It's supposed to be a buyer's market. Yet, for parents determined to buy in areas associated with top schools, those bargains may be harder to come by. When housing markets go south, "areas with exceptional schools tend to hold their value better than the market overall," says Michael Sklarz, president of Collateral Analytics
The statement above is from an interesting article in the WSJ talking about how high performing school districts help keep property values high, even in these difficult economic times, and discusses the economic sacrifices that parents are willing to make to get their children into top school districts. Going forward, certainly for the next few years as so many other districts grapple with the effects of budget deficits, some severe, District 203 with a balanced budget, can look towards improving the educational experience it offers, as opposed to other districts that are looking at significant cutbacks in teachers and programs. It will be a daunting task for these economically challenged districts to keep their academic standards up in the face of these cuts. The reality that District 203 is instead concentrating on moving forward can only help strengthen property values in the 203 area as savvy parents compare the fiscal condition of various school districts as part of their home buying decision.
Here's a bit more from the article;
There are several factors at play, says Mr. Sklarz. "Areas with good schools tend to be more affluent and were less susceptible to the sub-prime mortgage debacle so saw fewer foreclosures. What's more, homes associated with great schools generally sell faster, in good markets and bad."
All of this comes as no surprise to the real estate agents who work with education-obsessed parents. "Schools have a huge impact on home values," says Kathy Beacham, a real estate broker in Raleigh. When schools in her own well-to-do neighborhood were redistricted three years ago, the value of her million-dollar home dropped more than $150,000. "A good education has always been important but I don't remember looking at the numbers like parents do today," she says.
Locally, here in Naperville, Bill White Jr. of Re/max Naperville has a post on his blog talking about District 203 schools and the academic excellence of its students. When asked by QE203.org about the relationship between property vales and high performing school districts Mr. White said " The quality of schools is at the top of the "must have" list for any prospective buyer as it relates to resale. One of the best ways to protect property values, especially during uneven economic times, is to be able to lean on a strong school district, city infrastructure and the unique qualities of a town such as a vibrant downtown. Naperville can offer all three."
For more information please see his blog here.
From the "Federal Reserve Bank of St. Louis Review, May/June 2010" is an article titled Nonlinear Effects of School Quality on House Prices:
"Unlike most studies in the literature, we find that the price premium parents must pay to buy a house in an area associated with a better school increases as school quality increases.This is true even after controlling for neighborhood characteristics, such as the racial composition of neighborhoods, which is also capitalized into house prices. In contrast to previous studies that use the boundary discontinuity approach, we find that the price premium from school quality remains substantially large, particularly for neighborhoods associated with high-quality schools."
Finally, a recent N.Y. Times article talks about the same mindset:"Parents’ Real Estate Strategy: Schools Come First:" When Ann and Jonathan Binstock started shopping for an apartment in Manhattan in 2007, their first call was not to a real estate broker. Instead, they hired an education consultant, to show them where the best schools for their daughter, Ellen, were. After the consultant suggested the most desirable zones , they chose a two-bedroom apartment near Public School 87 on the Upper West Side. Public records show it cost $1.975 million. Ms. Binstock said the family’s apartment “was a stretch financially.”
“We ended up buying the apartment that we live in now based on the schools,” she added. “All of our money is in our little two-bedroom apartment.”