Schools and Property Values: Do School Districts Matter to Home Buyers?

There are essentially three types of homeowners, all of whom began as home buyers. Those buyers can generally be grouped as those with kids, those without, and those with kids that no longer live at home. Only two of those groups of home buyers may directly care about school districts in their neighborhood and yet all three groups care about property values. The importance of schools and the health of those institutions are key to the current value of homes and the future resale values of the same properties. Should any home buyer ignore the relationship between property values and the schools located in the vicinity of those homes?

Do Home Prices Correlate to School Districts?

While there are some hazy statistics that suggest that there is a direct interplay, the relationship of home prices as the result of a better school district increasing the value of the home has not been written in concrete. Many will believe the suggestion that affluence is a good indication of a school’s quality. And that may be the case. The real problem is how to judge a good school district.

The quality of school districts can be determined in a number of ways. Some websites offer a purely parent rating system, the same sort of one-thru- five stars ranking used for product references on popular shopping sites. While this is worth considering, many of the ratings are given anonymously and do not give a potential shopper a clear view of what the school is really like. In other words, a Yelp-like rating system may fall short when attempting to find a good school.

There are several additional, more scientific approaches that are worth considering. Some economist have used an “output-based” measurement heavily reliant on standardized test scores and the school’s ranking based on those test scores. Other studies have looked at measurements such as teacher-pupil ratio and per-pupil spending to create an “input-based” answer to the question of quality. It should be noted that the “out-put based” methodology is often used in the home prices-to-school district results.

Should Home Buyers Focus on School Districts when Deciding?

The term Local Public Goods or LPG was introduced by economist Charles Tiebout in an economic paper titled “A Pure Theory of Local Expenditures.” Tiebout suggested that more than schools played a role in a good location for a family or other home buyer. What he uncovered was the emotional tilt these buyers will have towards preferences for certain amenities, schools among the many of qualities that will make like-minded individuals gravitate toward the same neighborhoods. The LPG thinking places schools as part of a larger grouping, albeit near the top of that group.

And while other studies have looked at the same issue, often removing biases present in previous papers, home prices seem to be largely impacted by the quality of the school. This suggested that affluent neighborhoods and the higher home prices are a direct result of the local school system.

It should also be noted that many of the preferences home buyers look for in addition to schools may be sacrificed to some degree in affluent neighborhoods. In other words, the sense of community was not as great in higher-priced neighborhoods. Commuting distances also played a role, suggesting that some neighborhoods that were affluent were also less dense and made access to the schools harder.

An Important Consideration

One researcher at Duke University concluded that the right to attend the public school in the neighborhood was “baked” into the price of the home, suggesting that the home price a buyer will eventually pay is directly influenced by the quality of those schools. Home buyers who have no children, whether retired or not, should consider the nearby educational opportunities as an indicator of how property values may react in the future.

How can we assist you today?


On behalf of The Jones Group @ Sunriver Realty

Nola Horton-Jones, Principal Broker/Realtor | ABR, C-RIS, e-PRO, GREEN, RSPS, CCIM Candidate

Bryce Jones, Broker/Realtor | ABR, CRS, e-PRO, GREEN, GRI, RSPS, SFR

The Jones Group @ Sunriver Realty | 57057 Beaver Drive | Sunriver, OR 97707

Mobile: 541-420- 3725 | Mobile: 541-420- 4018 | Fax: 541-593- 5123



Licensed in Oregon