Tempted to pay more for a house just for a better school? Consider these issues:
Do you love the school — or its test scores? Do your homework.
Will you be happy in the community? If parents don’t feel at home, it’s hard on the kids too.
Can you really afford the house? Foreclosure probably trumps the trauma of a mediocre school!
Calculate your priorities: Do your children need their own bathroom or a great teacher?
Private school tuition cannot be written off taxes, but property taxes and mortgage interest can.
Homes can be leveraged for equity lines to pay for college, so they may provide important financial support for future educational costs.
By Carol Lloyd
How do you value your child’s education?
If this sounds like a chowder-headed question to ask a group of conscientious parents, it’s worth noting that economists have been parsing this issue for decades. But they’re not in search of feel-good maxims like “My children are priceless, so educating them is of the highest value to me.”
No, we’re talking cold, hard dollars and cents. As any real estate agent worth her smartphone knows, high-performing schools and higher price per square foot seem engaged in an eternal tango. The question that vexes economists is of the chicken-and-egg variety: Do better schools lead to higher home prices or the other way around?
In many cities such calculations are hard to do without an advanced degree in statistics, but sometimes the value of public schools is starkly evident. Piedmont, Calif., a small, upscale city surrounded by economically diverse Oakland, is known for its top-rated schools. According to a recent scan of the multiple listing service, homes in Piedmont run at least $100K more than an Oakland home of the same size and quality located directly across the street.
In Cupertino, Calif., where virtually all the elementary schools rake in stratospheric scores on standardized tests, the price of run-of-the-mill ranch homes can go for several hundred thousand dollars more than those in nearby communities with mediocre schools. This premium doesn’t deter some parents: One father who moved his family so his children could attend the top-rated Stevens Creek Elementary School in Cupertino told the New Yorker he'd circled the perimeter of the school district on a map and given it to his real estate agent.
Jessica Gottleib, a mother and blogger based in Los Angeles, made a similar calculation, but it backfired. “I bought into a ‘good school’ neighborhood,” she says. “By moving just a few blocks away, we could have saved about $200,000.”
Gottleib discovered the problem with long-term bets on a school based on its past performance: You can’t control its future. After she moved her family into the new home, the high-performing neighborhood school — as Gottleib put it — “tanked.” Her children ended up in private schools. Now she cautions other parents to avoid making the same mistake: “I routinely tell moms to save their money and buy the house they love in the neighborhood they love.”
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