Are Rising College Premiums Capitalized into House Prices? Evidence from China

The existing literature documents a clear relation between public school quality and a residential real estate price premium. The literature on whether charter school availability and quality are associated with a price premium, however, is surprisingly thin. After controlling for public school quality, we provide evidence that residential real estate price premiums are associated with charter school availability and quality. The price premium is smaller than that of quality public schools, but is economically meaningful when the quality of charter schools exceeds the quality of public schools. The price premium associated with charter schools is more prominent in areas where a large percentage of the population is between the ages of 6 and 18 and for familyoriented housing types. We also show that the premium associated with quality charter schools varies with school type and is highest for high schools. The findings contribute to the literature on school quality with policy implications relating to school choice options such as charter schools and vouchers.

Section: Literature Reviewsupporting

confidence: 65%

The housing price premium associated with charter schools

Beracha

Hardin

2019

“…The effect of schools on home prices is not unique to the U.S. A recent paper by Shen and Turner () illustrates that in many areas in China, preferential access to elite universities given to local residents is capitalized into housing prices. Davidoff and Leigh (), using data from Australia, show a 3.5% increase in price for each 5% improvement in standardized test scores.…”

Section: Literature Review and Motivationmentioning

confidence: 99%

The Capitalization of School Quality into Renter and Owner Housing

Beracha

Hardin

2017

Residential property amenities including school quality should be capitalized into both rent and property sale prices. Evidence of price and rent premiums for higher school quality is provided. The price premium for school quality for owners exceeds the premium for renters. The premiums paid by renters and owners vary with the likelihood the household directly uses school services, housing market conditions, whether the property is in an urban or suburban area and by the observed school quality in the years leading to the transaction. The larger price premium paid by owners is supported by enhanced liquidity and tempered price volatility for properties located in quality school districts.

“…Finally, this article also relates to the vast empirical literature that studies the effects of local public services on housing values ( e.g ., Black , Zheng and Kahn , Shen and Turner , Dronyk‐Trosper ). Numerous studies find that new transit systems have significantly positive capitalization effects ( e.g ., Gibbons and Machin , Billings and see Vessali for a comprehensive review), while Diao, Qin and Sing () document negative externalities of rail noise.…”

Section: Introductionmentioning

confidence: 99%

The Value of Access to Rail Transit in a Congested City: Evidence from Housing Prices in Beijing

2017

Using unique data sets of Beijing's congestion patterns and housing prices, I find that consumers are willing to pay significantly more for access to rail transit in more congested areas. Transit accessibility, however, offers little travel advantage outside of dense urban areas. The expansion of the metro network mitigates the costs of road congestion, creating both private and social benefits. Two policy initiatives aimed at reducing congestion are found to have achieved positive value effects. Further analysis reveals heterogeneous demand for accessibility, with wealthier residents and those owning fewer cars paying a higher premium for access to rail transit.