Daniel Matthews and Dr. Barrett Slade, Marriott School of Management
Introduction and Hypothesis
My research revolved around four hypotheses relating to the impact of BYU’s single-student housing policies on condominium values in Provo and around Utah Country. These four hypotheses are as follows:
– Hypothesis 1: BYU contracted condominiums in the boundary sell at a premium. Explanation: Approximately 1,900 contracted condominium units currently exist. In this research, I set out to explore whether these units sell at a premium to the approximately 7,000 other condominium units that exist in Utah County.
– Hypothesis 2: Condominiums that are outside of the boundary sell at a discount.
Explanation: There are approximately 6,000 condominium units that lie outside the boundary and are not contracted. I set out to examine whether these 6,000 units sell at a discount to units that are inside the boundary.
– Hypothesis 3: The price premium for being in the boundary increased after the announcement.
Explanation: After discovering that there is a price premium for being inside the boundary, I set out to examine whether this premium increased immediately after the boundary was publicly announced.
– Hypothesis 4: Male contracted condominiums sell at a premium to female units.
Explanation: Last, I examined whether units housing single male students sell at a premium to female units.
Results
Hypothesis 1: The variable of interest in the first hypothesis was statistically significant at the 1% level (t-stat is 12.2) and positive. It yielded a coefficient of .119, which can be interpreted as a 12.7% premium on sales price to a non-contracted condominium that lies within the boundary. In comparison with a non-contracted condominium outside of the boundary, this premium is approximately 16.3%, which is the difference between non-contracted condominiums outside the boundary and non-contracted condominiums inside, plus the premium from above.
Hypothesis 2: The variable of interest in the second hypothesis was statistically significant at the 1% level (t-stat is -3.79) and negative. The coefficient of -.036 can be interpreted to mean that condominiums outside of the boundary sell for approximately 3.6% lower than comparable condominiums inside the boundary. Thus, stated positively, condominiums located within the boundary experience approximately a 3.6% premium on sales price to condominiums outside the boundary.
Hypothesis 3: Results from regressions testing hypothesis three reveal that premiums before the announcement, between the announcement and enforcement, and after the announcement are 11.7%, 19.8%, and 17.1% premiums, respectively, for contracted condominiums over non-contracted condominiums in the boundary. Thus, contracted condominiums within the boundary experienced either an 8.1% premium increase or 5.4% increase when the boundary was announced, depending on whether looking only at the sales between the announcement and enforcement or all the sales after the announcement. Next, condominiums that lie outside the boundary before the announcement, between the announcement and enforcement, and after the announcement yield discounts of 3.1%, 5.6%, and 5.2%, respectively. Thus, non-contracted condominiums within the boundary experienced either a 2.5% or 2.1% premium increase after the announcement, depending on the time period used.
Hypothesis 4: The coefficient of the variable of interest for the last hypothesis is statistically significant at the 1% level (t-stat is 3.62). The result is that male contracted housing sells at a 2.1% premium on units contracted for females.
Conclusions, Summary of results
BYU’s off-campus housing policies clearly have an impact on the values of local condominiums. First, units that are contracted to house BYU single students sell at a 12.7% premium to non-contracted condominiums inside the boundary, and at a 16.3% premium to units lying outside the boundary. Further, condominiums that are not contracted outside of the boundary sell at a 3.6% discount to all condominiums inside this boundary. Next, this price premium for being inside the boundary increased after the December 8, 2003 announcement of the boundary. For contracted condominiums, the increase was between 5.4% and 8.1%; for non-contracted condominiums the increase was between 2.1% and 2.5%. Finally, male contracted condominiums sell at a 2.1% premium to female units.
Publication
The completed report of results is published on campus as an Honors Thesis. Four copies were made, which were distributed to the Honors Department, the Harold B. Lee Library, Dr. Barrett Slade, and myself.
As for future publication, the research performed in the project is being used by Dr. Barrett Slade for a paper with the topic of public versus private restrictions, and how BYU’s private restrictions are unique in the sense that a private entity is influencing the condominium market.
Lastly, another undergraduate student at BYU has continued on with this project. He plans to do similar research that looks at rental-price data as opposed to sales-price data.