School’s in Session: How School Districts Affect Home Values

It’s been a busy couple of weeks as our local schools have started their 2022-2023 academic years! We love seeing all of your “First Day” pictures from both students and teachers, and we wish you all a phenomenal year. We wanted to take this opportunity to remind our potential buyers and homeowners alike of the importance of the local school district when it comes to real estate and home value. 

So, pull-up a chair, and grab your notebooks! It’s time to get schooled. 

How Do Schools Impact Property Values?

Public schools, for better or worse, are mainly funded by local, state, federal governments. There are exceptions, of course, such as John Handley High School in Winchester, that is publicly endowed, but most schools rely on your property taxes. School funding relies heavily on property values because the higher the value of a home, lot, or property, the more tax revenue that home will generate. 

Now, a school’s value cannot be determined by funding alone— there are many districts that can stretch their funding, using money wisely and budgeting appropriately; still retain excellent teachers with fantastic morale, trust, respect, and positive school environments; and graduate outstanding young citizens, capable of achieving whatever they set their mind to achieving. Most of the time, however, the more funding a school receives equates to a better performing district, which in turn translates to higher home prices and values. 

Furthermore, with certain education laws and acts in place, schools can lose funding if it is deemed by the powers that be that they are “underperforming,” so standardized tests and other measures are vital in determining what constitutes a “good” or “great” school district. 

Now, all our children deserve a great education, and how we get more equitable opportunities for our nation’s youth is a topic for another day— and multiple issues that can’t be covered in a 1,000 word blog post, but this is our system, so you need to understand it as a potential home buyer or seller. 

What The Numbers Tell Us

Past studies by the National Bureau of Economic Research have discovered a correlation between home values and public school funding. They found that for every dollar spent on public schools within the local community, home values increased by $20. In addition, national statistics convey an average difference of $205,000 in home value estimates between homes located in “high-performing” districts versus “low performing” districts. That is significant. And that is precisely why good schools or at least well-funded schools should be a concern. 

Note that there are exceptions and many schools still provide a high-quality education while reducing their expenses, but taking a look at a district’s revenue in addition to a ranking website like Niche.com or GreatSchools.org can help you determine a quality school district. For more on what to look for in a school district, you can check out last year’s blog here. 

Other Considerations for Home Buyers and Sellers

In addition to higher home values, having better, well-funded schools in your area typically translates to lower crime rates, improved news literacy, higher employment rates, an increase in civic participation, and, overall, more engagement in cultural and community events (RAND Education). 

While you may not have nor want children or if you have children but homeschool or send kids to private school, higher-ranking schools create sought-after and highly coveted neighborhoods. When looking for a new home, you should always consider the school district and then weigh your pros and cons. Yes, living in an area with a better school can be fantastic, but it will also be more expensive. If you have a fixed budget, it might not be possible. 

On the other hand, an area with great schools may not have everything you’re looking for in a house or property. Perhaps, you want to own some livestock or live in a more rural, quieter area. You may opt to move where there’s a little less funding, but you have the added bonus of land, a lower-cost of living, and lower property taxes. Like the saying goes, “Nothing in life is free.” While your budget may get you into the home of your dreams, there might be hidden costs or additional taxes to consider. It is always best to weigh the pros and cons and consult your agent and broker. Run various scenarios and be sure to include all closing costs, taxes, and other fees in your purchase. 

Likewise, sellers should consider their district when establishing a selling price and considering offers or even deciding to make renovations. For example, potential buyers may not care if your house doesn’t have the latest kitchen appliances if the school district has an “A” grade or a 98% graduation rate. You can forget about upgrading and save your money. 

Schools Make a Difference

No matter how you slice it, schools should weigh heavily on your home buying and selling decisions and the quality of schools should be considered. Because of The National Association of Realtors Code of Ethics and the 1968 Fair Housing Act, your actual real estate agent cannot discuss the quality of schools with you. For more information about what an agent can or cannot say, read an article from US News & World Report here. If your agent does not mention schools or seems unwilling to give you an answer, do not worry. They are simply prohibited from doing so. 

Your best bet is to do a little investigating yourself. Obviously, if you have kids, you’ll want to ask some specific questions and visit the schools themselves in the area you’d like to live, and you can provide a zip code and tell your realtor you’d like to look in that area– be it for the schools or any other reason. Again, feel free to check out our previous blog concerning schools and their rankings or grades, and use your research skills to find those answers you’re seeking. 

If you want to talk business, you know where to find us! Call us at 571-308-2902 today and we’d be glad to get you connected to a fantastic agent to lead you on your home buying or selling journey! And, to all of our families out there with young learners and those invaluable teachers, principals, and other school staff, we wish you a fabulous and fulfilling school year!