The Journal of College and University Student Housing - Volume 41, No. 2 & Volume 42, No. 1 - 93

Note, however, that the extent of uncertainty
in each campus town cannot be compared
simply by looking at these estimates because
the equilibrium rental price of graduate university housing also depends on the supply side in
the housing market. For example, if the stock of
graduate housing increases relative to the stock
of housing managed by private property owners,
then the equilibrium rental price of graduate
housing will decrease as the supply curve of
graduate housing shifts to the right. To investigate the causes of uncertainty in the housing
market, further empirical studies are needed.

CONCLUSIONS
The costs of uncertainty in a college-town
housing market were empirically investigated
in this paper by estimating hedonic rental
price functions in Urbana-Champaign, the
home of the University of Illinois. Two kinds
of uncertainty were examined.

Housing for graduate and
undergraduate students is,
higher than the rent charged for
property owners.

housing and the housing managed by private
property owners is considered a university
premium for graduate students living in university housing, whereas the rent for undergraduate university housing is ﬁxed by the university.

One type of uncertainty for students is
their relationship with a prospective property
owner. We found that in Urbana-Champaign,
Illinois, the rental price of housing managed
by property owners with more than 10 claims
ﬁled against them in the past ﬁve years was
about 10% lower than the rental price of
housing managed by property owners with
fewer claims. This result indicates that many
students had considerable concern about their
relationships with prospective property owners
and thus referred to the Claims Record to gain
more information about them.

Although residence halls are generally considered more expensive than off-campus housing
for many reasons, this research conﬁrmed
empirically that graduate university housing is
45% more expensive than off-campus housing
even after controlling for the effects of various
advantages of university housing, such as builtin utilities, various amenities, and proximity to
the campus. This ﬁnding veriﬁes that the cost
of uncertainty inherent in the college-town
housing market is signiﬁcant and that university housing provides numerous beneﬁts to students in addition to the advantages suggested
above. The presence of a university premium
was also observed in West Lafayette, Indiana,
and in Columbus, Ohio.

Another type of uncertainty arises when
incoming students arrive from outside the
campus. Because the rental price of graduate
university housing reﬂects the market price,
the gap between the rent for graduate university

The ﬁndings of this study have several applications for university housing practitioners. First, given that university housing has
a huge potential advantage in the college-town
housing market in terms of the sense of secu93

The Journal of College and University Student Housing - Volume 41, No. 2 & Volume 42, No. 1

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