10 Takeaways: How Schools Impact Home Values

How School Districts Shape Home Values

What type of impact can schools have on property values? Learn about buying in top districts, proximity effects, and finding the best schools for your family. 

When searching for the perfect home in Raleigh, one factor consistently rises to the top of buyers' priority lists: schools. Whether you have children, plan to have them, or want to protect your investment, understanding the relationship between school quality and property values is essential for making informed real estate decisions.

Whether you're a young professional planning for future family growth, empty nesters considering downsizing, or investors seeking stable returns, the school district surrounding your potential home will influence your property's marketability, appreciation potential, and resale value for decades to come. Even buyers without children often prioritize strong school districts and access to daycare, recognizing that these areas maintain their desirability and command premium prices.

Wake County Public School System alone serves over 160,000 students across 199 schools, making it one of the largest and most dynamic districts in the Southeast. This size brings both opportunities and challenges that homebuyers and sellers must navigate carefully.

Understanding the relationship between school quality and property values is essential for making informed real estate decisions. In this article, we'll dive into how school districts impact property values, how buyers can research school districts before purchasing a home, and the difference in home values when buying in a high-performing school district vs. a lower-performing district.  

Here is what you need to know about the relationship between schools and property values. 

1. The Connection Between Schools and Property Values 

Many buyers considering buying a home in an affluent school district may be willing to spend more on a house to avoid the monumental cost of a private school. The average price for private school tuition in North Carolina is $10,442. Although purchasing a home in a strong school district may mean paying a higher price for that home, it is still sometimes cheaper than investing in the costly expense of a private school.

Sellers aware of this trend may get away with selling their homes above market value because they know many buyers are willing to pay a premium to be in certain school districts. When enough homes sell above market value in an area, the value of all homes rises. 

Of course, these statistics only apply to those who put their children in public school. Those who plan on putting their children in private schools will most likely place less emphasis on the quality of the school district and will spend more time considering the private school itself. That said, those who live close to highly regarded private schools can typically command higher home values due to their proximity to the private school.  

Strong schools attract engaged families who invest in their communities, leading to better-maintained properties, active neighborhood associations, and increased local business development. These factors combine to create stable, desirable neighborhoods that maintain their value over time.

2. How Good Schools Vs. Bad Schools Affect Your Investment

Studies have shown that higher test scores in a school district are often associated with increased home values. Of course, test scores are only one way of designating an area as a "good school district," other factors should also be considered, but test scores are a highly quotable measure.  

On the contrary, poor school quality generally negatively impacts home values and leads to decreased demand in the area. This leads to lower property values and longer selling times. Knowing this, it is safe to say that those living in good school districts will pay a considerable amount to reside there. 

3. Public School Ratings Drive Immediate Market Response

According to the National Bureau of Economic Research, there is a strong correlation between school expenditures and home values. A report found that for every dollar spent on public schools in an area, home values increased by $20.

These findings indicate that additional school expenditures benefit all homeowners in the community, whether those residents have children in the public school system or not. 

Real estate markets react quickly to changes in school ratings and test scores. When a school's performance improves, nearby home values often increase within 6-12 months. Similarly, declining school performance can create a drag on local property values.

In Raleigh, annual state report cards and GreatSchools ratings updates can influence buyer behavior almost immediately. Buyers monitor these ratings when timing their purchases, while sellers often use improved school ratings as selling points in their marketing.

4. New Schools Create New Opportunities

The announcement and construction of new schools, particularly highly-anticipated public elementary schools, can boost surrounding property values even before the school opens. This "anticipation effect" occurs because buyers expect reduced overcrowding and potentially better educational outcomes.

Wake County's ongoing school construction program has created several such opportunities in developing areas like Apex, Cary, and North Raleigh, where new schools have contributed to rapid home value appreciation.

New school building improvements are also known to increase test scores, since students feel more comfortable in their learning environment. 

5. Strategic Buying in Good School Districts 

When purchasing in a top school district, consider these factors:

Timing matters: Buy before major school improvements are announced for maximum value appreciation. Research the school district's long-term plans and capital improvement schedules.

Zone stability: Ensure the property will remain in the desired school zone. District boundaries can change, and being "grandfathered in" doesn't always transfer to new homeowners.

Multiple school levels: Consider the quality of elementary, middle, and high schools in the area. A strong elementary school with a weak middle school can limit your home's appeal to families with older children.

6. Finding Median Home Prices By School District 

Research median home prices within specific school zones using these methods:

• Check Wake County's school locator tool combined with recent sales data
• Analyze comparable sales within the past 6-12 months in the specific attendance zone
• Consider seasonal variations, as families often shop for homes during spring and summer before the school year

Remember that even within the same district, neighborhoods can show significant price variations based on specific school assignments.

7. How School Districts Impact Your Home Sale 

In a study using a five star system based on student-to-teacher ratios, enrollment, test scores, and other factors, schools with a rating of four or five stars were almost completely insulated from declining home values during a recession, whereas those with one to three stars experienced significant losses. 

When selling, leverage your school distict strategically:

Market timing: List during peak family buying season (February through July) when parents are planning for the upcoming school year.

Highlight ratings: Include current school ratings and any recent improvements in your listing description and marketing materials.

Provide data: Offer potential buyers detailed information about test scores, teacher-to-student ratios, and special programs.

Address concerns: If schools are rated lower, emphasize other neighborhood benefits and potential for improvement.

8. Does Living in Walking Distance to a School Increase Home Value? 

Homes that are located within close proximity to schools tend to have stronger property values, whereas those that are farther away have lower property values.

Properties within walking distance to highly-rated schools not only command a premium price, but they offer convenience for families with multiple children and reduced transportation costs over time. However, ensure walking routes are safe.

9. Is it Good or Bad to Live Next to a School?

Some pros and cons should be weighed when determining whether or not it is best to live next to a school. For some, this will be extremely convenient. For others, they may find it to be a challenge. Living next to a school may give some parents peace of mind, particularly those who have children with allergies or medical needs.

Additionally, most elementary schools have playgrounds accessible to the public after school ends each day. This may be a positive selling point for families moving with young children. On the downside, schools tend to bring on higher traffic levels during the morning drop-off and afternoon pick-up times, which may be hard to navigate and bring on excessive traffic noise at certain points in the day.

In addition to traffic noise, having a school within close proximity to your home may mean loud noise while the students are outside during recess. The noise may be inconvenient if you have an infant or toddler who naps during the day. 

Elementary schools generally have less negative impact than high schools due to reduced traffic and evening activities.

Potential benefits:

• Large open space that can't be developed
• Community focal point and neighborhood stability
• Easy access for families with children

Potential drawbacks:

• Traffic congestion during pickup and drop-off times
• Noise from outdoor activities and events
• Limited parking during school events
• Potential safety concerns with increased pedestrian traffic

10. Finding a Good School District

Websites such as GreatSchools and Niche are great resources for helping buyers review standardized test scores, average classroom size, student graduation rates, and other important factors. Buyers can also use these tools to narrow their search based on magnet, alternative, charter, special education, technical and vocational schools.

After gathering some information, it is also advised to consult with your real estate agent on recommended school districts. Real estate agents typically live in neighborhoods where they help their clients buy and sell homes, and their children may attend public schools. If they don't, they will still most likely have important insights into the school district and the overall education system that you may not be able to find online. 

Here are some other strategies to research schools: 

Visit in person: Tour schools during active hours to observe the environment, meet staff, and assess facilities.

Talk to locals: Connect with parents in neighborhoods through social media groups, community centers, or local real estate professionals.

Consider growth trends: Look at enrollment patterns and district investment plans to identify areas with improving schools.

Methodology 

Data was sourced from Education Week and the Raleigh News and Observer to determine if schools impact property values. 

FAQs 

Do schools increase property values? 

Yes, living next to a highly-rated school is known to increase property values especially if the home is located next to an elementary school which homebuyers with children appreciate. 

What has the biggest impact on home value? 

Location has the biggest impact on home value over all other factors. Location dictates safety rating, the school district, and access to amenities, major employers, and public transportation. 

What decreases property value the most? 

Several factors can decrease property value including neglected maintenance, poor curb appeal, outdated interior features, and negative external factors including high crime rates and foreclosures. 

Making the Right Choice for Your Family 

Understanding how schools impact home values helps you make decisions that benefit both your family's immediate needs and your long-term financial goals. Whether you're buying your first home or selling to upgrade, considering school quality alongside traditional factors like location and condition will position you for success in Raleigh's competitive real estate market.

Remember that school quality is just one factor when it comes to finding your dream home. Work with experienced professionals who understand both the local market dynamics and how educational opportunities influence property values in the Triangle area.

If you are moving to Raleigh and are ready to explore homes in Raleigh's top school districts, contact the experts at Raleigh Realty. Our knowledgable real estate specialists help families find beautiful homes in top-rated neighborhoods.