Many families contemplate moving to the suburbs for the schools, but with higher achievement comes higher prices.
But is this the only move that makes financial sense? We knew that Dr. Kevin Gillen, noted economist and Houwzer’s Chief Economic Advisor, would have the answer.
What we found was that high-achieving schools don’t just come with the territory in highly priced suburbs; among other factors, coveted school districts do contribute to the value of an area, and the proof is in the test scores.
To demonstrate this, Dr. Gillen analyzed research comparing the value of similar homes located in the same town, but zoned in different school districts. Across every research study he assessed, the results were remarkably consistent: a simple one-standard deviation increase in a school district’s performance on standardized tests (in our case, the PSSA) increased the its housing prices by 2-5%.
The increase may sound small - until you consider the average price of a home in Philadelphia, and how much homeowners stand to gain.
If Philadelphia students scored at the same level as Pennsylvania’s PSSA average, the average home values would increase by a minimum of $9,300 and a maximum of $23,200. If Philadelphia public schools performed at the same level as the higher-performing suburbs, average home value would increase even more - in the range of $12,400 to $31,000.
It goes without saying that the more your home is already worth, the more you have to gain. A $425,000 home could increase in value by as much as 50K if Philadelphia’s test scores reached the Commonwealth’s average, and as much as $67K if we matched the suburbs' scores.
As it turns out, if Philadelphia public schools were to improve, the implications would not just be educational but financial. Despite rising home values, the city would remain more affordable than the suburbs, but with the added benefit of higher performing school districts.
Until then, families who move to the suburbs will continue to see the best bang for their buck when it comes to school quality.
Read Dr. Gillen's full report here.
