Understanding how schools and their rankings impact home values can be a complex topic. In many ways, home values and schools are self-reinforcing: if your schools are seen as nicer, home values rise, property tax revenue grows, and schools have more funding to do great education work. Let’s look at how you can take some of the mystery out of “good” schools and “bad” schools and figure out what matters to you.

Is a School Bad or Just Underfunded?

In areas with lower home values, the property tax per home is likely to be proportionally lower as well. At the same time, that property tax (or any other tax mechanism that funds local education) will still need to support all the students who live in that neighborhood or district. This form of education funding means that some schools spend as much as $5000 less per student compared to public schools in well-funded, higher-home-cost areas. 


This leads to the question of whether schools are truly underachieving, or if they simply have fewer resources, resulting in fewer teachers with bigger classes, less opportunity to offer small high-achiever classes like honors and AP, and less funding for the enrichment programs that might develop love of learning in students.


People have various perspectives on how to close such a gap, but in general, people in the United States seem to see it as an issue that needs to be resolved, since the goal of public education is to give as many people as possible a level playing field from which to learn and achieve as adults.

Home Values in Higher Cost Neighborhoods: Evaluate School Excellence

On the other end of the spectrum, many people want a great public school education in a safe and comfortable neighborhood. If you aren’t sure why prices are quite this high in the area you want to live, take into account whether you’re also buying a spot in highly popular and excellent schools. If your schools are achieving major distinctions on your state’s school report cards for excellence, you may be paying a bit of a premium to get into those schools. 


If you have school-aged children, you may see this as well worth the cost of entry, but for those who don’t intend to use the school system during this season, looking in neighboring areas where schools aren’t quite so popular may grant you some savings. 


While it is wise to follow your own leanings when it comes to advocacy and ending education inequality, your choice for where to live is likely to be driven by individual factors: how much the premium is for great schools, how clear the challenges are in underfunded public schools in less expensive neighborhoods, and whether you will need access to schools at all during the time you live in this home. 


All that being said, your home’s value is likely to be substantially affected, so getting some information and local real estate agent insights about local schools in a few potential neighborhoods where you’d like to buy is a wise move. 

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