The Journal of College and University Student Housing - Volume 41, No. 2 & Volume 42, No. 1 - 81

graduate university housing
property owners implies a
minimum university premium
that graduate students living in
university housing are willing to
speciﬁc to university housing.

required to do so. Therefore, the rental price
of off-campus housing and graduate university
housing can be taken as the market price, balancing demand and supply, whereas the rental
price of undergraduate university housing is
not because it is determined by the university. The gap in rent between graduate university housing and housing offered by private
property owners implies a minimum university premium that graduate students living in
university housing are willing to pay to obtain
beneﬁts that are speciﬁc to university housing.
Generally, university housing is widely recognized as being more expensive than offcampus housing because it provides various
potential beneﬁts, such as a feeling of security,
high-quality services, regular maintenance,
and a better location. One of the main contributions of this research is that we apply
the hedonic approach introduced by Rosen
(1974) to the college-town housing market to
quantify the rent difference between univer-

sity housing and housing offered by private
property owners. We do this by controlling the
physical and locational variables as though the
two types of housing have the same qualities
for these variables; speciﬁcally, the effects on
the rent of ﬂoor space, proximity to campus,
built-in utilities, free Internet, furnishings or
not, and facilities such as a pool, tennis court,
and gym are controlled in the analysis.1 The estimation result still suggests that graduate university housing is more expensive than housing
offered by private property owners. This result
implies that university housing actually provides graduate students substantial beneﬁts in
addition to physical or locational advantages.

IMPLICATIONS OF
THE EMPIRICAL FINDINGS
The results of our analysis shed light on the
prominence of uncertainty in the college-town
housing market and highlight the importance
of information disclosure, which in turn allows
students to make informed housing choices.
In particular, this study has three main implications. First, the information disclosed about
risky property owners differentiates housing
rental prices according to the quality of services and helps students internalize the risk when
deciding on a property owner with whom to
sign a lease. This enables the housing market
to have greater efﬁciency compared with a
market without information available on risky
property owners.
1
Table 1 describes all variables that were included in the
analysis. The university premium was estimated as the
difference in rent between graduate university housing and
housing offered by private property owners of the same
quality and with the same characteristics, as listed in Table 1.
The following section discusses what factors account for the
university premium.

The Journal of College and University Student Housing - Volume 41, No. 2 & Volume 42, No. 1

Table of Contents for the Digital Edition of The Journal of College and University Student Housing - Volume 41, No. 2 & Volume 42, No. 1