It is common knowledge that school districts—how they are ranked and rated—impact the value of a home and its desirability for prospective buyers. But to what degree? And how can you use information about local school districts to evaluate your current or prospective home?
The short of it is that school districts make an enormous impact on property value. According to a recent survey on realtor.com, one in five buyers would sacrifice a bedroom or a garage for a better school district. Similarly, one in three would downsize houses considerably for a better school district. Buyers also admit to going considerably over budget for school districts over any other amenity or aspect; one in five says they will pay up to 10% above budget, while one in ten says they’d pay up to 20% above!
The Education-Home Value Relationship
The impact of schools on a home’s value can often be framed and discussed in a “chicken-or-egg” manner. Homes in the best school districts do tend to sell for higher prices than comparable homes within lower ranking school districts. Conversely though, more affluent people tend to live in better school districts, notably, even those without school-aged children. Studies habitually show the correlation between school districts’ average test scores and the average household income, proving that academic success and affluence are correlative. Thus, the statistics about a school could possibly be over-emphasized as a contributing factor to home prices, and moreover, it is possible that home prices actually drive the school ratings up, not vice versa.
If you want to do some research on current or prospective school districts, one of the simplest sites to use is Public School Review. You can search by state, by zip code, school type, etc. You can also compare schools side-by-side as well as view diversity rankings. Perhaps most useful when considering schools in relation to homes: you can set distance parameters around a given zip code to see where the best schools are in highly specific neighborhood pockets. Do keep in mind that test scores are not the only barometer of a school’s success though (consider teacher-student ratios, for example), and make sure to utilize trend charts that map the growth and success of the school over a number of years.
Overall, the relationship between school district ranking and home value is strong. Buying or keeping a home in an excellent district is not only important for the education of your children, but for maintaining and increasing your property value long-term. In fact, even if you don’t have children, buying a home in a strong school district is advisable since there is low risk of property depreciation. Research the school(s) in your district and neighborhood extensively though; while some may be ranked well, in concentrated urban areas (like Chicago) overcrowding in schools often leads to bussing students elsewhere, which could be detrimental to both your children’s education and to your home’s value.