House hunting comes with a whole host of decisions. The process can be fun, exhausting, stressful and time consuming. Most house shoppers who are also parents will tell you: when it comes to picking which property they want to call home, the school ratings matter a great deal. But in reality, the school district and rating of the schools in your neighborhood matter whether or not you have children.

There is actually a relationship between property values and school ratings and what home buyers are willing to pay as a premium for a home in a top-rated school district. Many homebuyers will tailor their home search to a specific school district, specific schools or schools in a particular area.

The purpose of school ratings is to assist families in making informed decisions. However, the quality of schools in a neighborhood stretches past those who will actually use them. What do school ratings really mean—and how do they impact the affordability of a home whether or not you have school aged kids?


How Are Schools Rated?

Most school rating sites base their school rankings on:

  • Student progress, which measures whether students at a school are making academic progress over time
  • College readiness, which measures how well schools prepare students for success in college
  • Equity rating, which measures how well schools serve disadvantaged student groups
  • Test scores

Although these rating sites certainly provide a convenient snapshot of a surrounding school district for a potential home, they do only provide one data point. Consider contacting and visiting the school in the area and talking to the administrators and staff to get to know more about the schools themselves. There are many good schools that unfortunately do not rank particularly high on some of these sites.


Benefits of Choosing a Home in a Good District


Here are some of the benefits of choosing a home in a good school district, whether or not you have children:


  1. Great schools make for an easier sell

Although this may be the right home for you now, you might consider a move in the future. Your next buyer may have children or grandchildren and be in the market for a neighborhood that offers great atmosphere and schools. Always consider your future needs as well as your current desires.


  1. Good school districts usually mean good neighborhoods

Often there is a correlation between super school districts and safer neighborhoods, better shopping and transportation and great public amenities – like parks. All of these factors increase the desirability of the neighborhood, which translates to higher home values and a better deal for you when it’s time to sell.


  1. More money spent on schools equals more money spent on homes

There is a correlation between school expenditures and home values in any given neighborhood. For every dollar spent on public schools in a community, home values increased $20.


  1. Higher school ratings raises and maintains home values

While changes in the economic landscape and local area can ripple across the market, a great school district can sometimes help insulate a home from market fluctuations.


Do Public Schools Affect Resale Value?

It is no surprise that real estate is about location, location, location. Even buyers without kids will often consider the quality of the local school district before buying a house. Why? They want their home to increase in value after they buy it, and a good school district boosts home prices.

High-ranking school districts have been increasingly hitting the top of home buyer’s wish lists. Schools are not the only factor affecting home prices—safety, commute times, jobs and housing inventory all play a part in any market. But a good home in a good school district will garner a higher price, and also hold a better resale value than a similar home in a lower rated district. In addition, a good school district attracts buyers and can lead to increased demand for homes in a certain neighborhood.

Parents and couples who plan to become parents will be particularly attracted to the area because they want their kids to be able to attend a high-ranking school and receive a good education. When buying, most people are not buying just the house; they are buying a community and what it has to offer and schools play a big part in that. If it is a top school system, people are willing to pay a little extra to get into that area.


So What Does This All Mean?

In the end, though, it is hard to deny that there is strong consumer demand for good schools. Demand drives prices higher for a limited product like real estate. We probably cannot pinpoint exactly how much that demand has on home prices, because the market is so complex and every home buyer’s decision weighs so many different factors.

Clearly, though, consumer demand is large enough that we can conclude that good schools do increase home values in some measure. Half of the home-buying population is willing to pay more than their intended budget to get into the right school district, and more than half would give up other amenities. Making a decision on buying a home should definitely include an analysis of the school district, even for buyers who do not intend to send children to those schools. Good schools provide stability for a community, and that is good for the property values of everyone who lives nearby.