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Public School Performances and Housing Values

The quality of public schools has a significant impact on housing prices, influencing where households choose to live. High-performing schools often drive up property values in their districts, as parents prioritize access to quality education for their children. This demand results in a premium on homes within these desirable school zones, often referred to as the "school premium."

Research indicates that housing prices can be notably higher in areas served by top-rated schools. For instance, a study by the National Bureau of Economic Research found that a 5% increase in test scores can lead to a 2.5% increase in home prices within the school district. This correlation is driven by the perceived long-term benefits of quality education, including higher academic achievement and better college admission prospects.

In this article, we compare the distribution of housing value by school performances. To measure the quality of public schools, we use the average test scores of each high school. Then, for each census tract, we calculate the average quality of public schools based on the location of schools and the school district boundary. We do this comparison for two states: California and Florida. For each state, we classify the census tracts to five groups using quantiles of public school quality, and we visualize the distribution of housing values for each group.

Below, we have the distribution of housing values by public school quality in California. Moving from the 1st quantile to the 5th quantile, it's likely that the performance of public school increases. We see that the housing values for the 5th quantile group is relatively higher compared to others. We also see that there's a small hump when the housing value reaches 2 million dollars, which indicates that there is a school premium in the California housing market. The data tells us that you can still reach to good quality public schools even in areas with low housing values; however, the chances get higher in census tracts with higher housing values.

In Florida, similar things happen again. The housing values are generally higher in census tracts where you can reach public schools with good quality. However, the differences are very small which also represents the housing market characteristics in Florida. When comparing the 2nd and 3rd quantile, we also see that public school qualities are not the only factor that determines the distribution of housing values.

Are you interested in education quality and housing markets? Market Stadium presents scorings for public schools at the finest scale. Reach us to explore more about the relationship between education fever and housing values in other parts of the country.

Q & A?

Jay Ha

Head of Urban Research 

Doctoral student in Urban Planning at USC

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