How School District Ratings Affect Your Home Value

While looking to build or purchase a new home, you may have thought about the school district your children would be enrolled in. A 2017 study by the National Association of Realtors found 26 percent of homebuyers consider the quality of schools when looking for a new home.

Lou Nimkoff, president of the Orlando Regional Realtor Association, says a good school district can increase buyer demand for the homes within the area, which increases home values.

“On the flip side,” he adds, “a struggling school district can experience less buyer demand, which restrains home values.”

As the desire for homes in nicer, high-rated school districts increases, so does the price of homes in the area. According to the Brookings Institution, on average, housing costs are nearly 2.5 times higher near high-scoring public school districts than near low-scoring districts. Another report states that every dollar spent on public schools in a community increased home values by $20. School expenditures may benefit everyone in the community, whether or not those homebuyers have children in the school district.

The desire for a home in a better school district is important enough for some homebuyers to pay 6 percent to 10 percent over their budget, or even to give up a bedroom or a garage in a new home. A majority of homebuyers who said school boundaries will have an impact on their home-buying decision are willing to pay 1 percent to 10 percent above their budget to live within school boundaries. Sixty-two percent of homebuyers who said school boundaries will have an impact on their decision indicated they would do without a pool or spa and 51 percent would give up easy access to shopping. Forty-four percent would pass on an extra room in their home.

So what do all these numbers mean?

Great Schools Make a Home Easier to Sell

Homes within the boundaries of a higher rated public school district are, on average, 49 percent more expensive than the national median listing price and 77 percent more expensive than homes located within the boundaries of lower ranked districts.

“Homes located in high-scoring school districts attract more buyers, including both parents who want their children to go to good schools,” Nimkoff says, “and others who understand that a good school district helps protect a home’s resale value.”

Alternatively, a low-scoring public school can lower home values in its immediate vicinity.

“A low-scoring public school can decrease the availability of amenities in the area and increase the proportion of renters to homeowners,” Nimkoff says.

What Homebuyers Should Think About

While it may seem like the obvious answer is to choose a home in a high-rated school district, the truth is not that cut and dried. Not every home in a high-rated school district is going to be expensive, and not every low-rated school district is a bad place to raise your kids.

Buyers should explore the school districts where they plan to build or purchase their new home, Nimkoff says. Homebuyers should plan to visit the schools and personally to meet with administrators, if they’re serious about a particular area.

“They should also be aware of educational options offered by the district that are not dependent on home location, such as magnet programs and charter schools,” he adds.

As an example, Nimkoff points to the educational options that many lower-performing high schools in Florida have, such as an International Baccalaureate program. Lower-performing elementary schools can receive additional financing and special support, and the homes surrounding these schools may be priced lower than those in better districts nearby, yet offer still good educational opportunities.