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As the focus on school performance has become more astute thanks to a rising emphasis on test scores and completion rates, home shoppers have become more cautious in their selections as well. A Brookings Institution report indicates that, on average, homes in high-scoring school districts are worth $205,000 or more than those in low-scoring districts. When enough of these parents pay a premium price to live in a good school district in your community, expect the prices to rise in those areas and to remain stagnant or even fall in others. If your home is among the “others,” you didn’t do your homework before buying. In contrast, house prices near poorly performing schools tend to be lower than among the surrounding area. Near the secondary schools ranked in the bottom 10% by performance, houses are 5% lower, making houses £9,000 ($11,000) cheaper.
These individuals are looking towards the future for their children and are willing to pay more for less to give their children access to good education. Some buyers will actually come to these areas with the specific intention to buy a home there specifically for the excellent school systems. This is why Southborough, Westborough, and Hopkinton have become known as “destination towns” in the Metrowest region of Massachusetts. For example, as far as towns go, Southborough Massachusetts, Westborough Massachusetts, and Hopkinton Massachusetts have highly regarded school systems. If you took a typically four bedrooms, 2.5 bath colonial in any one of these towns and compared the price to, say, the same home in Milford or Northbridge, the price would be substantially different. They found that for every five buyers, one buyer would be prepared to give up a garage or bedroom for a good school.
How much more is a good school district worth?
On the one hand, it is possible to argue that good schools are responsible for increased property values. In 2013 The National Association of Realtors surveyed home buyers and found 22 percent of them listed a home’s proximity to the school as part of their buying decision. This video explains how owning a house close to schools has an impact on real estate values. Although the size and price of a home are always key considerations, when considering the home’s future value, the quality of the school district may sometimes trump all else.
In addition, the size of the district or proximity of schools from neighboring districts could impact the perception of a specific school’s value, beyond the simple expenditure formula. Whitney’s experience shows just how passionate many homebuyers feel about school quality and the education of their children. It also echoes data from the National Association of Realtors showing that 26% of recent homebuyers were influenced by the quality of their school district when selecting a neighborhood. Among buyers ages 30 to 39, that percentage jumps to 46%, followed by 36% of buyers ages 22 to 29. Determining a dollar value for homes located in high-performing school districts seems to be the only area the experts disagree on. Some researchers support study claims that homes in school districts with high test scores are worth $16,000 more than similar homes in poor-performing districts.
Homes for Sale by City
An earlier study showed that nearly one-fourth of buyers were willing to pay 1 to 5 percent above their home purchasing budget for a home in a highly rated school district. “Fifty-three percent of buyers with children in the home under the age of 18 years said the quality of the school districts is an important factor when purchasing a home,” according to studies by the National Association of REALTORS®. Most with young, school-age kids usually shop for specific school districts and want to be close to their elementary school. Buyers with middle- and high-school-age children are more district-driven, with location being secondary,” says Mark Schreier, a Realtor® with Century 21 American Homes in Syosset, NY. Your neighbors’ home values are important because they impact your own home value. Small things like an unkempt lawn here or there are not likely to cause a long-lasting drop in your home value.
She says since good school districts drive up price tags on homes, buyers can usually find cheaper or bigger homes just outside of the school zone. “Homes in highly rated school zones are in higher demand for buyers, and fetch higher resale prices,” says de Jong. Essentially, your home value is how much the property is worth, but this is a flexible and variable figure that changes over time. Of course, certain factors like the house’s age, appearance, location, and amenities all play into figuring out home value. But you also want to keep in mind who exactly is figuring out the value because that can also impact the number.
How Can I find a Good School District?
In the end, though, it’s hard to deny that there is strong consumer demand for good schools. We probably can’t pinpoint exactly how much that demand has on home prices, because the market is so complex and every home buyer’s decision weighs so many different factors. As an example, Nimkoff points to the educational options that many lower-performing high schools in Florida have, such as an International Baccalaureate program. Lower-performing elementary schools can receive additional financing and special support, and the homes surrounding these schools may be priced lower than those in better districts nearby, yet offer still good educational opportunities. In addition, the differences in home prices may contribute to the educational disparities that occur between low- and middle to high-income students.
Depending on the home’s location, you could be talking about a difference of $50,000-$100,000! Obviously not chump change but history shows people are willing to pay for it. What’s interesting is these towns are not more than fifteen to twenty minutes away from one another. They also found that one buyer would even settle for a smaller home for every three buyers surveyed to get access to a good school. And over half of those surveyed said they would sacrifice nearby shopping options for a better school.
Buyers should explore the school districts where they plan to build or purchase their new home, Nimkoff says. Homebuyers should plan to visit the schools and personally to meet with administrators, if they’re serious about a particular area. Get free, objective, performance-based recommendations for top real estate agents in your area. “Our property taxes are much higher, as is our mortgage, and we now pay HOA fees — all expenses we feel are completely worth the transition,” she says. One analysis from the National Bureau of Economic Research found that overall, every $1 spent on school funding increases property values by about $20.
Even families that can afford the higher home prices may find houses snatched up so fast, they have a hard time landing a contract on a home that meets their needs. Some buyers, like retirees, land investors, home flippers, and other people who don’t have an immediate concern with educating their children will be attracted to lower property taxes that come from living in a less-desirable school district. Since property taxes often go up based on the quality of the school district, you may want to stage your home for sale to this particular segment of the market if you don’t live in the best school district. Your school district is so important, one study suggests that people pay an average of $50 more per square foot for homes in top rated school districts.
Of course, many of us become shortsighted and don’t think of a monetary payout in the future. Prior to her work with BDX, she worked at a newspaper in West Texas and at television stations in Omaha, Nebraska and Albuquerque, New Mexico. She was a multimedia journalist — or a one-woman-band reporter–meaning she wrote, shot, and edited all her own material. At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying.
He has been one of the top RE/MAX Realtors in New England for the past two decades. Where to find ratings on schools throughout the country in each state via Great Schools. The number and size of specialized programs for gifted or needy students. Speaking to the head of education and other department heads is a good move. Some seniors do get squeezed out of their town due to higher taxes, fees, and other expenses despite the fact their equity has grown.
Listing firm has attempted to offer accurate data, but the Information is Not Guaranteed and buyers are advised to confirm all items. Where you live and how good the schools are there are just one big piece of the overall picture. School attendance usually forecasts trends in an area, suggesting that housing demand also would increase in these areas. There are times where we all lose sight of the fact that our assessed value could be off, which is causing our taxes to be higher than they should be. Orange County is home to Orlando, best known for Walt Disney World and other theme parks, while their previous neighborhood was near acreages where people kept horses, cows, goats, and chickens. This enrollment growth may reflect stronger employment, or at least more goods and services, the analysis says, forecasting that housing demand also would increase in these areas.
Things like the quality of public transit or ease of access to shopping and entertainment are often better in larger cities. However, if you live in a city that is prone to floods, fires, or other natural disasters, your home values might suffer a bit, even if it’s a popular location. We consistently hear from real estate agents the battle between those who have relocated for the interest of schools and those who are being priced out of their community due to taxes. Sometimes a lower-rated school district can work as a benefit to buyers, such as retirees, land investors, or farmers — all people who like to keep expenses low, he adds. “Usually, the better the school district, the higher the property tax rate,” says Spurgeon. As a homeowner, you’d like to know about all of the factors that impact your property value — and your school district is a big one.
Things That Can Hurt Your Property Value and Which Ones You Can Fix
It’s no mystery that, at any given time, the current economy impacts home values, but that’s not the only predictor of a home’s worth. Foreclosures in the area, local planning department aims and even the habits of your neighbors can determine the worth of your home. But it sits across the street from a school—which could be good or bad. With school in session 180 days a year, buyers should weigh the advantages and disadvantages of living near a school before making a final decision. In London, where house prices are significantly higher than the rest of the country, the secondary premium is just 3%, but this still translates to £17,000 ($21,000) on the value of the house, or 42% of average gross annual earnings. Buying or selling real estate can be one of the largest financial decisions you’ll ever make.
