Good Schools Do Impact Property Values
By Jim Brown, Kettering Board of Education
The relationship between a public school’s performance and home value is so important
to the citizens of Kettering that we wanted to review the subject again. A survey
conducted by the Nation l Association of Realtors concluded that Americans rank public
school quality as second only to crime rate when deciding where to live.,
Realtors don’t need a survey to tell them about the importance of quality education. The
subject comes up so often in the initial meeting with new clients that it is most certainly a
part of the final decision.
In and interview with the Dayton Area Board of Realtors, we learned that both families of
school-age children and families of children with no children ask about the quality of
schools. Childless families are interested in good schools because someday they will be
selling their home and know that a top-rated school system will give them a big
advantage.
A study published in 2006 and co-authored by Donald Haurin from the Ohio State
University, concluded that student proficiency scores impact home values. They studies
77,576 house-buying transactions covering 310 different school districts in Ohio. The
study showed that an increase of about 20 percentage points on the proficiency test (pass
rate) resulted in increased house values in the school district of approximately 7 percent.
Many people shopping for a home seem more interested in the end result of education
and look primarily at overall test scores.
Other families are interested in the value-added factors that consider how well a school
district does in improving student performance over a particular time period. Home
buyers in Kettering will be rewarded in both categories, as your school district has top
test scores and excels in value-added.
Improvement in public schools helped to increase home values in a wide range of
communities. An August 2010 article lauded Michelle Rhee, Chancellor of the
Washington, DC public schools as the most powerful person in DC real estate. In her
three years as chancellor, she has shuttered under-performing schools, fired underperforming administrators and teachers and invested in professional development. Pubic
education in DC is improving and as a result, parents are no longer moving out of
Washington, DC when their children reach school age. This phenomenon is having a very
positive effect on property values in the city.
UCLA economist Sandra E. Black calculated that parents are willing to pay 2.5 percent
more for housing for every 5-percent increase in test scores among students in that school
district. This, of course, increases the overall value of homes in the community. Moving
from the bottom 5 percent of schools districts to the top 5 percent is associated with an
18-to-25-percentage-point difference in value for identical homes.
Good schools are prized by parents and homeowners in other countries, as well as here in
the United States. A study in England found that parents are willing to pay L5,800 more
for a home in a school catchment area where a high percentage of students achieve level
four or above in their key stage 2 Standard Assessment Test.
Top schools such as ours here in Kettering also protect home values during an economic
downturn. In Irvine, California – an area with great schools – home prices since 2006
have declined about 18 percent, whereas home prices in surrounding areas with lower
performing schools have declined 33 percent. In highly rated Andover, Massachusetts,
home prices are down 4 percent, versus a decline of 16 percent for the greater Boston
market.
The concept of “Good Schools – Good Community” is not lost on the residents of
Bellevue, Washington. Like Kettering, they have a history of supporting their schools. I
quote from a recent article, “Even residents who don’t have school-age children tend to
stand behind the schools. It’s not altruism; it’s economics.”
All things equal, homes in the Bellevue school district fetch a 15-percent premium over
homes just outside the area.
Money spent on property taxes to support top-rated schools is capitalized into higher
property values. Seven percent of a $100,000 home is $7,000. Compare $7,000 to the
$150 increase in property taxes for the Kettering Schools’ levy on November 2nd…Please
consider that support of our schools is actually an investment in our community.