The study shows colleges and hospitals do affect home prices and rents, but not always positively. Prices also rise and fall faster around these institutions, increasing the risk for investors. The results confirm universities and hospitals are "opportunity hubs" with jobs, high wages, and other amenities that can increase real estate value, while other, less well understood factors can decrease price or lead to market volatility.
"One of the questions we wanted to answer is if the presence of a university or hospital would have a stabilizing effect on prices in the event of a crisis like the 2008 housing market crash," said Vagelis Hristidis, a professor of computer science and engineering in UCR's Marlan and Rosemary Bourns College of Engineering. "What we found is actually the opposite. Investing close to a university or hospital may not protect you from price volatility."
Group - Hristidis - UCR - Computer - Science
A group led by Hristidis and UCR computer science doctoral student Ryan Rivas examined median home price data from 13,105 ZIP codes over 21 years and rent data from 15,918 ZIP codes over seven years to compare a ZIP code's appreciation, volatility, and vacancies to the size of a university or hospital within that ZIP code. They also looked at data from more than 2.7 million homes for sale and 267,000 homes for rent to determine the impact distance from the nearest university or hospital had on individual home prices.
They found that average home prices and rents were higher in ZIP codes with a university than without, and highest in ZIP codes with a medium-sized university of 10,000-20,000 students.
Proximity - University - Impact - Price - Homes
The proximity to a university had the biggest positive impact on the price of two-bedroom homes and the rent of one-bedroom homes. The impact of distance was slightly stronger for home prices...
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