By Del Stover
12/14/04 — When California realtor Malka Nagel meets with a client for the first time, she’s no longer surprised if the potential homebuyer pulls out a spreadsheet listing the test scores of area schools.
“They come to their first meeting with their printouts, and they say, ‘Okay, I would like a house in this and this and this area, where my kids can go to these schools,” she says.
Good schools have always been a factor in the real estate market. But nowadays, with everyone in education talking about test scores and the information easily accessible online, home buyers increasingly are relying on a handful of numbers to determine where they want to live.
In some markets, realtors say, it’s gotten to the point that parents are willing to pay $100,000 more for a house near a top-scoring school rather than move to a less-expensive neighborhood served by schools with slightly lower average scores.
“Once they’ve made up their mind . . . that that’s how they’re shopping, it’s very hard to convince them to look at other factors,” Nagel says.
Not every homebuyer, of course, has such a myopic opinion about what makes a good school, says William L. Bainbridge, president of SchoolMatch, a research and database service company that collects information on the nation’s schools.
Among SchoolMatch customers, the most influential factors in home buying appear to be a school’s average scores on college entrance exams — the ACT and SAT — and such norm-referenced tests as the Stanford 9.
Other important selling points for parents are the availability of Advanced Placement or International Baccalaureate courses, extracurricular opportunities, and athletic activities.
“The other thing parents are starting to become aware of — and the No Child Left Behind Act has brought this to their attention — is dropout rates,” Bainbridge says. “Parents are starting to realize that schools with high test scores and high dropout rates may have numbers that do not fairly reflect what goes on in the school.”
At first glance, the rationale behind home buyers’ decisions might seem of little importance to local school officials.
But more popular homes sell for higher prices, and more expensive homes bring in higher property taxes and more affluent homeowners to local businesses. Good test scores, then, are good for the community.
And, under some state accountability systems, even small changes in test scores matter. That was the case recently in the Carroll (Texas) Independent School District, where the real estate market has been buoyed in recent years because the schools have been rated “exemplary” by the state department of education.
So this fall, school officials and real estate agents were waiting with keen interest to see if local test scores stayed up — and the schools kept their coveted designation. (They did.)
“People are very conscious of the ratings and their impact on the reputation of the community, which goes right into the real estate values,” says Diane Frost, the district’s executive director of accountability, research, and assessment.
No one can say with certainty how much test scores affect housing prices, as so many other factors come into play. Not every homebuyer has a child, and not many can afford to pay higher prices to live near the best schools.
But some in the real estate market say that, in some metropolitan neighborhoods, housing prices can jump by five figures simply by crossing the boundary between the city school district and an affluent suburban district.
One study, by researchers at the University of California-Los Angeles, Dartmouth College, and Harvard University, looked at the housing market in Charlotte, N.C., and concluded that differences in test scores could affect housing prices by 25 percent or more.
Price fluctuations didn’t change overnight, however, suggesting that school reputations can survive minor fluctuations in test scores.
But researchers noted that one implication is that schools with improving test scores might not be recognized for their efforts for many years.
“In other words,” researchers wrote, “a school that is improving has a difficult time signaling that improvement to the housing market.”
Researchers might have come to a different conclusion if they’d studied the housing market in California’s Silicon Valley. There, Nagel says, she’s seeing interest in neighborhoods shift with even minor changes in test scores.
That might well have something to do with the unique nature of her clientele, she suggests only half-jokingly. “So many of our buyers are engineers. They’re very numbers oriented.”