Topics: Miller College of Business, College of Applied Sciences and Technology

October 16, 2013

College students are willing to pay more to live within a mile of campus despite much cheaper housing available several miles away, says a new study from Ball State University.

“A hedonic model for off-campus student housing: The value of proximity to campus” examined value of location as a variable in the monthly rent that college students are willing to pay. The study appeared in a recent issue of Housing and Society, the journal of the Housing Education and Research Association (HERA).

Using a national sample of 97 student-housing communities in six college markets, the results suggest that college students are willing to pay an average of 16 percent more for an apartment located within one mile of the center of campus. Living outside a four-mile radius from campus carries an average 13 percent discount in rent.

“These distance levels are in line with the expected student lifestyle,” said Carla Earhart, a professor in Ball State’s family and consumer sciences department who teaches in the residential property management program. “Being within one mile of campus suggests the benefit of being within reasonable walking distance, while being outside four miles begins to segregate students from the ‘university district,’ other college friends and easy use of the campus facilities. Between one and four miles, students are likely to commute, and the incremental advantage or disadvantage of proximity to campus is not seen as a driving factor.”

The study was co-authored by Earhart; Tung Liu, a Ball State economics professor; and Howard Campbell, a Ball State family and consumer sciences professor, along with former graduate student T.J. Fields, who earned his degree in 2011.

“Not only is the one-mile distance conveniently walkable for the student, it potentially eliminates the costs involved in owning a car, the fuel and parking,” Earhart said. “Whether it is for convenience, economics or access to the university environment, it seems students are willing to invest in housing that is located close to campus.”

The study also found:

  • Average rent for the 2010-2011 academic year was $1,377 per unit that included 1,143 square feet, 2.76 bedrooms, 2.53 bathrooms and was located 2.43 miles from the academic center of campus.
  • 62 percent of the units were furnished.
  • Water, sewer and trash costs were included in the rent for 66 percent, 64 percent and 71 percent of the units, respectively.
  • Electricity usage cost was included in the rent for only 22 percent of units.
  • Cable and Internet were provided for 90 percent and 89 percent of units, respectively.
  • 80 percent of the units were apartments.
  • Average age of the properties in 2010 was 12 years.
  • Average occupancy was 96 percent.

“Student housing in the U.S. is a very competitive billion dollar business,” Earhart said. “Built and sometimes operated more like resorts than apartment communities, the new student housing in many college towns offers lavish swimming pools, private bathrooms for every bedroom, high-end finishes and furnishings, and high-speed Internet. Some of today’s college students are paying more than $500 per month per bedroom.

“While these amenities can be added during construction or renovation, the one aspect of a student housing community determined well in advance and critical to the success of the community is location.”