Whether or not you intend for your home to be an investment, it is. The school district where your home is located influences the value considerably. The foremost reason is that many potential buyers have children and the quality of education is an extremely important factor in where they are willing to move.
Parents value a good education for their children, and if the public schools are not satisfactory, many elect private schools or move to an area with better public education. The costs associated with a private school education generally run into the thousands of dollars every year.
If a home is located in a school district with an excellent track record, private school education may not be necessary, saving a family money that would otherwise be spent on education. In this case, a lot of money that would have been spent on education can be used for other purchases. High on the list for people with extra money to spend, is on the purchase of a home. This in turn creates added value for a home in an excellent public school district and increases the value of homes located there.
Let's take a look at an example: A family of four, with two children in elementary school, one child in first grade and another in third grade, have a combined 22 years of education to be concerned about. Let's say that a home that this family is interested in is located in an area where the public education is sub par. This family would feel obligated to provide a good education to their children. To do so they will need to pay private school tuition to ensure a quality education for their children. According to the Cato Institute, the average cost of private school education for first grade through twelfth grade is $3,116. Multiply that out and this family will pay $68,552 at a cost of $6,232 dollars a year for education. This dollar amount translates into a mortgage payment at 6% interest of approximately $83,000. Not only would this family have to buy a home for $83,000 less, they also would not have that money to invest for the future or to use that money for other expenses.
Another option for this family would be to move to a location where public school education is better thereby eliminating the need to send their children to private schools. By choosing this option, this family will be able to use this extra money in whatever way they see fit. Usually, a substantial portion of this money is used for the purchase of a home. For this reason, neighborhoods with better schools tend to have people with more income to spend on homes so the price of homes goes up.Buying a home is a very important decision and the implications of choosing a home that does not include being located in a great school district can severely impact the long term value.
If you are considering a move, make sure that you take into consideration whether or not the school district your next home is located in constitutes an added value to the home itself. The decision to buy in a good school district will pay dividends in the long run.
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