I know this is not news to most folks, but I do get asked by friends, clients and random strangers at the grocery store if the school district really does matter in the value of a home. Well, I’m here to report that yes, yes it does. To prove it to you, I created a chart.
In examining this topic, I approached it two ways:
- As a parent, I specifically bought my house because it was affordable and in the Morris Brandon elementary school district, which is one of the top-rated elementary schools in the Atlanta Public School District. Even though there are about five private schools within a stone’s throw from any house I considered buying, it just was not an option for my household.
- As a data nerd, this very question motivated me to develop the Hatch Neighborhood Report. I examined the data for our specific area, which is near the borders for three elementary districts: Morris Brandon, E. Rivers and Bolton Academy. I looked at the average sales prices of homes sold within about one mile from the highlighted district lines in the map above. These neighborhoods have similar amenities, traffic and crime; as well as housing inventory which ranges from 1940 bungalows to new construction.
- As we know from economics, value is partially determined by what a buyer is willing to pay. Were we willing to pay more for our home because of the perceived quality of the schools? Yes, yes we were, and in June 2016, buyers paid a 28% premium to live in the Brandon school district over E. Rivers.
- Coincidentally, the average sales price in the E. Rivers school district was also 28% higher than Bolton Academy in June 2016.
So, what does this mean to you as a buyer or seller?
- Know your boundaries. Whether you are buying or selling a home, double check school district maps to ensure the listing information is correct.
- Know how much schools affect values in the neighborhood. Research market activity to see whether list prices are overstated or understated based on the school district. A great research tool is The Hatch Neighborhood Report, which breaks down average sales prices by neighborhood AND school district.
- Understand if schools matter to you or your target buyers. Keep in mind if you’re selling in the top school district around, it may not be that important to your target buyers if they have older kids, or no kids, or if they are sending the kids to private school. As a buyer, if you’d rather not pay a premium price to be in a top school district for the same reasons above, you may get more for your money by shopping just a mile over the school district line.
Yes, the facts and anecdotal evidence tell us that school boundaries do affect home values. Exactly how much depends on the area of town. And, of course there are so many other factors in determining a home’s value. So, let’s discuss your objectives, whether you want to buy or sell.
**Side note: as a first-time home buyer, I based way too much emphasis on test-based school ratings. Now I know that a school is made up of a community, so I always advise my clients to tour schools before making that decision.**