Do School Districts Make a Financial Difference When Buying a House?

Happy family is taking keys from their new house from broker and smiling.
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There’s so much to think about when choosing a home to buy: location, floor plan, property taxes, whether you’ll have any nosy neighbors poking around. If you have children, choosing a home in a reputable school district might also be at the top of the list. It is for 53% of buyers with kids, according to a 2019 report from the National Association of Realtors

See: Explore the Cost of Education in the United States
Find Out: Can You Afford Education in America at These Prices?

But you might not realize that whether or not you’re a parent, school districts can play a major role in your homebuying decision. Here’s what you should know about how school districts affect your finances when buying a house.

Quality School District = Higher Costs

“As both a realtor and real estate investor, I can tell you firsthand that the quality of a school district impacts the homebuying costs,” said Amanda Moore, a realtor at Perfect Valley Homes. She explained that in a good school district, education-related ballot measures are often unanimously passed, resulting in higher property taxes. “Additionally, the actual price of houses located within preferred districts is elevated, simply due to the demand,” she added.

Building Wealth

In fact, analysis by Realtor.com found that homes in higher-rated public school districts are, on average, 49% more expensive than the national median and 77% more expensive than ones in lower-ranked districts.

Read More: Families Vastly Underestimate College Costs, Study Shows

Pros and Cons of Buying in a Good School District

Buying in a highly ranked school district has benefits beyond Junior’s education. 

“A home in a good district is most likely to hold and increase in value,” said Tanya Gradet, a real estate agent with Avenue 8. “The process of selling your house in an area with a good district is usually faster too.”

See: Is the Cost of an Elite Preschool Worth It? Experts Weigh In

But there are plenty of disadvantages, too. A big one: You get less house for your money. You either have to settle for a less expensive home — and maybe give up a couple of your must-haves — or take on a bigger loan. That could also mean paying a slightly higher interest rate due to the increased risk, which translates to tens of thousands of dollars over a 15- or 30-year mortgage.

Also consider that homes in the district retain their value as long as scores stay high. Gradet noted that school scores can change, and with them, so can home values.

Plus, high-scoring schools are often invested in keeping their high rankings, “which may not always translate to the best education for your particular child if your child does not fit a typical academic mold,” Gradet said.

Discover: How Coronavirus Revealed America Is Failing Children — and Parents

Should You Consider a Lower-Scoring District?

Sure, you want the best for your kids. However, high ratings don’t always translate to a better education. 

“The problem is that people who are house hunting based on schools are often just looking at scores they’re seeing on whatever real estate search site they’re using, but these scores do not tell a complete story about the quality of the school,” Gradet said. Often, you end up paying significantly more money to be zoned for a specific school, but in reality, what makes that school score higher may not be something that actually benefits your child.

Building Wealth

“I advise all of my clients to do a deeper dive on the schools that may be lower scoring – especially if there is a house they love – because they may be pleasantly surprised,” Gradet said. “To use a poker metaphor: look at the whole hand, not just one card. School A may be better than School B — but is it $200,000+ better?”

Click To See: The Cost of College the Year You Were Born
Read: Here’s How Much Economists Say One Good Public School Teacher Is Worth

Consider some of the advantages of buying in a not-so-great school district:

  • Not only will you often get more house for your money, Gradet noted there may also be less competition for homes if you live in a hot market like Los Angeles.
  • It provides the chance to help build up a community school and add value to the neighborhood. “Parental involvement can do a lot to improve a school,” Gradet said.
  • These school zones also typically provide the potential for a more diverse experience for your children, according to Gradet. Plus, the possibility of under-enrollment means the student body is smaller and your child may end up with a smaller class size (aka more individual attention).

Ultimately, homebuyers who are concerned with school districts should worry less about broad metrics and focus on finding the best overall fit for their family. “Schools are just one factor – like pools or views – that impact a home’s value,” Gradet said. “They should be considered, but are not the end all, be all of what makes a home right for you.”

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Last updated: Aug. 13, 2021

About the Author

Casey Bond is seasoned editor and writer who has covered personal finance for more than a decade. Currently, she is a reporter for HuffPost covering money, home and living. Previously, she held editorial management roles at Student Loan Hero and GOBankingRates. Casey’s work has also appeared on Yahoo!, Business Insider, MSN, The Motley Fool, U.S. News & World Report, Forbes, TheStreet and more.

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