Why Schools have an Effect on Home Prices
For homebuyers who have school-aged children, it is important to know that school districts have a direct impact on home values. In other words, the cost to live in a top-rated school district is going to be more than living in a neighborhood with a lower rated school.
A national realty brokerage firm called Redfin, conducted a study to show price differences. With a database consisting of roughly 407,000 homes sales and close to 11,000 elementary school districts spread out in 57 markets, the firm was able to determine that buyers pay $50 per square foot more on average for homes located in districts with top-rated schools.
The information used to create the database came from a number of listing services. In addition, research firms like Onboard Informatics and GreatSchools were responsible for supplying the characteristics of schools and test scores.
What Redfin determined from the study was that the difference in price for homes of similar square footage, as well as number of bedrooms and bathrooms that were located relatively close but in different school districts had the potential to range anywhere from tens of thousands to hundreds of thousands of dollars. In the more expensive locations to include coastal communities in California, the difference in price for homes in the best school districts from between $300,000 and $500,000.
The study also showed there were significant price gaps even when homes of similar size and features had just one school boundary from a half mile to three quarters of a mile apart. For example, nearly identical homes in Alexandria Virgin were included in the study. Each consisted of four bedrooms, three bathrooms, and 3,000 square feet. The pairs were also less than one mile apart. However, one home was in an excellent school district while the other was not. The difference in price premium was 16% or $130,000.
The study also made comparisons for homes in Gilbert Arizona, Seattle Washington, San Diego California, and Beaverton Oregon. Again, the homes located in the best school districts, which were based on test scores in the 90th percentile or higher, were much higher than homes throughout the United States in less favorable districts.
According to the lead researcher of the study, Tommy Unger, the goal was to show homebuyers what statistics showed but the data was not analyzed using extreme rigor that could prove the numbers from a scientific point of view. Even so, the information provided in the study certainly reveals interesting information.
Redfin did point out that the homes used in the study for comparison were nearly identical and that with this particular research, the goal was not to create true comparables to include appraisal reports that show improvements, facilities within the neighborhood, interior condition of the homes, and so on. Therefore, some pertinent information was excluded but from the study, experts do believe there are noted differences in home prices based on school district