The value of a home takes a series of calculations roughly based on the cost of actual construction plus value-adds like proximity to shopping and other conveniences. Comparisons to other nearby homes are also taken into consideration.
A school district is one thing that almost always affects a home’s value for the buyer.
The Numbers Have It
A quick search on the internet can prove one thing; better school districts can increase the value of your home. A study from the Federal Reserve Bank of St. Louis found that schools that were just below the average for quality did not influence the homes where their students lived. These houses were priced based solely only on their characteristics. On the other hand, better school districts increased the price of the home well beyond the physical characteristics of the house.
The National Association of Realtors reports that 26 percent of all buyers chose their house based on the school district’s quality. However, among age groups prime to have children in the household, 40 percent of those under 36 years of age considered the school district an influential factor, as did 35 percent of those buyers 37 to 51. A surprisingly high percentage of buyers consider school districts to be a factor when buying a home.
How Much More Will You Pay?
Trying to figure out how much more you will pay is more complex than it seems because there will most likely be another buyer who really needs a house in that school district. This year in the Dallas-Fort Worth, Texas metroplex, for example, homes were frequently being sold for more than their listed price because someone out there had to have that house in that location and right now.
But, you can still look at price trends for homes in a very general and rational way to get a feel for the influence of school districts. The Washington Post reported on a vast study by Redfin that included 407,000 home sales and almost 11,000 elementary school districts across 57 metropolitan markets. The study’s goal was to determine the average additional value brought to homes by their school districts.
The results were astounding because top rated school districts increased that value of a home by $50 per square foot. That’s an extra $100,000 for a 2,000 square foot home! The effect in California’s hottest markets was even more dramatic, with buyers paying up to $500,000 more for the best districts.
Compromises: School or Shopping?
When Realtor.com announced its findings from a back to school survey in 2013, a few trends popped up. For example, buyers were more than happy to make significant sacrifices to get their kids into a great school district. Of the people surveyed and indicated that school boundaries were an essential factor in their search (90.53 percent), 42 percent would give up parks and trails, 43.96 would give up a bonus room, 50.6 would give up easily accessible shopping, and 62.39 percent could live without a pool or spa. School districts would directly affect 3 out of 5 buyers.
Breaking It All Down
All of this may sound quite complicated, but it’s actually pretty straightforward. There are a limited amount of houses in the best school districts, and there are more buyers than homes in those districts. Since school districts are so important to many buyers, bidding wars on houses are common.
It’s a snowball effect. Those way-over-asking-price homes end up being comparable homes when the appraiser comes around a few months later, raising the prices of all the houses around them. So, authentically, it can be said that your school district, if it’s a good one, has a significant impact on your home’s value.
Where Can You Go for Advice on Buying or Selling in a Hot School District?
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