Where a school district is located has a significant effect on the property values of nearby homes. School districts with a good reputation attract families with school-aged children, creating a demand for nearby real estate. This demand can drive up property values.

The Wealth of Homeowners

In and of itself, a good school district is not responsible for rising property values. For the most part, good schools tend to be located in neighborhoods that are more affluent and have a higher standard of living. The wealth in these neighborhoods tends to help create school districts that score higher on tests and have higher student performance than schools located in poorer neighborhoods. So when real estate is located in the boundaries of a good school district with a high standard of living, the property values will be higher than surrounding areas.

Higher Demand for Real Estate

When purchasing a home, there is a strong demand for a good school nearby, as a good school can provide stability to the community. This demand combined with a limited product like real estate can drive property values higher.

Homes located in highly sought after school districts will typically sell for higher prices than similar homes in less-popular school districts. As such, many homebuyers are willing to pay more per square foot than their anticipated budget and give up amenities like additional bedrooms or bathrooms in order to purchase a home in their desired school district. As a result, the price differences for similar homes located near each other but served by different school systems can range from tens to hundreds of thousands of dollars.

Homes Have Better Resale Value

Even if you don’t have children, a school district is a very important factor to consider when buying a home. It can have a dramatic effect on the resale value of the property. Properties located in good school districts tend to hold their value or even increase in value when the rest of the market has slowed down. Many home buyers are willing to pay more for good schools. They are willing to trade a larger home for a smaller one in a better school system.

If you are selling a home in a good school district, you can reasonably ask a higher price for your home than a similar home located in a less desirable school district. If you are a buyer searching for a home in a good school district, you can expect to pay more for that home.

Find More Home Loan Tips on Our Blog

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.