How much more do they have to pay for a home that feeds into a top-ranked elementary school as opposed to an average-ranked school? Nationally, try an extra $50 per square foot, on average, according to the data crunchers at Redfin.
In the Chicago area, the median price of a home near top-tier schools was $257,500, 58.5 percent higher than the median price of $162,500 for a home near an average-ranked school.
The findings are a jolt of reality for almost 1,000 consumers who plan to buy a home in the next two years and completed a Realtor.com survey in July. More than half of those potential buyers said they’d be willing to pay as much as 20 percent above their budget to buy a home within certain school boundaries. Apparently, that’s not enough to get into the best schools.
To do its calculations, Redfin compared median sale prices of similar homes in the same neighborhood but which fell within the boundaries of different elementary schools. The transactions studied were those that closed between May 1 and Aug. 31 — a time when home prices were showing recovery in most parts of the country — and were listed on local multiple listing services. Then Redfin boiled those numbers down into median sales prices per square foot.
An interesting experimental design – houses matched by neighborhood but in different school districts – and an interesting finding.
This reminds me of hearing Annette Lareau speak at the American Sociological Association meetings this past August in New York City. When she and her fellow researchers looked at how middle and upper-class families took schools into account when searching for where to live, they found that they were able to quickly eliminate most school districts as not being good enough. In contrast to the lengthy research these parents did regarding other areas of life, through word of mouth, they were able quickly learn what neighborhoods they would buy in.
Putting this all together, if there are only so many homes in the top school districts, buyers can ask for more and expect some competition among people who want to be part of the better school district.