBER Working Papers 2197, National Bureau of Economic Research, Inc.
- Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007.
"A Unified Framework for Measuring Preferences for Schools and Neighborhoods,"
Journal of Political Economy,
University of Chicago Press, vol. 115(4), pages 588-638, 08.
- Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," NBER Working Papers 13236, National Bureau of Economic Research, Inc.
- Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Working Papers 07-27, Center for Economic Studies, U.S. Census Bureau.
- Ladd, Helen F. & Bradbury, Katharine L., 1988. "City Taxes and Property Tax Bases," National Tax Journal, National Tax Association, vol. 41(4), pages 503-23, December.
- Shultz, Steven D & King, David A, 2001. "The Use of Census Data for Hedonic Price Estimates of Open-Space Amenities and Land Use," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 239-52, March-May.
- Bucholtz, Shawn & Geoghegan, Jacqueline & Lynch, Lori, 2003. "Capitalization of Open Spaces into Housing Values and the Residential Property Tax Revenue Impacts of Agricultural Easement Programs," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 32(1), April.
- Geoghegan, Jacqueline & Wainger, Lisa A. & Bockstael, Nancy E., 1997. "Spatial landscape indices in a hedonic framework: an ecological economics analysis using GIS," Ecological Economics, Elsevier, vol. 23(3), pages 251-264, December.
- Anderson, Soren T. & West, Sarah E., 2006. "Open space, residential property values, and spatial context," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 773-789, November.
- Haurin, Donald R. & Brasington, David, 1996. "School Quality and Real House Prices: Inter- and Intrametropolitan Effects," Journal of Housing Economics, Elsevier, vol. 5(4), pages 351-368, December.
- Craig Brett & Joris Pinkse, 2000. "The determinants of municipal tax rates in British Columbia," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 695-714, August.
- Sandra E. Black, 1997. "Do better schools matter? Parental valuation of elementary education," Research Paper 9729, Federal Reserve Bank of New York.
- Reback, Randall, 2005. "House prices and the provision of local public services: capitalization under school choice programs," Journal of Urban Economics, Elsevier, vol. 57(2), pages 275-301, March.
- Weimer, David L. & Wolkoff, Michael J., 2001. "School Performance and Housing Values: Using Non-Contiguous District and Incorporation Boundaries to Identify School Effects," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 231-54, June.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:18998. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.