“How are the schools?” is a question that can have different meanings for those looking to buy or sell homes. On one hand, this question could be referring to whether the local schools are in high-performing school districts. This is an essential consideration for homebuyers with school-aged children.
On the other hand, this question could imply that a homeowner wants to know how the schools in the local neighborhood affect their home valuation. Schools can have a tremendous impact on homes in the local area.
This article explores how vital schools are in the home buying and selling process and how inequalities arise in the educational system based on property values.
Why Home Buyers Should Learn About School Districts
It is so easy to become fascinated by how a house looks that it distracts from much more critical factors with buying a house. Buying a home can be a very emotional experience, especially for new home buyers.
Not only will you experience emotions based on the aesthetic beauty of the house, but you may also experience other intense emotions such as fear, stress, sadness, and frustration from the buying process. The most recent seller’s market has been emotional for many home buyers.
With so little inventory in the current selling market, potential buyers are devastated when they can’t purchase the home they want due to high competition.
While home buying can be a very emotional experience, home buyers may do better to keep their emotions in check throughout, especially during the decision-making process. This will allow them to pay close attention to issues that could become problematic after the purchase.
One significant factor home buyers should keep in mind when buying a home is the importance of the local school district. This is essential to remember, especially if you are a home buyer with children.
In some cases, the school district may be a tremendous driving force in purchasing a home since schools will impact your children from grade school until high school. A recent survey by the National Association of Realtors revealed that 25 percent of home buyers consider school quality when purchasing a home.
So becoming acquainted with your local school district before buying is critical if you have school-aged children and plan to buy a new home.
High-Performing Schools and Their Effect on Property Values
Learning more about high-performing school districts shouldn’t only be something you consider for your children’s education. A potential homeowner should dig deeper and understand how these schools will affect their pockets, whether they have children or not.
Unfortunately, some homebuyers may be so thrilled with buying a home that they may not consider how the district will increase their property taxes. Keep in mind that you will purchase a home generally with a mortgage for 30 years. Although you may move before the 30 years is complete, you will still have to pay property taxes annually while in the home.
Carrying a moderately high mortgage may be comfortable. But this, coupled with high property taxes, may become unbearable, especially if taxes continue to increase over time.
Property taxes can be pretty steep depending on where you live in the U.S. Your annual property taxes could be very high depending on the city you reside in. Average national property taxes are 1.1 percent, and the home in your area could fall well below are above the national average.
For instance, homes in Hawaii, Colorado, and Alabama have some of the nation’s lowest property taxes, with Hawaii being the lowest at 0.28 percent. On the other hand, New Jersey, Illinois, and New Hampshire have some of the nation’s highest property taxes, with New Jersey being the highest at 2.49 percent. For a home that costs $300,000, this could mean a difference of $840 and $7500 per year.
You may wonder what constitutes a high-performing school district? Such schools will have excellent test scores, accelerated programs, college readiness, and substantial diversity. To have such results, school districts must attract great teachers and facilities.
Therefore, they must attract these teachers and pay for these facilities with substantial money from local property taxes. Other funds for education come from the federal and state governments. Local property taxes are assessed based on the value of the home. So, in areas where the home values are higher, homeowners put more money into the local school district.
How American Educational Systems Face Inequalities Based on Property Values
Since schools in the U.S. are based on how much the local community can put back into the school district, it’s no wonder that there are many less than stellar school districts. These low-performing school districts don’t have the funding wealthier neighborhoods have to hire great teachers and build high-quality facilities.
As a result, homes in these communities don’t benefit from higher property values. Most of these properties with lower values tend to be in non-white communities. Thus, creating the inequalities within schools that exist throughout the country. Unfortunately, this creates a cycle that is inextricably tied to property taxes.
On a brighter note, there is a significant benefit to homes in neighborhoods where the property values aren’t as high due to high-performing schools. These neighborhoods are ideal for home buyers who are on fixed incomes or earning lower wages.
They won’t have higher home values, which leads to higher mortgages. Nor will they have to pay higher property taxes for the local higher-performing schools. This provides affordable housing solutions for people with such financial circumstances.
Disparities still exist in the educational system along property tax lines. While these issues will still need to be addressed by politicians, knowing this information when searching for a home will give a homebuyer a better picture of the true costs of a home.
It is also essential to know this information during the selling process so that home sellers will know how to price their homes and how much value their local school district may add to their bottom line. The school district could be a key selling point when listing your home as long as you aren’t biased in presenting this information.
Having an agent provide the names of your local schools in your listing should be enough to allow potential homeowners to research the school’s quality.