How School Districts Impact Real Estate Values
It is "Back to School" time and if your newsfeed has been like ours it has been full of cute "Back to School" pictures. In light of school starting back, I thought it would be a good time to take a look at how school district's impact housing values in real estate.
"Location, Location, Location"- it is what you always hear in real estate. This is because real estate is fixed and immovable. The school district in which your property is located has an impact on its value. Ask any real estate agent and they will tell you how important the school district is when they are selling or looking for properties for buyers. One of the first questions asked will be about the school district in which the property located.
To illustrate the impact of school districts on real estate values, we took a look at the unique development of Providence Village in Denton County in two separate school districts. Providence Village began as a Master Planned Development that developed in an unincorporated area in Denton County along Hwy 380. This is area is located at the outer edges of Aubrey ISD and Denton ISD. Providence Village is now an incorporated town with a population of 4,786 per US Census 2010. In the master planned community of Providence Village all homes are of Cape Cod or Craftsman style architecture. The community has a home owners association and amenities include a Club House, 2 Waterparks, Parks, Playgrounds, 2 Dog Parks, Greenbelt and a 25 acre lake. It is a homogeneous development with homes of similar age, design and market appeal, which is why it makes a good study of how school district impact the values of homes. We decided to look at all homes in Providence with living area (gla) between 1,800 - 2,200 sq ft. Here is a map of all sales that fall into these parameters:
The homes to the north are located in the Aubrey Independent School District and the homes located to the south are located in the Denton Independent School District. As you can see here:
In researching sales within the past 12 months in the Aubrey ISD there are 40 sales of homes with gla between 1,800 and 2,200 sq ft. The mean sale price is $180,015 and the median sale price is $178,500.
When only changing the search parameters to Denton ISD the results are 38 sales and the mean price is $171,138 and the median price is $170,000.
When we look at values we always want to compare apples to apples to see the market reaction. In this case the only difference for these homes was the school district they were located in. The homes located in the Aubrey ISD sold for $8,500 more than homes located in Denton ISD, which is a 5% increase. For this small section of the market, there was a market reaction for differences in school districts. Buyers and Sellers were willing to pay about 5% more to be located in the Aubrey ISD rather than the Denton ISD this past year.
Here are a couple of things to keep in mind regarding school districts and markets:
Markets are Not Stagnant They are constantly changing. There are four sources that impact value: Economic, Social, Governmental and Environmental. As seen this week in the wild stock market fluctuations which is an economic force, all of these factors change. One of the forces impacting this current development is the North Dallas Tollway Extension up to Hwy 380 where this development is located making for an easier commute into DFW. There is also new job growth in North Texas that has created a demand for housing. These forces have been positive for Providence Village. One future change that may impact the market reaction of school districts is the current construction that is underway for a new High School for the Denton ISD residents. The new high school is being built right by this development along Hwy 380 by Navo Road. Currently the Denton ISD students located in Providence Village attend Ryan High School which is about 22 minutes from Providence. In contrast Aubrey High School is only located about 10 minutes from Providence Village. Once the new high school is completed this may impact homes located in Denton ISD favorably.
School Districts & Real Estate Taxes The better the school district, the higher the values, the higher the property taxes will be. Therefore, some buyers may not desire to live in a more desirable school district , particularly if they are retired and would not have children in the school district. In this situation, if the school district improves, home values will be higher thus increasing the amount of tax each year. This might be a time to sell and relocate to an area where property taxes are not as high. In regards to the Providence Village community there are many starter homes and many families are located in this area, thus the school district is deemed important.
Appeal of Different School Districts Buyers look to different school districts for different reasons. For some the appeal of a smaller school district with a small student to teacher ratio is appealing. In these school students may receive more individual attention and can participate in multiple activities. For others, larger school districts are more appealing as they offer bigger programs or offer programs that may not be offered in smaller districts. In the case of our Aubrey ISD vs Denton ISD, Aubrey is a smaller school district which has only one high school in the entire school district whereas Denton ISD is much larger with three high schools with ,as mentioned, the 4th high school under construction. Of course the school performance rankings from the state are a consideration. For the state of Texas the rankings are accessible from the Texas Education Agency Website. Additional considerations are the athletic programs, music programs, art programs, STEM (science , technology, engineering, mathematics) programs, special need/gifted talented programs.
If you have kids that are already back to school I hope that it has been a great start to the school year. I hope this illustration helps in understanding how school districts can impact the value of real estate. As always, please comment or let me know if you have any questions.
Here are some additional resources that you mind find helpful:
How Schools Can Impact Home Prices - Bill Gassett, Maximum Exposure Real Estate
Field Guide to Schools and the Home Buying Decision - National Associations of Realtors
*All data is from the NTREIS database which is considered to be reliable but not guaranteed.
Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use. This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. If you’d like to obtain additional information or order an appraisal for your specific needs, please contact us at www.dwslaterco.com.