If you’re in the market to buy a home, there are a lot of factors that might attract you to a particular house, including square footage, the number of bedrooms and bathrooms, how much remodeling has been done, amenities like pools and larger garages, and, of course, the asking price.
But there’s another factor that holds major sway over home buying decisions: the quality of schools in the community.
Ironically, that’s also one thing that we Realtors CAN’T speak to, as it’s a violation of Fair Housing laws to influence buyer decisions based on school systems or to even give information like school ranking to home shoppers.
But what we CAN cover is the direct relationship between top-flight schools and higher property values. In fact, if you want to ensure that your home purchase ends up being a wise financial decision and reaches maximum price appreciation, purchasing near an A-rated school is one of the most important things to look for.
You may think that it’s common sense that homes in neighborhoods with great schools cost more, keep their values better through hard times, and go up faster in price, but we searched near and far to come up with these facts, statistics, and studies that quantify that relationship:
When Realtor.com surveyed 1,000 home buyers and owners, they found that 91 percent of home buyers include school boundaries and school systems in their decision-making process when shopping for a home – a virtual consensus.
Even more swaying, for some of the 9 percent of those surveyed who said that schools were not a factor for them, a good portion did not have children or were even single buyers.
Furthermore, their survey found that home buyers were willing to make significant sacrifices in order to get into a home in a better school district. According to respondents, for every five home buyers, one would be willing to live in a home with no garage or one less bedroom if that meant access to a good school system.
Additionally, for every three buyers surveyed, at least one would give up some square footage and live in a smaller home if it meant being in a better school system.
Even more profound, more than half of the people polled in that Realtor.com survey said that they would gladly live further away from stores, shopping, and other amenities if it meant being closer to a better school.
Buyers didn't draw the line at giving up amenities and square footage for the chance to live within the boundaries of a better school system. The study also found that 20 percent of home buyers – one in five – said that they would pay an asking price six to 10 percent above their budget to live near the right school. One in ten buyers went so far as to say they'd kick in 20 percent more than their budget just to live in a community with a high quality school.
A 2013 survey by the National Association of Realtors found that 22 percent of home buyers said that a home’s proximity to a school was an important factor for them when purchasing.
While being close to a school/schools was important, it seems that the quality of the school district was an even bigger enticing factor for buyers. In fact, 29 percent of those surveyed reported that school quality was a “deciding factor” in their decision where to buy.
The trend towards looking at school systems as an indicator of a wise home buying decision was reinforced by the National Association of Realtors (NAR) Home Buyer and Seller Generational Trends study in 2015. By ranking the factors home buyers look for in order of importance, they found that the quality of the school district was the 6th overall factor, behind price, home size, and other considerations. For home purchasers in the 35 to 49-year-old range, the quality of the school district for their potential neighborhood was even more important, the 4th highest factor.
One recent survey by a prominent national real estate website revealed that 35 percent of Americans with school-age children said that their dream home would be in a top-flight school district, compared to only 12 percent of those without kids that said the same.
Another well known real estate search website found that homes in neighborhoods with A-ranked schools cost an average of approximately $50 more per square foot than complementary homes with lesser-quality schools.
Aside from just surveys, plenty of research has been conducted into the correlation and influence of good schools on home prices.
A study by UK researcher Dr. Lorenzo Neri found that for every three percent increase in the number of students that performed above expectations on testing, local house prices rose by 1.5 percent as a result.
He also found that the effect of home price increases due to good tests scores was even more dramatic in areas with more than one high-quality school, a phenomenon called ‘Hedging" (where buyers try to move to an area with several great schools, not just for one school).
"What our study shows is that even very small levels of grade inflation can make a significant impact on house prices," reports Professor Battistin, a contributor to the study.
Much closer to home, a comprehensive study by the Brookings Institute found that housing costs were, in fact, higher in areas where high-ranking schools were located. The Brookings Institute study examined housing prices in the 100 largest metropolitan areas in the U.S., cross-references against school test scores. It found that there's an average difference of $205,000 in home prices between homes close to the best schools compared to poor school systems. They also found that there are 30 percent more rentals in areas near lower-performing schools.
Of course, that should come as no revelation that home prices are higher near good schools, but the degree and extent were surprising.
A 2010 Wall Street Journal article backed that assertion up, demonstrating that it’s easier than ever for home shoppers to research school rankings and test scores in communities they were thinking of buying in, in large part thanks to the Internet, standardized testing, and the prevalence of published school reports.
One clear example the Wall Street Journal offered was the case of one community in Florida, where they found that neighborhoods with A-rated schools had average home sale prices at least $10,00 more than similar neighborhoods save for B-rated school systems.
But the relationship between home prices and school systems may best be summed up by the report, “Using Market Valuation to Assess Public School Spending.” Its findings included the fact that for every dollar spent on public schools in a particular community, home values increased by $20 over time. Whether they had children in the school system or not, all homeowners in the vicinity of well-funded and top-quality public schools directly benefited.
That's good news for homeowners or buyers in the proximity of good schools!
