Wisdom from The Action Wisdom In Action

Should You Spend More For Your House to Get Better Schools?

From Fox Business News.

"If you ask Deanne Anderson what a top school is worth, she's got a specific answer: 25 percent of your home's value."

...

"This seemingly subtle difference in school districts has a dramatic impact on home prices, says Anderson, who works for Coldwell Banker in La Cañada. Homes in the Sagebrush area sell for about $100 less a square foot than those in the La Cañada school district."

...

"housing prices in the A-rated districts immediately jumped 10 percent over those in areas where the schools were good, but not great--in other words, where the schools received B or even B+ grades. When schools proved consistently better over time, the price difference got wider.

In fact, Figlio's research confirms Anderson's evaluation almost to the percentage point. He says a consistently top district commands a 23 percent premium in housing prices over homes in even B+ school districts. While housing prices may rise and fall, this cost differential remains, and Realtors say houses in top school districts sell faster, too. But watch out if there's any chance that the schools will deteriorate or re-zone, says Figlio.

"Schools are an asset," he says. "Even people who don't have kids are willing to pay more for houses in a good school district because they know that when they sell, they are going to be able to sell for more."

...

"At today's mortgage rates, you'd be better off spending an extra $75,000 per child on a house with access to good public schools than on even a relatively inexpensive private parochial school.

If you'd send your kids to the pricier non-sectarian schools, boost that figure by $100,000, he says. In reality, private schools would cost you more than $225,000. But Wilson figured you'd pay more for property taxes and insurance with the more expensive home too, so he factored that in for his apples-to-apples comparison."

Okay, I have questions:

1. Is "school score" another intangible that supposedly adds to the perceived value of the house, like neighborhood and ambience?

2. Should people who have no kids (or no kids left at home) even take this into consideration?

3. At the rate in which people move around (more frequently as the housing market sinks), is it even worth the effort to seek out the best school districts and pay more for what amounts to a short-term rental from the bank?

4. Does any of this even take into consideration that school districts can be improved by the people already living in it?

5. What's the point of spending more money when your job outlook is shaky, and the prospect of selling is even shakier?

Instead of spending more money for so-called "better schools", why not work to better the schools you live near RIGHT NOW? This amounts to throwing money at a school problem, and is equivalent to throwing money at a perceived "global warming" problem by buying a hybrid car. It's still a car that takes oil to produce, rare earths to produce, and takes oil to run...not to mention coal in the form of electricity.

What's the point of seeking out better school districts when you know you aren't going to live there for very long? Your money is going to real estate commissions when you sell anyway--the real estate agent will pass on this intangible benefit to the next buyer, getting a higher price (and higher commission) along the way. The house itself hasn't changed, and neither has the school district. Only the perception of value (aided by the agent and his/her "intangibles") has changed.

Can you say M-A-R-K-E-T-I-N-G?

I'm buying a HOUSE, not a school district! That extra money for better districts only ends up in the seller's, agent's, and eventually, the tax collector's pocket, instead of going to improving my own property and its TRUE worth.

Unless you're buying the house when the kids are young (or not even born yet), and plan to stay there until they graduate and go to college, NO IT ISN'T WORTH THE EXTRA MONEY. Living in a "good" school district for a few years out of a kid's life isn't going to help the kid or your wallet...which leads me to another question: how long should you stay in and continue to pay for that "better district" when your own kids are grown and gone, and you have no further use of the "good" school district? Who can afford to buy your house THEN?

Posted by Cute at 7:51 PM

Labels: economy, financial (non-tax)