School Values and Housing Prices – Specifically in Albemarle County

Do better schools increase house prices? From my perspective as a Realtor in the Charlottesville area, the answer is yes. I have never had buyers tell me that they wanted to live in a bad school district; but virtually every single one – whether they have kids or not – wants to be in a good school district. Frankly, I don’t need metrics or analysis or data to support my conclusion; I know that people buying homes in Charlottesville and Albemarle want good schools.

All the data in the world isn’t going to change my opinion, either as a Realtor or as a parent, that good, quality schools matter – to our kids and to our housing values.

From The Impact of School Characteristics on House Prices: Chicago 1987-1991

For many people, an important consideration when buying a house is the quality of the local public schools. There is a general perception that, all else equal, houses in better school districts will cost more.

Our results indicate that individuals pay attention to both per-pupil expenditures and test scores when deciding where to locate. However, when purchasing a home, individuals do appear to consider the current test performance of students in the local school rather than the extent to which a community’s schools contribute to a cohort’s test performance.

So what? What happens to Albemarle County home values if:

1 – Albemarle County schools cannot trim the fat sufficiently and
2 – They have to make so many dramatic cuts?

This is an email sent by the Albemarle County Parents’ Council with five attachments that will help you get acclimated … before the public hearing tonight at 6:30.

And now the meat of the post – if I’m a homeowner in Albemarle County, what are you talking about? How much more would I pay in taxes?

Brian Wheeler has presented a post with hard numbers – numbers that put into context what an increase in property taxes would mean for you – something that has been mostly lacking from most discussions I have read.

The Albemarle County Public Schools budget is now facing catastrophic cuts if we do not find new sources of revenue. This is the result of the national economy, declining sales taxes, declining property values, a proposal to lower taxes collected in Albemarle, and significant state funding cuts for education.

… In an effort to get my head around the numbers, I have prepared the attached spreadsheet which evaluates (to the best of my ability with the data available), the impact of the different budget scenarios and what different property tax rate increases necessary to close the funding gap. (Acrobat PDF); or (Excel spreadsheet)

If you download the Excel spreadsheet, you can even plug in your own home assessments from 2009 and 2010 to measure the personal impact of adjusting the tax rate. At this point in the process, I don’t like trying to address a budget challenge by manipulating the tax rate, but I think the public deserves some factual information about the different scenarios and how that might impact their personal pocketbooks. At this point, the burden has been put on local government and it has few revenue tools at its disposal. We all need to understand the cost-benefit of the status quo, the current tax rate, which in reality is a tax reduction.

In the analysis I have provided, here is the bottom line for the median household (2009 sales price) in Albemarle.

– With the worst case state funding scenario (new reductions of $9 million), a property tax rate of 86.5 cents would fund Dr. Moran’s budget with only Tier 1 cuts implemented. That rate would increase ANNUAL tax payments by $272.08 for the median priced home when compared to 2009.

– In the best case state funding scenario, a property tax rate of 81.9 cents would balance the budget and increase ANNUAL tax payments by $146.19 for the median priced home when compared to 2009.

This discussion at the Daily Progress was pretty informative.

* Thank you to Deedstreet for pointing me to the below-referenced study.

The quality of local public schools is widely believed to be a key determinant of housing prices.1 However, the strength of the consensus is puzzling, given the formidable empirical challenges facing any homeowner or empirical researcher seeking to answer the question carefully.2 First, good schools usually come bundled with other neighborhood qualities– such as proximity to employment, shopping and recreational conveniences and neighborhood peers. Because the homebuyers who enjoy (and can afford) such amenities tend to congregate together, it is difficult to isolate the effect of schools from the effect of these other traits that accompany good schools. Second, it is difficult to disentangle the valuation of the schools themselves (school facilities, curriculum, teachers and principals) from the valuation of the quality of peers available at the school. Common measures of school quality (such as test scores) typically reflect both the quality of the education being offered and the characteristics of the incoming students.3 It is unclear whether homebuyers are paying for quality schools or quality classmates
for their children.

Google Rocks.

Personally, I’d feel a lot better about all of this if I trusted the government. (I’m surprised you made it to the bottom of the post)

Cross-posted at RealCrozetVA.

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