I think most people know that good schools benefit the housing market and home prices in that district by creating more demand for homes in the district. This demand contributes to a healthy market and, the ultimate hope of most home owners, appreciating home prices that yield a good return on the investment over time. Conversely, the opposite is generally believed to be true as well that a poor school district has a negative effect on the housing market and home prices within that district.
How much effect does a school district have on home prices, whether a good district or bad?
To address this, I first went to SchoolDigger.com to find school district rankings for St Louis area districts. I then chose the five districts that were ranked highest and the five ranked the lowest, which are:
- Highest Ranked-
- Lindbergh (3)
- Clayton (6)
- Brentwood (11)
- Kirkwood (12)
- Rockwood (14)
- Lowest Ranked-
- Riverview (502)
- St Louis City (497)
- Normandy (495)
- Ferguson-Florissant (464)
- Ritenour (458)
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Next, I pulled the median prices homes sold for over the past 10 years from the grouped of best ranked school districts and compared them with the median home prices for for worst ranked districts and found, as the charts below show, the following:
- In the best school districts, the median price of homes sold in 2004 was $247,000 and in 2014 was $262,250, for an increase of 6.1% over the 10-year period.
- In the worst school districts, the median price of homes sold in 2004 was $86,000 and in 2014 was $84,000, for a decrease of 2.3% of the 10-year period.
While the 10-year price change data above clearly shows the impact of school districts on home prices, when I looked at the change over that period in home prices from the peak, during the real estate boom, to the trough, when home prices hit bottom, I saw just how much stability a good school district adds to home prices and how much more volatile home prices in poor school districts are:
- In the best school districts, the peak in home prices was in 2007 when prices hit $265,450 and the trough came in 2009 when prices fell to the 10-year low of $235,000, for a peak to trough decline of 11.5%.
- In the worst school districts, the peak in home prices was in 2006 when prices hit $100,000 and the trough came in 2011 when prices fell to the 10-year low of $43,000, for a peak to trough decline of 57%.
Best School Districts 10 Year Chart of Median Home Prices
Worst School Districts 10 Year Chart of Median Home Prices
Best School Districts – Peak to Trough Home Prices
Worst School Districts – Peak to Trough Home Prices
