The impact of colleges and hospitals to local real estate markets

Abstract

This paper studies how the presence of universities and hospitals influences local home prices and rents. We analyze the data on ZIP code level and on the level of individual homes. Our ZIP code-level analysis uses median home price data from 13,105 ZIP codes over 21 years and rent data from 15,918 ZIP codes over 7 years to compare a ZIP code’s appreciation, volatility and vacancies to the size of a university or hospital within that ZIP code. Our home-level analysis uses data from 2,786,895 homes for sale and 267,486 homes for rent to study the impact of the distance from the nearest university or hospital to individual home prices. While our results generally agree with our expectations that larger, closer institutions yield higher prices, we also find some interesting results that challenge these expectations, such as positive correlations between volatility and university/hospital size in some ZIP codes, a positive correlation between rent and distance from a hospital for some homes, and lower correlations of rent vs. distance from a university compared to price vs. distance.