Minneapolis Star Tribune Home Section
October 2005
--reprint rights available two weeks after publication
By Jason Amundsen
Special to the Star Tribune
Before Frank and Jill Roffers moved from their south Minneapolis
home
this year, they embarked on a targeted search. The main
criterion: excellent schools for their children, aged 2 and 3. They
found that, plus a house they liked, in Edina.
"We ended up paying a premium for the things that are important
to us," said Jill Roffers.Families like the Roffers are discovering
an unwritten law of residential real state: the better the school
district, the higher the home prices.
"The old real estate law was 'location, location, location'....One
might change it to be 'schools, schools, schools,'" said David
Weimer, Professor of Public Affairs at the University of Wisconsin-
Madison who has studied the correlation between home prices
and school performance. hether it's school quality that drives
home values or home values that drive school quality is subject to
debate.
Higher-income families gravitate to more expensive housing close
to better schools. But when that happens, it makes the job of
poorly-performing schools even more difficult as they end up with
a higher number of children from poorer families and a host of
urban problems that some middle-class parents don't want to
deal with.
Weimer says his research, which controls for the fraction of
students from poor families in each school, shows that school test
scores do affect home prices. In a paper based on data from New
York state and published in 2001, Weimer found that homes
served by elementary schools with higher test scores had
substantially higher sale prices. Specifically, he found that a one
percent increase in fourth-grade state test results translated to a
1.5 to 4.5 percent increase in home value.
While corresponding numbers aren't available for the Twin Cities,
realtors say they see the same pattern here. Chad Lashinski, a
Realtor with Keller Williams in Coon Rapids, compared two
neighboring school districts to illustrate the difference.
District 11, covering Andover and Ham Lake, for example, has a
great reputation for schools. Homes start in the $400,000's, said
Lashinski. Neighboring District 15 serving East Bethel, St.
Francis, and Oak Grove does not have the same strong
reputation for schools, according to Lashinski, and most of the
homes there start in the high $200,000's and low $300,000's.
In District 15, "the market time is an additional three to four
weeks. And you get a lower price for the home," Lashinski said.
Of course, other forces come into play when deciding where to
buy, such as affordability and where people work. But
increasingly, in addition
to calculating commute times, home buyers are researching
school districts to figure out where they want to live.
"Ninety percent of my clients come very educated on the topic,"
said Realtor David McIntosh, also out of the Keller Williams office
in Coon Rapids. "If you're in an area where families don't want to
live, it reduces the marketability of the property."
The rental market shows similar trends. Because renters are
often people without kids, "less than five percent of our clients
ever bring up schools," said Stacey Neameyer, a District Manager
with RelocationCentral. "But for those who do, it's very important
to them. They're willing to spend top dollar to rent in the school
districts they've researched. Those customers are typically
relocating from out of state," she said.
Owners of rental property in strong school districts can and do
command higher rent. According to Neameyer, in well regarded
districts renters pay $50.00 to $100.00 more per unit, per month
than similar units elsewhere.
But as investment, does it make sense to purchase a home in
strong school district? "Not necessarily," was the response from
Steve Mooney, Professor of Real Estate at St. Cloud State
University. "One's return overall wouldn't be higher because
people have paid more going in."Home buyers looking for a good
investment should look for a school district that, for whatever
reason, appears likely to get better.
"If you thought a school district was going to improve, that would
be the place to buy," said the University of Wisconsin-Madison's
Weimer. "As a parent you have an incentive to improve your
district, not only for the sake of your kids. If you're successful,
you'll also increase your property value."
Of course, the quality of schools isn't determined by rankings
alone. Parents have many things to look for when selecting a
district, said Chris Holden, Principal of Robbinsdale Middle
School. These include a safe environment, a place where a child
feels academically challenged, active parent organizations and
opportunities for parents to volunteer at school.
"Test scores tell part of the story, but many of these intangibles
are more important that test scores and report card stars,"
Holden said.Even as relocating families continue to push up
home prices in the best school districts, some are finding
themselves priced out of the race.
The Lessard family is one example. Kelsey and Rich Lessard
have two children, aged 1 and 4. Minneapolis residents, they like
their house, but are less enamored with the quality of schools
nearby.
Rich is an engineer with General Electric and Kelsey does
freelance work for a consumer research firm. But even with two
incomes, the Lessards are realizing they cannot afford to move to
a better school district. "We'd like to live in Roseville or White
Bear Lake but our finances don't support it," she said.
