The Capitalization of School Quality into Renter and Owner Housing |
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| Authors: | Eli Beracha William G Hardin III |
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| Institution: | 1. Tibor and Sheila Hollo School of Real Estate, Florida International University, Miami, FL;2. Tibor and Sheila Hollo School of Real Estate and the Jerome Bain Real Estate Institute, Florida International University, Miami, FL |
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| Abstract: | 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. |
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