August 2021

When your client is evaluating public schools...

For many clients, the quality of a school district is an important consideration when buying a home. How much impact does a highly rated district have on home values and what does that mean for your clients? Looking at your role in this process is a good place to start.

As a real estate agent, you face certain restrictions when it comes to helping clients. The Fair Housing Act prohibits you from "steering" a buyer's choice of home or neighborhood based on seven protected classes: race, color, religion, national origin, gender, disability and familial status. Consequently, you can't say whether a home is located in a "good" or "bad" school district, although you can provide objective criteria such as school test scores.Footnote1 Footnote2

Willing to pay for high-quality schools

It comes as no surprise that there's a clear correlation between school test scores and home prices. An analysis by the Brookings Institution found that, across the 100 largest metropolitan areas, homes near a high-scoring public school cost an average of 2.4 times as much as those near a low-scoring one.Footnote3

Likewise, in a survey by Realtor.com, 78% of homebuyers said purchasing in a good school district was "important." For "the privilege of living near a better school," these buyers said they had compromised on other features, including garages (19%), updated kitchens (17%), extra bedrooms (17%) and outdoor living areas (16%).Footnote1

While it's not easy to isolate the impact on home prices of a well-regarded school district, one study by Collateral Analytics sought to do just that.Footnote4 It identified two homes near Cincinnati that were in the same neighborhood and of similar size and age but were served by different districts. In 2018, the home in the more highly rated district was valued 58% higher per square foot and $150,000 higher overall.

Weighing the benefits

Buying in a highly rated school district can mean different things depending on your clients' needs.

  • Are they planning to use the schools? Your clients will gain access to a strong educational opportunity for their kids. While they will likely pay more in taxes, your clients will save on private-school tuition and enjoy the other features that higher-scoring districts tend to offer.

  • Are they thinking of private or religious school? You can help your clients compare the costs of owning in a higher-scoring school district versus the price of a (potentially nicer) home in a lower-scoring one, with the addition of out-of-pocket tuition.

  • Are there no kids in the household? Notably, your clients will be paying more for a benefit they will not be using. However, according to Trulia, homes in more affluent districts tend to sell more quickly and hold their value during tough economic times compared to homes in lower-rated districts.Footnote5

But again, due to Fair Housing Act prohibitions, you can't provide your clients with any personal judgments about or guarantees of enrollment in specific school districts.Footnote2 You can, however, guide your clients to third-party sources, such as school information websites.

Ultimately, individual clients will need to decide for themselves what they value most.

A note from your lending specialist:

Please have your clients contact me about financing as they prepare to purchase their first or next home.

1 "What home buyers are willing to give up to live in a good school district," MarketWatch, Jacob Passy, July 24, 2018.

2 "How to Spot Real Estate Discrimination," The Balance, Elizabeth Weintraub, November 12, 2020.

3 "Housing costs, zoning and access to high-scoring schools," Brookings, Jonathan Rothwell, April 19, 2012.

4 "Housing values & school quality," Collateral Analytics, Michael Sklarz, Norman Miller and Anthony Pennington-Cross, April 17, 2018.

5 "No kids? Here’s why you should still buy in a good school district," Trulia Blog, trulia.com.


MAP3650419 | 07/2021

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