A recent analysis by real estate website Redfin.com shows that homes located in above average school districts have higher value. That’s no surprise; with the cost of education skyrocketing, it stands to reason that parents are willing to pay a steep premium for their children to enroll in top-rated public schools.
However, Redfin’s data, pulled from MLS data of homes sold in May, June and July 2013, also sheds light on the degree to which school district affects home price and what homebuyers can do about it.
Redfin data show that even when comparing similar size and quality homes in nearby neighborhoods, people still pay $50 more per square foot for homes in top-ranked school districts than average-ranked school districts.
One such example is Alexandra, Va., where a house in the high-rated Waynewood school zone sold for $130,000 more than a nearly identical home, which is less than a mile away but located within the low-rated Belle View school zone.
School district also makes a big difference in Beaverton, Ore., just outside of Portland, where many families come for high profile jobs at Nike, Intel or elsewhere in its high-tech “Silicon Forest.”
Bob Ulery, a real estate agent for Hasson Company, based in northwest Portland, Ore., recently worked with a family that lived in an apartment for seven months while they waited to buy a home, determined to enroll their child in top-ranking Findley Elementary. The home they eventually purchased sold in 24 hours with six offers, at $20,000 over its list price.
“[Demand for quality schools] feeds this competition for these houses, and that goes to price,” Ulery says. “It’s just the law of supply and demand. Demand is huge and the supply is limited; price goes up.”
The real estate market in San Diego is also competitive, and school districts play a big role, But Linda Lee, president of the Greater San Diego Association of Realtors, says that homebuyers without school-aged children are more likely to be influenced by lifestyle.
She says that older buyers are more concerned about where they’d like to live geographically, whether that is near the ocean, in the mountains, or near a city.
Ulery adds that “empty nester” buyers can still care about the value of the schools in their area because of their resale value.
So what can you do if you’re searching for a home in one of these high-demand areas?
Redfin’s report specifies some high-performing school districts where median home prices are low compared to other desirable school districts.
For instance, Mortensen Elementary School in Littleton, Colo., is a strong school located in a district where homes are priced 58 percent lower than the nearby top-performing school district.
Similarly, McKay Elementary School in Beaverton, Ore., is located in a district with more affordable schools than Findley Elementary. “It’s a very good school. It’s pulling from an older suburban part of town with a very broad mixture of small inexpensive homes and big expensive homes,” Ulery says.
“There’s certainly not a one-to-one correlation between schools and home prices,” he adds. Other factors include “access to freeways, nearby shopping, quality of environment.”
For those who insist on home shopping in those ultra-competitive school districts, “We just have to be ready to buy,” Joan Probala tells her clients in Seattle, where people pay up to a 10 percent premium to live near good schools. “We can’t wait. The day you see it, you have to write the offer and look at the price realistically because that’s what it’s going to sell for.”
Of course, being ready to buy a house means you must have your financing in order, including preapproval from your lender.
“Sometimes it’s not the perfect house that they want, and that’s fine with them as long as they can get into that school district,” she says.
Don’t expect the seller to negotiate much on the price if you’re buying in an area where there is high demand among schools. “If it’s a good house and it’s something that you really want, then you have to be prepared to pay,” Probala says.
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