Years ago the most oft-repeated adage in real estate was “Location, location, location.” In today’s market, that might be appropriately rephrased as, “Schools, schools, schools,” as “high-ranking school district” is found at the top of more and more buyers’ wish lists.
In a 2017 study by the National Association of Realtors, 26 percent of home buyers considered the quality of schools when looking for a new home. Particularly if resale value is important to you, buy a home in a quality school district. These homes are the ones most likely to hold their value during down markets, and are worth more than comparable homes in lower-rated school districts. The NAR then asked home buyers if they would be willing to pay more for a home in a good school district, and over half of the respondents said yes.
How Much Are we Talking?
In Florida, for example, homes in what the state labels as their “A” districts are worth an average of $50,000 more than similarly appointed and sized homes in districts with lower ratings. In another example, Washington State’s Bellevue School District is by far the highest rated in the state. As a result, similar homes sell in the Bellevue district for an average of 15 percent more than in other school districts.
Test Scores are Tops
Several criteria are used in determining the quality of a school district, from average GPAs to graduation rates, to the percentage of students taking Advanced Placement Courses. The single biggest factor affecting ratings as they relate to home prices, are test scores. According to the New York Times, economists have estimated that within suburban neighborhoods, a 5 percent improvement in test scores can result in area home prices increasing by 2.5 percent.
Weighing the Costs
When buyers are forced to make choices between their top priorities in order to stay within budget, other items are often sacrificed in exchange for access to a top-tier school district. In many markets buyers have shown a willingness to forgo an additional bedroom and modern aesthetics like vaulted ceilings. When faced with splurging on a basement, a pool, or a better school district, the schools more often win out.
Other parents are merely sacrificing their desired location, choosing an area where their new home might even be cheaper, but located farther from the urban city center. The money saved on a suburban home and not needing to incur the cost of private school ($20,000 annually and counting in some cities), is for many worth the traffic woes and lack of conveniences when moving from the city to a more outlying area.
So, if you are purchasing your next home for more than just the present, but with future resale value in mind, it’s worth the time and trouble to fully research the local school districts, even if you don’t have school-age children yourself. If you do have kids, they’ll benefit from the education opportunities now, and you will more than likely see a pleasant return on your investment when you choose to sell your home down the line.