Report Correlates Home Prices, School Quality
Location, location, location–and good schools.
“One of the biggest reasons people move, in addition to job opportunities and needing more/less space, is because they want a better education for their children,” said Tom O’Grady, CEO of Pro Teck Valuation Services, Waltham, Mass. “But a better education means a certain type of school, and a certain type of school may end up meaning a pricier home.”
Pro Teck’s monthly Home Value Forecast explored the impact school reputation has on home prices–particularly whether a homebuyer can expect to pay more for a similar home in an area with a good school system. In some cases, the report found a great deal of validity to the perception.
For example, Pro Teck looked at a two similar homes in a neighborhood in Cincinnati. The two homes are only two miles apart from each other, but are in different school districts. One home was valued at $137 per square foot, the other at $217–a 58% difference. The biggest driver in the price difference, according to the analysis, was the quality of education at each school.
“In this case, the school district appeared to be the main driver of this price difference,” the report said. “In this particular section of Cincinnati there are two high schools, five miles apart. Sycamore High School gets a greatschools.org rank of 8 out of 10, and a 10 for ‘college readiness.’ The other school, Princeton High School, received a greatschools.org rating of 3, and a matching 3 for ‘college readiness.’ These differences are reflected in home prices.”
Pro Teck said data further suggest elementary school may matter even more than high school in driving locational preferences of homebuyers with children. In Mission Viejo, Calif., for example, while the overall trend lines for nine elementary schools were similar, there is a $300,000 home price spread.
A National Bureau of Economic Research report solidifies the idea that communities that invest in their schools in an effort to improve quality experience a direct impact on property values. The report, Using Market Valuation to Assess Public School Spending, finds a “definite correlation” between school expenditures and home values in a given neighborhood–every additional dollar spent in per pupil state aid increases home values by about $20
The Pro Teck report can be found at https://www.proteckservices.com/how-schools-impact-home-prices/.
