Does a better school really mean paying more for that three bedroom dream house on the corner? According to a recent report, the answer is a resounding yes. In fact, many homebuyers all across the country could find themselves paying more up front in order to get close to a great educational area for their children.
However, it won't just be buyers who notice the change in prices. The better a school performs, the more money sellers could get for their house based on that factor alone. Also, real estate investors might have a new strategy besides simply scanning the foreclosed houses listings - snagging up property in a great school district could produce a high return on investment.
Better scores, higher prices
According to a report by Redfin, homes near strong, well-performing schools often were considered more valuable on the market. The firm looked at many properties on Multiple Listing Services and compared sale prices with school zones. What was found is interesting - better scores meant higher home prices.
Redfin reported that schools that scored within the 90th test score percentile had a median home sale price of $400,000. By comparison, the median price for the lowest percentile was less than $200,000. However, it isn't because nice schools have bigger, better homes nearby. On the contrary, two comparable homes close to each other - yet in different school zones - could see price differences of hundreds of thousands of dollars.
For example, In Beaverton, Ore., two homes only 0.5 miles apart sold with a price difference of $43,000, Redfin noted. In San Diego, Calif., one home sold for $618,000, while a nearby property in a separate school zone sold for only $535,000 - a price difference of $83,000.
Overall, all of the information compiled by Redfin found that better schools resulted in higher home prices, even if the two properties were nearly identical in every way. That could drastically impact a person's buying strategy, especially if children are involved.
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Investors could pay attention to school zones
For many real estate investors, the strategy starts with finding cheap, affordable properties and either renting them or selling them quickly for a profit. Often, this means chasing after foreclosed houses and other distressed properties, but another unique strategy could focus on school districts.
According to investor Ken Corsini, in an article for Bigger Pockets, information similar to what Redfin reported changed his buying criteria. He explained that even though many different items factor in, school zones deserve greater consideration given how drastically they affect prices.
For instance, Corsini noted that long-term investments could benefit from locations within strong school zones. Real estate prices could be stable for a longer period of time, and potential buyers with families may be willing to pay more just for the perk of a great education.