I was asked a simple question the other day – “Do better schools increase property value?” I can’t answer the question as asked because it’s somewhat of a “which came first, the chicken or the egg” question. Let me explain.
Looking at the Austin ISD list of school ratings, it’s clear at a glance that the most highly rated schools, the “Exemplary” schools, are located in areas where real estate prices are higher. I have confirmed this with MLS analysis, which I will share below. So, if the question were “Does it cost more to buy a home that attends an exemplary school?”, the answer is very much a “yes”.
But which came first?…the more expensive homes or the more desirable schools? In other words, do good schools affect real estate values by enhancing the desirability of a given area, or do the children of people who live in more expensive homes perform better academically, such that the school is able to achieve a higher rating? The best way to determine this will be to compare sales data with homes in the same areas that are as much alike as possible, except for the schools. Read on to see the results.
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