School District Impact on Property Values and Home Prices

Dale Lavine September 8, 2022 | 4 min read
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Did you know? School district impact on property values can influence home prices and home buying trends.

It’s back-to-school season and we can’t think of a better way to get into school spirit than by discussing the importance of looking for good school districts during the home buying process.

The fact of the matter is that many buyers don’t even know school districts should factor into their decision, but they absolutely should. School quality is an integral part of a neighborhood, with a substantial impact on home prices and property values. So, where do we start?

The importance of a good school district

You might be surprised to learn that, when it comes to value, it’s not all about the ratio of bed to bath or square footage. With or without children, lots of buyers intentionally choose to buy homes in quality school districts. For some, it’s because they want a good education within walking distance for current or future children. For others, a good school district can be a sign of a healthy local economy and real estate value.

In 2017, the National Association of Realtors (NAR) found that nearly one quarter of buyers considered the quality of local schools when house hunting. Of course, families rarely stay put forever. Jobs change, children grow up, and when it comes time to sell, people want to know their home has retained or increased in value. Realtor.com found homes in higher-performing districts received 26% more views than the average listing. Even more surprising? Those homes were 42% more popular than homes in lower-ranked districts, which brings us to our next point…

School district impact on home prices

Many factors play into home prices, and a school district’s quality is just one of them. On one hand, sellers understand that a good district is more desirable, so they might use it as leverage for higher asking prices. On the other hand, if you’re a buyer and a good school district is one of your must-haves, you might be willing to bid higher to snag the right home. On average, people were willing to pay $50 more per square foot for a home in top-ranking school districts compared to homes in average districts, according to Redfin.

Other buyers might also be willing to trade some of their “wants” if it means securing a spot in a top district. After all, what’s more important: your bonus-room-turned-craft station, or a dependable school district with all the resources a child could need?

Even for buyers who aren’t parents yet, it’s something worth thinking about. Either way, it’s a trade off and it’ll come down to what you value most. And speaking of value…

School district impact on property values

Higher home prices and higher test scores often mean higher property values. Higher property values usually equate to higher property taxes, a portion of which tend to trickle down to local school districts. In a roundabout way, this is why higher-quality schools with higher test scores tend to be located in more affluent areas: more funding from the community.

Some sources even suggest that properties in better school districts hold up during various crises. Take the past housing crisis, for example. One study from Ken Corsini of BiggerPockets found that, between 2006 and 2009, “properties near schools with a rating of four or five stars were almost completely insulated from declining values, while those near schools with one to three stars experienced massive losses in value.”

That tells us that a neighborhood’s equity can serve as a buffer during challenging market conditions.

Not the most important factor

Children or not, every buyer should take the school district into consideration. But that doesn’t mean it needs to be your top priority. The right home for you is the one that feels right at the time. When that day comes, you can count on us to help you get there faster.

A good rule of thumb to keep in mind when you’re home shopping: wherever you buy, you’re buying into the local school district.

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