The impact of international students on housing markets |
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Authors: | Tatiana Mocanu Pedro Tremacoldi-Rossi |
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Institution: | 1. Department of Economics, University of Illinois Urbana-Champaign, United States;2. Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign, United States |
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Abstract: | We study the impact of the 2005–2015 international student boom in US universities on local housing markets. By constructing a sample of American college towns characterizing rarely studied local markets in small urban areas, we show that international students exogenously sustained demand for rentals and residential investment, representing counter-cyclical shocks during the Great Recession. Exploiting the historical distribution of foreign enrolment across college towns and country-of-origin networks, we find that international students increased rents by 1.3% and home prices by 2.5% relative to the housing boom peak, translating into home equity gains of $4,000. An analysis exploiting within-city dynamics reveals that neighbourhoods near campus absorbed international inflows by replacing single-family homes with apartment rentals. |
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