School Location and
Consolidation Effect on Communities and Real Estate Values
1. Links provided to Long
Range Planning Committee by Pat Cosentino
Improving Resale Value
Schools Can Effect Home Values
What Affects Home Appraisals
How Does School District Consolidation Affect Property Values?
Pros and Cons of School District Consolidation
Educational Quality, Facilities and Real Estate Value
The Impact of School District Consolidation on Housing Prices http://cpr.maxwell.syr.edu/efap/Publications/lmpact of Consolidation.pdf
School District Consolidation: The Benefits and Costs http://www.aasa.org/SchoolAdministratorArticle.aspx?id=13218
The Impact of Schools on Property Values
2. Further links regarding Schools, Real-Estate and Community found by Alan Brown
Rural School Consolidation Report
Public Schools and Economic Development: What the Research Shows
What Does a School Mean to a Community?
Have all the costs of closing a school been considered?
http://www.oecd.org/edu/innovation-education/centreforeffectivelearningenvironmentscele/48358265.pdf
Helping Johnny Walk to School
Neighborhood and School Connection: Examining the Importance of Schools on Neighborhoods, Community Development, and the Housing Market
How Much Is a Neighborhood School Worth?
Economic Role of School Districts in Rural Communities
http://www.jrre.psu.edu/articles/v4,n3,p125-130,Sederberg.pdf
7 Neighborhood Threats to Your Home's Value,
3. Excerpts from all of the sources listed above.
Improving Resale Value UNATTRIBUTED WEB ARTICLE
“It is well-established fact that being in close proximity to an excellent school can boost the value of your property.”
“Call up the local school district and see if elementary aged children always attend the school closest to their home. “
Schools Can Effect Home Values BLOG ARTICLE
“A school known for good educational programs, great test scores, good sports programs etc. will attract buyers who will want their (current or future) child/ren to attend.”
What Affects Home Appraisals EHOW CONTRIBUTOR’S ARTICLE
Proximity to services, such as shopping, hospitals and schools, also play a part in a final appraisal value.
How Does School District Consolidation Affect Property Values? ACADEMIC RESEARCH
We find that, on average, consolidation has a small negative impact on house values. However, this average impact reflects a downward trend in house values the years right after consolidation combined with a positive trend starting in the second year. After about four and a half years, house values have returned to their pre-consolidation level and then continue to increase faster than house values in comparable districts. These results suggest it takes a while either for the advantages of consolidation to 3
be
apparent or for the people who prefer consolidated districts to actually move
in. Finally, the impacts of consolidation on house values are more negative
in high-income census tracts, where parents may have a relatively large
willingness to pay for the access to teachers and other nonbudgetary advantages
of small districts.
…
Recent articles by Brasington
(2004) and Hu and Yinger (2008) explore the property value impact of
consolidation. Property value impacts raise additional issues because they may
reflect parental concerns that do not appear in school districts’ budgets, such
as parental access to teachers or the time parents and students spend getting
to school. Indeed, Brasington finds that once one controls for changes in
student test scores and property tax rates, consolidation has a negative impact
on property values.
…
First, since relatively few
districts in New York consolidate, despite generous financial incentives from
the state, districts that do consolidated are not likely to be typical even of
small districts in the state.
… the impact of consolidation
over time is heavily influenced by tract income. … These results are consistent
with the notion that high-income households continue to perceive the loss of
access to teachers associated with consolidation and indeed become more
concerned with this and related factors over time. But it is also consistent
with the related notion that high-income people gradually leave consolidated
districts—because of the loss of access and other factors—so that the demand
for housing in high-income tracts, and thus the equilibrium price, gradually
declines. 4
Pros and Cons of School District Consolidation UNIVERSITY WEBZINE ARTICLE ON ED PROFESSOR
The consolidation of school
districts has several favorable arguments, Thompson said. A larger school can
offer a wider curriculum. It can also run more efficient fiscally, as well as
have an appropriate class size. School consolidation also would alleviate the
lack of enrollment and financial concerns, he said.
…
The consolidation of school
districts has several opposing arguments, Thompson said. Residents might see a
loss of community identity if their child's school district consolidates with
another. For longtime community members, there is a loss of history because
they might have once attended that school.
…
“People will see the loss of a
school as taking a shot at the heart of the community. The old phrase, 'If the
school goes, it will be followed by the church and post office,' isn't entirely
true,” he said. “It does get, very accurately, at the notion that the school
isn't just an expense for the community; it is part of the heart of the
community and it is a financial benefit, even though people like to complain
about taxes.
“It does get reduced in the
end to dollars, but one of the difficulties in Kansas today is that we are so
focused on money that we're not paying attention and celebrating the other good
things about schools and communities, like student academic achievement and
social benefits of education,” he
said.
“Most school districts will try
as long as possible to avoid consolidation,”
Thompson said. Communities might try to attract new residents, attempt cost-cutting measures or suggest a tax increase.”
Thompson said. Communities might try to attract new residents, attempt cost-cutting measures or suggest a tax increase.”
Educational Quality, Facilities
and Real Estate Value BLOG (WITH SOURCES)
This brief summarizes research
by leading economists that show a clear property-value benefit associated with
strong neighborhood schools.
…
“if a community increases its
tax rates and employs the receipts to improve its school system, the
[statistical] coefficients indicate that the increased benefits from the
expenditure side of the budget will roughly offset (or perhaps even more than offset)
the depressive effect of the higher tax rates on local property values.”
The Impact of School District Consolidation on Housing Prices ACADEMIC RESEARCH
We find that consolidation boosted house values and rents by about 25 percent in very small school districts and that this effect declines with district enrollment, as expected based on economies of size. Consolidation has no impact on house values for districts with more than about 1700 pupils. We also find that the impact of consolidation on housing prices declines with tract income and actually is negative in the highest-income tracts.
…
School district consolidation
is no longer as common as it once was, but some states still encourage
districts to consolidate.
… 5
In
very small districts, the impact of consolidation on house values approaches 25
percent
…
It appears, therefore, that
households in very small districts would still perceive net bene¯ts from
consolidation, due both to economies of size and, perhaps, to other factors
that we cannot identify, even if consolidation did not lead to an increase in
state aid.
…
We find that consolidation has
a large positive impact on house values and rents in low-income tracts, but a
large negative impact in high-income tracts. Overall, consolidation appears to
be popular with the average household in small rural school districts, but
judging by its impact on housing prices, it is not popular with high-income
households anywhere in rural New York.
School District Consolidation: The Benefits and Costs ACADEMIC ARTICLE
… students may be
more motivated and parents may find it more comfortable to interact with teachers
in smaller districts, which tend to have a greater community feel. These
reactions and closer student-faculty relationships may result in higher student
performance at any given spending level.
…
To some degree,
consolidation may break parents’ valued connections with existing schools,
result in higher transportation costs for parents and students, or raise costs
for improving school outcomes other than the test score measures included in
existing studies.
Because
consolidation requires the consent of voters in all the consolidating
districts, consolidation will not take place unless a majority of voters
perceive the net benefits outweigh the costs. Nevertheless, the net benefits of
consolidation to voters still could be far below the cost savings to the
districts themselves.
…
Second, the
impact of consolidation on housing prices declines as house value and rent
increase and is actually negative in the wealthiest neighborhoods.
...
…consolidation
appears to have significant effects beyond cost savings for school districts.
On the one hand, households, particularly those with high incomes, appear to
value the features of smaller districts, such as better access to teachers and
lower transportation costs. From society’s point of view, therefore, the cost
savings from consolidation are offset to some degree by the losses households
experience outside the school budget. These losses do not eliminate the case
for consolidation, but they do indicate the case for consolidation is stronger
when a district has 500 or 1,000 pupils than when it has 1,500 pupils.
The Impact of Schools on Property Values OVERVIEW AND CITATIONS OF ACADEMIC RESEARCH
The quality of the local public
school system is a crucial determinant of the demand for housing in a
neighborhood.
…
It would seem intuitive that
the closer a property is to a school the more desirable the property would be
to families with children served by these schools. The benefits valued by
parents relate either directly or indirectly to accessibility to the school
(most apparent in terms of the safety of and time spent by 6
children
commuting to school). This increase in desirability could result in increased
value of the property relative to similar properties at greater distances to
the school.
…
• Bogart & Cromwell (2000)
showed that school redistricting, including some school closures that led to
busing of some school children, in Shaker Heights, Ohio in 1987 led to
disrupting neighborhood schools which reduced property values by 9.9 percent.
• Colwell & Guntermann
(1984) measure the relation between housing values and proximity to a school
and calculate the financial impact of closing a neighborhood school. The
perceived benefits of a neighborhood elementary school are capitalized into
residential property values. The study showed that school closing will lower
property values and the author estimated the value of neighborhood school
through the difference between the before and after values of the neighborhood.
• A study by Beta
Biostatistics, Inc (2007) looked at the relationship between proximity to
schools in the Oshkosh Region and the sale prices of properties recently sold
in the area. The study shows that there is a significant relationship between a
residential property’s proximity to public schools and the property’s value as
predicted by sales prices. The further a property is away from the schools, the
less value a property might have.
• Kwame, Espey & Huiyan
(2007) argue that the impact of school proximity appears to be as significant
in terms of property values as school quality is, with close proximity
generally making a positive contribution to property values while greater than
average distance from schools correlates with significantly lower property
values. Moreover, Kwame & Espey (1993) study of the impact of school
quality on property values within the city limits of Greenville, SC suggests
that greater distance to assigned K-12 schools has a negative impact on the
value of the property. For assigned elementary schools, housing values within
2640 feet (quarter of a mile) were 18 percent higher than those beyond 10560
feet (two miles). Schools between 2640 and 5280 feet were 17 percent higher
than those beyond 10560 feet. Schools between 5280 and 10560 feet were 7
percent higher in value. Assigned middle schools within 10560 feet sold for 16
percent higher than those beyond the 10560 foot range. Assigned high schools
within 10560 feet sold for 12 percent higher than those beyond 10560 foot
range. Also, the results suggest that those who choose to live within the city
limits of the study pay a premium to live in high quality school attendance
areas.
Rural School Consolidation
Report ACADEMIC REPORT WITH SOURCES
Rural communities should make
every possible effort to maintain a physical school presence, and rural
community and school leaders should take into account every possible variable
to decide if “two are better than one.”
The relationship of the public
school to the community and the role of the school in sustaining the community
have also been a concern for those opposed to consolidation efforts. Ilvento
(1990) says that the public school is important to the rural community both
socially and economically. Socially, schools in rural areas tend to be the only
source of social activity. Economically, the school many times is the largest
employer in a rural community. The school can also be the focus of many
community activities as well as school activities. Ilvento stresses the
importance of connecting the rural school to the community through the
curriculum, and the need for flexibility in policies to meet local needs. 7
Despite
evidence supporting the advantages of small schools, the situation for small
and rural schools continues to be a topic of concern. Declining enrollments and
budget constraints are forcing remaining rural school districts and communities
to face the possibility of consolidation.
Mary Anne Raywid concluded
that, “When viewed on a cost-per-student basis, they (small schools) are
somewhat more expensive. But when examined on the basis of the number of
students they graduate, they are less expensive than either medium-sized or
large high schools.” (1999, p.2, EDO-RC-98-8). … Therefore, “small schools help
increase the number of economically productive adults and cut government
costs.” (The Rural School and Community Trust, 2004).
The NREA realizes that in some
situations, consolidation may be inevitable, as in situations where the
population has declined to the point that a quality education cannot be
provided to all students. However, rural schools and communities should work
together to form strong partnerships, examine all possible variables, and make
well-informed decisions based on all possible data before embarking on the path
toward consolidation. Each district and each school is unique because of
location, culture or size. Before consolidation is considered, districts should
look in depth at the implications of fiscal, educational, and community
advantages and disadvantages. Consolidation should be a decision by the local
school districts. Sher (1988) wrote, “Still, there is no evidence suggesting a
compelling reason for the state to intervene by encouraging—let alone
MANDATING—such mergers.”
• The educational and financial
results of state mandated school district consolidations do not meet legislated
expectations.
• There is no “ideal” size for
schools or districts.
• “Size” does not guarantee
success – effective schools come in all sizes.
• Local school officials
should be wary of merging several smaller elementary schools, at least if the
goal is improved performance.
• After a school closure,
out migration, population decline, and neighborhood deterioration are set in
motion, and support for public education diminishes.
Public Schools and Economic
Development: What the Research Shows FOUNDATION REPORT
Much of the literature discussing the importance of small, local schools is in the context of rural areas (Wolfshohl 2003, Lyson 2002, Reynolds 2002, Dunn 2001, Pearson 2001, Boethel 2000, Drabenstott 2000, Annenberg Rural Challenge 2000, Collins 1999, Southwest Education Development Laboratory 1999, Salant and Waller 1998). This work developed in part as a response to the threat of consolidating rural schools and districts.
Dreier claims there is no
economic impact on a community when a school closes, though Slant and Waller challenge
Dreier’s “small sample size and questionable methodology.”
Karl Wolfshohl notes … in his
article “A Rural School That Works” in Progressive Farmer (2003), highlighting
the Boone County, Nebraska school district as successfully mitigating the negative
local economic impact of consolidation. When that district was formed by
consolidating the school districts of two small towns, the new district left
elementary schools in each town. It then placed the middle school in one of the
towns and the high school in the other, ensuring that neither town lost all of
its local schools. Because each town retained a local school, the positive
economic impact of local schools was preserved. 8
A
building’s quality also projects an image of the school’s value, and a poorly
maintained school can discourage students from striving for high performance
(Byron, Exeter and Mediratta 2001, Finucan 2000). Schneider finds that a
building’s “age itself should not be used as an indicator of a facility’s
impact on student performance,” as older buildings can be modernized.
What Does a School Mean to a Community? ACADEMIC RESEARCH
While consolidation advocate s can sometimes make an economic argument for merging districts and closing schools, they have not been able to marshal evidence to show that educational quality improves as scale increases. In addition to the detrimental effects on educational quality and student performance, school consolidation also has deleterious effects on small rural communities (Peshkin. 1982), Sell and Leistritz (1996), for example, note, "The impact of school consolidation on students is immediate, or nearly so: however, the impacts of consolidation on the respective communities - socially and economically – may take place over several years" (p. 1). Rural communities serve as trade and service centers for local populations. They also serve as places that nurture participation in civic and social affairs and as such can be viewed as nodes that anchor people to place. And as many commentators have noted, schools, churches, volunteer fire departments, post offices, and other civic institutions serve to solidify and define community boundaries. (Loomis & Beegle, 1957; Lyson. in press).
Of all civic instistutions
in a village, however, the school serves the broadest constituency. Not only do
schools meet the educational needs of a community and may be a source of
employment for village residents, the local school also provides social,
cultural and recreational opportunities. It is a place where generations come
together and where community identity is forged (Langdon. 2000). As Fuller (1982, pp. 234-235) noted
almost 20 years ago. "To close a country school was to destroy an
institution that held the little rural community together. It was to wipe out
the one building the people of the district had in common and, in fact, to
destroy the community.”
For the smallest rural
communities, the presence of a school is associated with appreciably higher housing
values compared to similar communities without a school (Panel B). The average
value of a home in a small village with a school was $59,508 and the median
value was S57,450 in 1990. This is equivalent to the mean value of houses in
much larger rural villages. On the other hand, in small rural villages without
schools, the average house value was $47,782 and the median value was $43,500.
In larger rural communities, those with between 501 and 2500 residents, housing
values are higher in villages with schools (mean = $62.329, median = $58,450)
than in villages without schools (mean = $58,832, median = $50,400).
Why is it important to document
and quantify what a school means to small rural villages? First it is important
for policymakers, educational administrators, and local citizens to understand
that schools are vital to rural communities (see Fuller, 1982). The money that
might he saved through consolidation could be forfeited in lost taxes,
declining property values, and lost businesses. I have shown a pattern of
consistent results. For the smallest rural communities, the presence of a
school is associated with many social and economic benefits. Housing values an:
considerably higher and municipal infrastructure is more developed in small
villages with schools.
School consolidation is likely
to remain a threat to many rural communities in the coming decades. For at
least a century, rural areas in the U.S. have been marked by a profound
depopulation. In most cases, 9
rural
areas are losing economically and socially viable populations, tax bases, and
essential services such as schools and retail establishments. But there are
also cases of rural communities that are thriving and, in doing so, retaining
populations or even growing. There is a body of research that shows that in
communities where the citizenry is civically engaged, local businesses prosper,
and that these factors anchor population to place (Irwin et al, 1997). My
results show that in even the smallest rural villages in New York, schools serve
as important markers of social and economic viability and vitality.
Have all the costs of closing a school been considered? NGO/CONSULTANT REPORT
By Michael Lytton, Lytton
Consulting, August,2011
http://www.oecd.org/edu/innovation-education/centreforeffectivelearningenvironmentscele/48358265.pdf
Citing under-utilized classrooms, district officials argue that they can no longer afford to operate schools with excess capacity. A further justification might be that a building has become obsolete and beyond economical repair or upgrading. The quick-fix option is to close the school: a process euphemistically termed “shuttering.” Severely under-utilized schools are consolidated; closed facilities are either moth-balled, leased to non-public education providers, adapted to non-instructional purposes, sold, or demolished.
The current spate of closures
raises a number of issues, most of which reflect uncertainties that complicate
the task of decision makers who ponder whether shuttering facilities is the
right way to address a (hopefully temporary) budget challenge. These variables
can be framed as questions:
• Are fiscal problems related
only to current economic conditions or are they possibly a culmination of
previous financial missteps?
• Does the school system face a
long-term fiscal imbalance? If so, how long and how severe?
• Might current enrolment
declines reverse? If so, when and by how much?
• What is the threshold and
duration of excess capacity that determines when a school is financially
insupportable?
• What criteria are used to
establish that a building is obsolete and beyond repair or modernization? Note:
age alone is not sufficient.
• What options are available in
lieu of closing a school? Do they include cost savings through modernization,
or potential revenue generation from the school?
• Have all the economic
costs and community impacts of closing a school been identified and formally
evaluated by decision makers?
In the absence of definitive
answers to these questions, three points should be kept in mind: i) with
adequate maintenance, buildings can be useful almost indefinitely, ii) life-cycle
planning for schools needs to accommodate fluctuations in enrolment, evolving
curricula and changing roles in the community over time; and iii) modernization
must be a strategic plank in education reform efforts because upgraded schools
are better places for teaching and learning. …
Communities already afflicted
by lost jobs and homes will be shaken further by the closing of a neighborhood
school, particularly if the decision-making process has been acrimonious. Fallout
from strained community relations, such as eroded confidence in decision making
or withdrawn support for municipal bond measures, can affect school boards for
years.
Nevertheless, district leadership that is considering closing schools must make difficult decisions. Uncertainties and ramifications far beyond the immediate budget issue make the task enormously 10
difficult.
All costs and indirect consequences must be identified and carefully evaluated.
A full range of feasible economies and cost-avoidance options must also be
analyzed and ranked. And the community needs to be engaged as collaborative
stakeholders in the decision-making process.
Good examples are being
developed and tested in school districts as disparate as Vancouver BC,
Cleveland OH, Portland OR and Charlotte-Mecklenburg NC, to name a few. But
common to all is a thoughtful approach that recognizes and respects the
importance of schools in a community – not only as work and learning places,
but also as vibrant centers of recreation, public health and social
interaction. In these districts closing a school may be the right decision, but
it should always be a last resort.
Helping Johnny Walk to School NGO REPORT
Policy
Recommendations for Removing Barriers to Community-Centered Schools
By Renee Kuhlman, National
Trust for Historic Preservation, 2009
Demolishing and abandoning schools in existing communities decreases property values. Michigan researchers discovered that school closures resulted in decreased property tax revenues. Their analysis of Jackson, Mich., found that average home property values within a half-mile of an open, stable elementary school rose at a 3 percent higher annual rate than they did around similar neighborhoods with a closed elementary school. Researchers also studied the effects of closing an elementary school. Had the school remained open and home values had similarly increased, researchers believe the city, county, and schools would have realized almost $2 million more in property taxes from 1994 to 2003.
There is a misperception that older schools cannot be renovated for 21st century educational needs and cannot incorporate green technology. Solution: Provide technical assistance to local school officials to encourage renovation options. Disseminate case studies about the successful renovation and retrofitting of older and historic schools. (A Primer for the Renovation/Rehabilitation of Older and Historic Schools, National
Center for Preservation, Technology and Training with the Council of Education Facility Planners, International, 2004.
www.ncptt.nps.gov. www.ncptt.nps.gov.
An Appraisal Guide for Older and Historic School Facilities, Council of Education Facility Planners International.) Address reuse of older buildings in green standards for operating and construction of schools.
Neighborhood and School Connection: Examining the Importance ACADEMIC RESEARCH
of Schools on Neighborhoods,
Community Development, and the Housing Market
By Caroline Diamond, Ball
State University, May, 2013
In recent years, communities have begun to recognize the importance of community centered schools following numerous related publications. In October 2002, “Why Johnny Can’t Walk to School” was published by the National Trust for Historic Preservation. This publication outlined the dangers of the rapid growth of “super schools” on the outskirts of communities and what happens to education as a result. Numerous similar publications such as “Helping Johnny Walk to School” and “Reconnecting Schools and Neighborhoods” were published shortly after. These important works not only observed the problems outlined in “Why Johnny Can’t Walk to School,” but expanded on potential solutions to solve the issues. While some school districts have seen positive changes since then, school closings and consolidation still affect hundreds of schools today. 11
Some
communities are implementing correctional policies and seeking out alternative
solutions to school closings and seeing great success in rebuilding or
maintaining their communities, and the right policy implementations can have an
extremely positive effect on the communities they’re working to protect.
An analysis of property value
in Jackson, Michigan concluded that average property values of homes near a
stable, community school rose at a rate of 3 percent higher annually than in
similar neighborhoods where the school had been closed.6 Keeping
an existing school open increases home values in surrounding neighborhoods and
helps stabilize the area and its business activity, while closing them slows
the rise of home values.7 It is estimated that closing the school
cost that neighborhood about $2 million in property tax revenue.8 Raising
taxes for new school construction has not only cost homeowners and business
owners money, but has tripled related debt from $4 billion to $12 billion since
1994.9 Issuing debt is another way that cities and towns fund
school related projects, and in 1995 the state saw a 150 percent increase in
the dollar amount of bond issues for school construction — from $499 million in
1994 to $1.25 billion.10 (Citations: Mclelland, Mac and Keith Schneider.. Michigan’s School
Construction Boom: the Real Costs of Public Schools. Michigan Land Use
Institute. Feb 22, 2004.)
…
… many, if not most school
districts are exempt from established planning and zoning laws, and school
districts are allowed to develop without thought to the community’s master
plan.25 The main issue is that if a school district’s plans do not comply with
a city or town’s Comprehensive Plan, the government authority cannot keep the
school district from building as it chooses. Many communities have worked to
change this shortfall in planning and community building to ensure that the
school district must plan for growth along with the city or town.
…
If renovation costs are
over-estimated, it is easier for a school district to convince the community to
build a new school rather than to renovate an old one. This was the case in
Kokomo, Indiana, where in 1997 the fate of the city’s oldest high school was
demolition. The 21st Century Committee, an advisory group created by Kokomo’s
school board, had estimated about $20 million in renovation costs to bring the
building up to modern code, while they estimated that demolishing the old
building and building a brand new one would on cost about $7 million.34 With
these numbers, the school board easily voted in favor of demolition and
rebuilding; before work began, a new school board member challenged the group’s
assumptions and asked for a reassessment of renovation costs. After pressing
the superintendent, he found there was no documentation stating that the school
was unsafe and couldn’t meet code without these massive renovations, nor that
the renovations would cost $20 million. Within a year, the building was
completely renovated to include modern amenities and top of the line media
equipment at just $7 million.
…
Government and business leaders
may want parents to believe that unsafe routes and inconvenience of living
through school renovations are the reasons keeping schools from renovation, but
in so many cases the glamorous idea of new construction drives school boards to
make fast decisions that are costly to the neighborhood, community, and
taxpayers. These costs are not only financial burdens in straight dollars; they
are measured in decreased property values and tax increases to pay for
skyrocketing construction costs. Cities and towns are faced with debt that far
exceeds what it should be, and monetary restrictions to other schools in the
district may be a result of construction on just one new facility.
With property values already
some of the lowest they have been in 5 years cities and towns cannot afford for
residents to abandon their downtown properties and sprawl into the suburbs.
Desirable 12
schools
are one of the primary reasons parents choose to live in a certain area. By
ensuring that the best schools are tucked into established neighborhoods,
cities can retain their historic neighborhoods and encourage a walkable
community with schools and parks as neighborhood anchors, discouraging sprawl.
With fewer children needing bus transit, fewer busses need to be purchased and
maintained and fuel costs decrease. The money previously spent on transit can
be reinvested into the schools.
Old neighborhood schools should
be treated as assets, not burdens, to the community where they are located.
With regularly scheduled maintenance, these buildings can serve their
communities well into the future and can be updated periodically to reflect the
needs of the neighborhood and changing technology. Blending modern amenities
with historical character adds a unique element to the neighborhood and is most
cost effective than new construction.
Residents can also enjoy the
many benefits of their neighborhood centered schools for both parents and
students. With reduced commutes to school or the ability for some students to
walk, parents spend less time in the car and are rewarded with more time to
spend with their children. In smaller education facilities, students enjoy
reduced class sizes and are less at risk of getting lost in a sea of students.
These students typically perform better on standardized tests, have lower
dropout rates, and graduate on time. Participation in after-school activities
is more convenient for parents that don’t have the ability to provide
transportation.
How Much Is a Neighborhood School Worth? ACADEMIC RESEARCH
William T. Bogart, Department
of Economics and Center for Regional Economic Issues, Case Western Reserve
University, and Brian A. Cromwell PricewaterhouseCoopers
Received October 12, 1998;
revised June 2, 1999
This paper presents evidence of the effect on house values of a school redistricting in Shaker Heights, Ohio in 1987. As a result of redistricting, neighborhood schools are disrupted, bus transportation is introduced, and school racial composition changes. The data include all arms-length sales of houses in Shaker Heights between 1983 and 1994. We find, using a difference-in-difference estimator, that disruption of neighborhood schools reduces house values by 9.9%, or $5738 at the mean house value. This result is robust to a variety of alternative specifications, including repeat-sales analysis and within-neighborhood analysis.
Another cause for realignment
is a change in demographics, as the number of school children and their
geographical distribution within a city vary over time. This paper investigates
the impact on house prices of a school district realignment including some
school closures that led to busing of some school children in a suburb
characterized by neighborhood schools before the realignment.
One effect of redistricting may
be that, by making it harder for parents to get involved, it harms the quality
of schools. It also makes it more difficult for students to participate in
after-school activities relative to the case where they can walk to and from
the school. We refer to this as the ‘‘neighborhood schools effect’’ of
redistricting. Because the neighborhood schools effect reduces the quality of
the schools, it leads us to expect to find a negative relation between sales
prices of houses and school redistricting. …
Our preferred approach is to
use a difference-in-difference regression to estimate the impact of losing a 13
neighborhood
school on house value. It is possible to separate the houses into two different
groups: houses that do not lose their neighborhood schools as a result of
redistricting and houses that do. It is also possible to separate the sales
into those that happened before the redistricting and those that happened
after. The idea of a difference-in-difference regression is to identify a
control group and a treatment group, and compare the experience of the two
groups. The control group in this case consists of houses that stay in the same
school district, while the treatment group consists of houses that change
districts.
To implement the
difference-in-difference estimator, we create three dummy variables. The first
dummy variable, School District Change, equals 1 if the house is in a
part of Shaker Heights that lost its neighborhood school after 1987, and equals
0 otherwise. The second dummy variable, Sale in 1987 or Later,
equals 1 if the house sold in 1987 or later, and 0 otherwise. The third dummy
variable, and the focus of our attention, is the product of the other two dummy
variables. The third variable is called School District Change and Sale in 1987
or Later. The coefficient on this variable is our estimate of the
neighborhood schools effect.
In order to control for other
differences among houses, we include a set of variables that summarize the
physical characteristics of the house. These characteristics include the lot
size, age, average room size, living area, number of plumbing fixtures, the
construction grade of the house, and the current condition of the house. We
also include observable characteristics of the neighborhood and school
district, including whether the street has heavy traffic, the percent nonwhite
in the census tract in 1980 and 1990, and the percent nonwhite in the school.
Because our sales take place
over a 12-year period, there is inflation over time. We deflate the sales
prices of the houses using a repeat-sales annual housing price index (shown in
Table 2). …
This paper has presented
evidence on a familiar question, the relation between local public schools and
house prices. Our main result is that disrupting neighborhood schools reduces
house values by 9.9%, all else being equal. We were also able to measure the
value of providing trans-portation services, something that has not (to our
knowledge) been done before. Instituting transportation services increases
house values by 2.6%, all else being equal. Our findings are robust to
alternative econometric specifications that focus on the unobservable
heterogeneity across neighborhoods.
The neighborhood schools effect
is about $570 per year at a 10% discount rate. To put this number in perspective,
consider that the mean school property tax rate for this period was about 60
mills, applied to an assessed value of 35% of market value. At the mean house
price of about $58,000, this implies an annual property tax bill for schools of
about $1200. This neighborhood schools effect has an equivalent impact on
house values of a fully capitalized 47.5% increase in property taxes. This
is a substantial number, and one that indicates the importance of the way in
which public schools are provided as well as how they are financed.
Economic Role of School Districts in Rural Communities ACADEMIC RESEARCH
Charles H. Sederber, Department
of Educational Policy and Administration, College of Education, University of
Minnesota, 1987
http://www.jrre.psu.edu/articles/v4,n3,p125-130,Sederberg.pdf
14
Average realtor ratings of the importance of schools in maintaining residential property values in five of the counties ranged from 7 to 8 on a scale where 1=low and 10= high. The following interview quotations supported this perception: “School is pretty important for this area. If it closed there would be a really big drop (in residential property values), probably 25 percent without blinking an eye. Main thing would be not attracting new families, they want to live in towns that have schools.” “(A neighboring town) always had lower real estate values, but after the school was closed in consolidation
(residential
property values) really went to heck.”
7 Neighborhood Threats to Your Home's Value WEB ARTICLE
by Brian O'Connell, MSN
Real Estate, June 6, 2011
Closed schools. Sometimes, neighborhood problems can stem from local government action. For example, if a cash-strapped city or town closes a neighborhood school, that can easily steer home values south. The National Association of Realtors says 75% of home shoppers say the quality and availability of schools in the neighborhood is either “somewhat important” or “very important.”
