Living near just one high-performing elementary school nearly doubles the value of your home, according to a new study. That helps existing homeowners, but shuts out many buyers with average incomes trying to get their children a better education.
In zip codes with at least one good school, the median home price was $411,573, or 95 percent higher than the median price of $210,662 in areas without good schools, according to a new analysis by RealtyTrac. In nearly two-thirds of the good school districts, the average wage earner must spend more than a third of their income to buy a median-priced home.
The Los Angeles metro area had the most expensive zip codes with good schools at 183, followed by New York at 158 and San Francisco at 77.
Chicago topped the city list with the most affordable zip codes with good schools at 172. Other metro areas with the most reasonably-priced neighborhoods with good schools included Detroit (45), Phoenix (22), and Miami (20).
“Schools can make a huge difference in terms of where people move and relocate in certain regions,” says Scott Wilkinson, Scott Wilkinson, president and CEO of Wilkinson ERA Real Estate in Charlotte, North Carolina. “Because Charlotte is located on the border, we see people who will move into counties in North Carolina or South Carolina, specifically for the school systems.”
For those worried about affordability, Wilkinson recommends checking out all schooling options in an area, such as private or parochial schools along with public schools. Families that prioritize school district over all other factors also could consider buying a smaller home, townhouse or condo in the pricier districts, he says.
Putting down a larger down payment can also reduce the monthly mortgage payment by hundreds of dollars.
The RealtyTrac study looked at test scores from 27,000 elementary schools and defined “good” as those that scored above the state average. A zip code was considered unaffordable if an average wage-earner had to spend more than 33 percent of their income to pay the mortgage payment on a median-priced home. The analysis assumed a 10-percent down payment and a 3.8 percent mortgage rate. It did not factor in property tax rates, which tend to be higher in better districts.