Why it pays to purchase a home in a good school district
by Erik J. Martin
CTW Features
They say there’s no substitute for a quality education. But the quality of an education will greatly depend on the caliber of the school, and typically the best public schools are located within the finest school districts. The lesson to be learned here? Purchase a home in a high-performing school district: it can not only give your child a leg up in learning, but it should also increase your home’s value over time, per the latest research.
A new report by ATTOM Data Solutions reveals that homes in ZIP codes having a minimum of one good elementary school boast higher values and more robust home price appreciation over time compared to residences in ZIP codes minus good elementary schools. Consider that, in areas having at least one good school, the average estimated home value was 77 percent greater than abodes in locations lacking any quality schools. Additionally, homes within ZIP codes having a minimum of one good school have gained $74,760 in value, on average, since being bought – yielding a 32 percent return on investment.
“These report findings fit with the conventional wisdom that good schools are tied to higher home values and faster home value gain over the long-term,” says Daren Blomquist, senior vice president for Irvine, California headquartered ATTOM Data Solutions. “This data shows that buying a home in a ZIP code with at least one good school is a wise financial decision, because that home is more likely to appreciate in value more quickly over time and hold its value better during a downturn.”
John Lyons, broker/Realtor with Baird and Warner in Chicago, isn’t surprised by the aforementioned findings.
“I recently sold a single-family home for $1.06 million within seven days in a great school district. Two months later, one block away but not in the same great school district, a very similar home by the same builder sold for $937,000 after 120 days – despite the fact that this home was more updated with much better finishes,” Lyons says. “The moral here is that property values in good school districts will be better insulated to the volatility of the market. Demand for homes in these good school districts will always be higher than those without, resulting in a safer investment.”
Of course, the downside for buyers house hunting in a more preferred school district is that they can usually expect to pay a lot more. Which begs the question: is it worth it if you don’t have children now or in the future who will be attending those acclaimed learning institutions?
“Even if you don’t have children, it pays to buy in a better school district for resale value. School quality, along with neighborhood amenities and access to major roads and schools, ranks among the top three criteria when it comes to choosing a location,” Eric Tovar, president of Churchill Classics, LLC, a Rockville, Maryland based home building firm, says.
His advice for those on a budget? Buy a less-expensive fixer-upper that’s still within the boundaries of a desirable school district.
“It will pay off in the end versus buying in a lesser school district,” Tovar says. “You just need to find a reputable builder or remodeler to do the renovations.”
John Schloz, branch manager for HomeSmart, a real estate brokerage in Scottsdale, Arizona, concurs.
“Buying in the best district you can afford will perform better as an investment. You can always upgrade a home in the future, but you can’t upgrade the local school,” Schloz says.
Be careful, however, that you don’t overvalue the reputation of a given school district.
“A quality school area sometimes morphs into a status symbol, and the school is thought to be good but research actually shows it to be only mediocre,” says Schloz, who recommends doing your homework carefully. “Buyers should look at sites like the nonprofit greatschools.net, ask their agent for school district reports and test scores, talk to neighbors, and tour the schools. Buyers need to know how their local public school ranks compared to others throughout the city or area.”
Avoid school district tunnel vision, too.
“Focusing solely on school quality when shopping for a home could end up causing a buyer to make a bad financial decision,” Blomquist adds. “He or she may want so badly to buy near a good school that they end up purchasing a home that is not affordable and within a district with exceedingly high property taxes, which can cause financial and quality-of-life problems.”
© CTW Features
