Vandegrift, Donald and Lockshiss, Amanda and Lahr, Michael/L (2009): Town versus Gown: The Effect of a College on Housing Prices and the Tax Base.
Download (691kB) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Town versus Gown: The Effect of a College on Housing Prices and the Tax Base|
|Keywords:||Keywords: tax base, college, local amenities.|
|Subjects:||H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
|Depositing User:||Donald Vandegrift|
|Date Deposited:||04. Dec 2009 23:20|
|Last Modified:||13. Feb 2013 09:32|
Anderson, S., and West, S. (2006). “Open Space, Residential Property Values and Spatial Context,” Regional Science and Urban Economics 36, 773-789.
Bayer, P. J., McMillan, R., and Ferreira, F. V., (2007). “A United Framework for Measuring Preferences for Schools and Neighborhoods,” Journal of Political Economy 115, 588-638.
Black, S., (1999). “Do Better Schools Matter? Parental Valuation of Elementary Education,” Quarterly Journal of Economics 114, 577-99.
Bolitzer, B., and Netusil, N. R., (2000). “The Impact of Open Spaces on Property Values in Portland, Oregon,” Journal of Environmental Management 59, 185-93.
Brett C., and Pinske J., (2000). The Determinants of Municipal Tax Rates in British Columbia,” Canadian Journal of Economics 33, 695-714.
Davidoff, I., and Leigh, A., (2008). “How Much do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality,” The Economic Record 84, 193-206.
Downes, T. A., and Zabel, J. E., (2002). “The Impact of School Characteristics on House Prices: Chicago 1987-91,” Journal of Urban Economics 52, 1-25.
Earnhart, D., (2001). “Combining Revealed and Stated Preference Methods to Value Environmental Amenities at Residential Locations,” Land Economics 77, 12-29.
Espey, M., and Owusu-Edusei, K., (2001). “Property Values in Greenville, South Carolina,” Journal of Agricultural and Applied Economics 33, 487-92.
Geoghegan, J., Wainger, L., and Bockstael, N., (1997). “Spatial Landscape Indices in a Hedonic Framework: An Ecological Analysis Using GIS,” Ecological Economics 23, 251-264.
Geoghegan, J., (2002). “The Value of Open Spaces in Residential Land Use,” Land Use Policy 19, 91-98.
Geoghegan, J., Lynch, L., and Bucholtz, S., (2003). “Capitalization of Open Spaces into Housing Values and the Residential Property Tax Revenue Impacts of Agricultural Easement Programs,” Agricultural and Resource Economics Review 32, 33-45.
Gibbons, S., and Machin, S., (2006). “Paying for Primary Schools: Supply Constraints, Popularity, or Congestion,” Economic Journal 116, C77-C92.
Gopal, P., (2008). “College Towns: Still a Smart Investment,” Business Week Online 14 March 2008, 5-5.
Halvorsen, R. and Palmquist, R., (1980). “The Interpretation of Dummy Variables in Semilogarithmic Equations,” American Economic Review 70, 474-475.
Haurin, D., and Brasington, D., (1996). “School Quality and Real House Prices: Inter- and Intrametropolitan Effects,” Journal of Housing Economics 5, 351-68.
Ladd H.F., and Bradbury, K. L., (1988). “City Taxes and Property Tax Bases,” National Tax Journal 41, 503-23.
Luttik, J., (2000). “The Value of Trees, Water, and Open Space as Reflected by House Prices in the Netherlands,” Landscape and Urban Planning 48, 161-67.
Lutzenhiser, M., and Netusil, N., (2001). “The Effect of Open Spaces on a Home’s Sale Price,” Contemporary Economic Policy 19, 291-298.
Mayer, K., (2009). “Pittsburgh Pushes Tax on College Students,” Wall Street Journal 1 December 2009.
Openshaw, J., (2006). “Why Buying Property Near a University is a Smart Move,” Wall Street Journal 10 July 2006.
Reback, R., (2005). “House Prices and the Provision of Local Public Services: Capitalization under School Choice Programs,” Journal of Urban Economics 57, 275-301.
Shultz, S. D., and King, D. A., (2001). “The Use of Census Data for Hedonic Price Estimates of Open Space Amenities and Land Use,” Journal of Real Estate Finance and Economics 22, 239-252.
Vandegrift, D., and Lahr, M., (2009). “Open Space, House Prices, and the Tax Base” Annals of Regional Science (forthcoming).
Weimer, D. L., and Wolkoff, M., (2001). “School Performance and Housing Values: Using Non-contiguous District and Incorporation Boundaries to Identify School Effects,” National Tax Journal 54, 231-54.