The Correlation of Real Estate Investments in College Towns with Markets During Economic Recession
Open Access
- Author:
- Pica, Cameron
- Area of Honors:
- Finance
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Mallory Marie Meehan, Thesis Supervisor
Brian Spangler Davis, Thesis Honors Advisor - Keywords:
- Recession Proof
College Town Real Estate
Great Recession
Risk Averse
Spill Over Effect - Abstract:
- This paper intends to examine and determine the effects of an economic recession on College town real estate values and compares them to other markets across the United States. College real estate investments are a unique investment alternative for risk averse investors or investors looking to diversify their portfolio. These investments tend to rely on other microeconomic factors providing more stability during economic downturns. Some of the main microeconomic factors include stable or growing student enrollment, lower unemployment rate, university expansion, supply and demand of housing, proximity to campus, and university policies. Prior literature was utilized to understand how some external factors have an effect on college town home prices. Some college town real estate markets that were analyzed were not as recession proof as other markets due to a spillover effect other nearby metropolitan areas had on the market. The initial analysis was conducted by focusing on five college town real estate market indices for all transaction home prices in the area and compared them to the overall housing market index. This original analysis gave us a good starting point before diving deeper into our analysis. The majority of college town markets were very recession proof while we had one outlier which was explained by this spillover effect. The in depth analysis compared each college town real estate market and five more non college town real estate markets of similar size from across the United States to the overall S&P Case Shiller National Home Pricing index. Overall, we found very supportive correlation and R2 values for the majority of our group with a few interesting cases. Further research could be conducted to determine how much each variable affects the price of investments in these markets.