Jul292016

Do school ratings reflect the quality of education that warrants high real estate values?

School ratings reflect where concerned parents move with their children, not the quality of education a school provides.

school-dunceParents want to provide their children with every advantage in life. Those students with the best education generally enjoy higher wages and greater life achievement than students from school districts with low achievement scores. Parents react to inequities of our education system by shunning poor performing districts in favor of higher rated ones. Thus real estate values are higher close to better schools.

Many parents shopping for a house obsess over the school ratings. They aren’t chasing the ratings because of abstract correlations to a better life. Parents seek out these schools because they believe the quality of education is higher and the higher quality of education is what will make their child succeed. However, school ratings may not signal that the quality of education is any better.

School ratings are largely based on standardized test scores, probably the best method because it compares all schools to the same benchmark. However, school ratings often have less to do with the quality of the teachers than it does with the quality of the parenting. The more parents value education, the better their children score on standardized tests.

The activities of these parents make school ratings self-reinforcing. Once a school district obtains a high rating, it attracts other parents who greatly value education, so they bring in their children who will also score well. High ratings beget high ratings and low ratings beget low ratings as parents who value education shun poor performing districts.

School ratings only change significantly if the demographics of the school change. For example, poor performing school districts in the path of residential development generally see a significant improvement in test scores once all the high wage earners move in to new houses in the area. One example in Orange County is San Clemente. In the early 00s, the schools in San Clemente were about average, but when new developments at Talega and Marblehead added a large number of high wage earners, the school achievement scores went up considerably.pay_mortgage_or_children_rental

Were the improved test scores at San Clemente High due to a sudden improvement in the quality of education, or was it due to the sudden influx of new families concerned about education?

Does recognizing this fact change how you look at school ratings?

California Renters Pay Up to 46% More Near Top Schools

July 21, 2016, Nadia Balint

The pressure of finding a good public school and deciding whether to move to a different school district is something parents know all too well.

The big question is whether they can afford it. To help parents sort things out, we compared the average cost of rent near the best schools versus rents near low-rated schools, in 5 of California’s largest cities. And out of curiosity, we also compared home sale prices. Here’s the housing cost breakdown in these 5 cities: Los Angeles, San Francisco, San Diego, Sacramento and San Jose.

Keep in mind that the quality of schools may not be the only reason house prices and rents are higher in one area or another. This article attributes 100% of the additional cost to school performance, but that is not the case.

Los Angeles — known as a very divided city in terms of wealth distribution — registers a whopping 38% (or $617 per month) rent difference between the least desirable school districts and the wealthy neighborhoods that hold most of the top public schools. The San Diego rental market seems to be the tamest of them all, with fairly moderate rent prices and a 21% difference in rent. Sacramento, however, was the biggest surprise of our study. Though overall rent prices in Sacramento are the lowest of all the 5 cities analyzed, for a family to move from a poor school district to a top school district would involve a huge financial sacrifice, as their housing cost would increase by a staggering 46%.

California-5-Cities-Rents-Difference

Realistically, as long as my son receives education, the quality of the school district will matter to me. Actually, the quality of the school district creates a “redline” that crosses the map wherever the good school district boundaries are drawn. When my son is out of school, these lines will matter less, but even then, when considering resale value, it never hurts to be near a great school.

How much extra are you willing to pay to be in the “right” school district?

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