How Do Quality Schools Effect Local Home Values
Buying a Home in a Good School
Most people with kids try to purchase a home in a neighborhood with the best schools they can afford. Any real estate agent will tell you that when taking out a home buyer with kids, that one of their most important buying criteria is that they want a house in a good school district. This would lead us to believe that there is a strong correlation between the rating of a school district and home prices in that community? Better schools should equate to higher home prices and poorly rated schools should equate to lower home prices.
Home buyer will definitely pay a premium for a home located in the best school districts, but what is hard to determine is the exact difference paid for a comparable home in a district with a Great Schools rating of 9 or 8 or 7. These are still great schools and homes will likely still be priced more than homes located in areas where the rating is a 4 or 5. Something else to consider is that many districts now have an open enrollment option. So homes that are located within a short drive of the school, will likely be priced somewhat more than homes that are further away. The problem with open enrollment, however, is that often times each school only has a limited number of spots and when they are filled, families located outside of the district, no longer have the option to send their kids to that particular school. In theory, home prices could drop in a neighboring community if open enrollment in the higher ranked school is closed.
Comparing Home Prices in Different Districts
Analyzing home prices in two communities with schools that have different ratings can be difficult because it is hard to find exact comparable properties that have sold with an ideal time frame to make them comparable. For example, can you find a single family house that was built in 1990, with 4000 finished square feet, a remodeled kitchen and updated bathrooms. Well, what if the updates to one house aren’t exactly the same? They likely won’t be. What if one house has carpet and the other has hardwood floors. Maybe one has a more desirable yard.
Young families who are searching for their first home, will almost always buy the house in the better school district. It’s something that is on every parents mind. It’s very common for young married couples to buy their first house or condo in an urban area. They enjoy the bars, restaurants and social scene available in an urban community. Things change however, when they have kids and recent trends show that many families move to the suburbs once they have children in order to get them the best education possible.