The Effect of School Quality on Neighborhood Choice and Home Prices
The importance of attending a high-quality school cannot be overstated. It’s no surprise, then, that we occasionally see home buyers in Seattle turn down otherwise beautiful homes because schools in certain areas have a less-than-ideal reputation. Conversely, we also see home buyers priced out of their desired neighborhoods because they are in areas with excellent school systems.
No housing market in the United States is immune to this phenomenon, which is why you should always choose a Realtor® who has knowledge of the local school districts and their perceived quality. Here’s what you need to know about how school systems affect housing markets, and how this dynamic should influence your hunt for the perfect home.
School Quality VS. Neighborhood Choice
Home buyers with children, and even those without, consider school quality when choosing a local neighborhood. The 2015 National Association of Realtors Home Buyer and Seller Generational Trends study gives us the data to support that claim. It found that potential home buyers considered “quality of the school district” as the sixth most important factor in their choice of neighborhood. For buyers aged 35-49, school reputation ranked even higher, claiming fourth place among the most important location factors.
Trulia found similar results, with 19 percent of Americans indicating that their “dream home” is located in an excellent school district. That number jumped to 35 percent among current parents of a school aged child.
Of all the factors that residents look for in a neighborhood (such as yard size, noise level, crime rate, curb appeal, and more), education quality consistently ranks among the most important.
We experience the pull of quality schools every day. If you’re shopping for a new home in Seattle, expect to face some fierce competition for homes located in areas with schools that have an outstanding reputation.
School Quality VS. Home Prices
With demand comes increased price. The more people covet homes in high-quality school districts, the higher the prices for those homes will rise. It’s a simple economic principle that’s backed up by market research.
National Realty Brokerage, Redfin, released a study that found on average, buyers pay $50 more per square foot for homes in top-rated school districts. Redfin compared homes with the same square footage, number of bedrooms, and number of bathrooms.
The study also goes on to examine home prices in specific markets. One pair of homes in Alexandria, Virginia was nearly identical, aside from their locals schools. The home located in the better school district commanded a 16 percent premium, or $130,000 dollars in extra value. Similar results in some coastal California districts showed home price variances of up to $500,000. These results are extreme examples, but some neighborhoods in the greater Seattle area have experienced a comparable effect.
In 2013, a home in the Wedgewood elementary district cost around $44,000 more than a comparable home in the John Rodgers elementary district. All other factors aside, Wedgewood elementary outranks John Rodgers elementary by 100 spots in the list of Seattle’s best public elementary schools.
What home buyers are facing is a “pay to educate” market. Neighborhood prices rise because no one wants to compromise their child’s education.
The current situation is difficult to navigate, but fortunately, we’re here to help. If you’re looking to buy or sell a home in Seattle, contact us. We’ll be sure that you understand all of the factors that affect market value and what each of them means for you.
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