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Consumers are willing to sacrice certain things to live in the right <br />school district. Some of the beta.realtor.comsurvey results were <br />surprising: One out of ve buyers would give up a bedroom or a <br />garage for a better school. One out of three would purchase a smaller <br />home to wind up in the right district. <br />Buyers are also willing to put their money where their mouths are. One <br />out of ve home buyers said they would pay six to 10 percent above <br />their budget for the right school. One out of 10 would double that to <br />20 percent. Considering that premium could approach $100,000 in a <br />lot of markets, it makes you wonder: How much investment in a <br />school district is appropriate? <br />Do School Districts Inuence Home Prices or Vice Versa? <br />Conversations about schools and their effect on a home’s value are <br />often of the “chicken or the egg” variety. Homes in the best school <br />districts, on average, sell for higher prices than similar homes in less- <br />popular school districts. A simple analysis might say that good <br />schools are wholly responsible for this added value. <br />At the same time, on average, more auent home owners live in more <br />sought-after school districts. Statistics often show that for large <br />sample sizes, the more auence there is in a community, the higher <br />test scores will be in that same community. Test scores are just one <br />measure of “good schools,” but they’re a highly quoted measure. <br />There can be a self-reinforcing mechanism here that might <br />overemphasize the effect of the school itself on the prices of those <br />homes. One might even hypothesize that the high home prices make <br />the schools better. <br />Consumer Demand Shows Clear Connection <br />In the end, though, it’s hard to deny that there is strong consumer <br />demand for good schools. Demand drives prices higher for a limited <br />product like real estate. We probably can’t pinpoint exactly how much <br />that demand has on home prices, because the market is so complex <br />and every home buyer’s decision weighs so many different factors. <br />Clearly, though, consumer demand is large enough that we can <br />conclude that good schools do increase home values in some <br />measure. Half of the home-buying population is willing to pay more <br />than their intended budget to get into the right school district, and <br />more than half would give up other amenities. Making a decision on <br />buying a home should denitely include an analysis of the school <br />district, even for buyers who don’t intend to send children to those <br />schools. Good schools provide stability for a community, and that’s <br />good for the property values of everyone who lives nearby. <br />buying a home should denitely include an analysis of the school <br />district, even for buyers who don’t intend to send children to those <br />schools. Good schools provide stability for a community, and that’s <br />good for the property values of everyone who lives nearby.