Question

The quality of the school district can affect house prices in that district. If this is true, then what observation should we make? Provide examples.

Answer 1

SCHOOL DISTRICT AND HOME VALUES

Although many variables can influence surplus value of a property (such as services, green areas and shopping areas), many families in the United States choose their next home based on location and school district quality.

Many empirical studies affirm a significant correlation between the value of houses and school performance in that district. In this case, the cost of the property tends to be higher in areas where a highly qualified school is located. In the same way, thanks to the high demand, the houses in these areas sell fast, compared to other areas.

School standardized score is often use as a signal of school quality. However, the size of the district or proximity of schools from neighboring districts could have an impact on the school score. Other data that can help to evaluate the school are completion rates and student-teacher ratio.

Although this is very positive for homeowners near these areas and for that particular community, it is a challenge for families who want to change neighborhoods and / or want to benefit from a good education. It is important to mention that the differences between home prices can contribute to educational disparity and the creation of segregated schools and urban areas. Educational disparity can also affect, in the long run, to income level disparities, poverty and even delinquency.