Town versus Gown: The Effect of a College on Housing Prices and the Tax Base


  • Donald Vandegrift is a professor of economics in the Department of Economics, School of Business, The College of New Jersey, 2000 Pennington Road. Ewing, NJ 08628, USA. His e-mail address is: Amanda Lockshiss is a finance analyst at the Goldman Sachs Group, Inc., 200 West Street, New York, NY 10281, USA. Her e-mail address is: Michael Lahr is an associate research professor at the Center for Urban Policy Research, Rutgers University, 33 Livingston Ave., Suite 400, New Brunswick, NJ 08901, USA. His e-mail address is: We gratefully acknowledge support from the New Jersey Department of Environmental Protection. Martijn Dröes offered a series of helpful comments, and Samuel Taylor, Pingli Jiang, Una Hong, Garrett Hincken, and Cory Yemen provided valuable research assistance.


The analysis reported here suggests that the presence of a college is associated with house prices that are about 2.7 percent higher. However, the effect is caused only by 4-year colleges, and the primary source of the effect is the degree to which the college is residential. Interestingly, the size of the college as measured by enrollment has no effect on house prices. While the results indicate that municipalities with a community college have a tax base that is 11.6 percent higher, evidence to support the claim that colleges cause the tax base increase is weak. Finally, neither the size of the college (measured by enrollment) nor the degree to which the college is residential has an impact on the tax base.