Saratoga News
Homes
Schools play a major role in home prices
The better the schools, the more valuable the houses
By Jean Newton
With the recent release of the API student test scores, Realtors as well as homeowners are paying attention to how specific school districts measure up, since there is a direct correlation between good schools and home values.
Realtor Helen Cockrum of Alain Pinel Realtors in Los Gatos believes the quality of schools affects the decision of people who are buying in the area.
"A good district is particularly important to families with school-aged children. Buyers must keep in mind that API scores do not tell the whole story. There are many good schools out there and in the end much depends on the teachers and the students themselves as to whether it will be a good experience," Cockrum said.
She also finds that people who do not have school-aged children pay a premium price to buy in a neighborhood in a good school district. "They may elect not to do so knowing that they will buy for less and also sell for less. Many are OK with this."
Aileen La Bouff, a Realtor with Coldwell Banker in Los Altos, agrees that schools are a critical factor in determining the value and desirability of a home. She makes sure to discuss the quality of local schools with each client so that they are aware of the effect schools may have on resale values.
"People will specifically research a particular area based on the schools and API scores. The difference can be quite noticeable, with properties on the right side of a street being easier to sell and at a higher price than those in a different district," La Bouff said.
Neil Reid of Wells Fargo Home Mortgage says schools are a hot topic in Silicon Valley right now.
"Schools are a huge issue in our area, whether it be Los Gatos/Saratoga, Campbell/San Jose, Cupertino or Palo Alto/Menlo Park. You can check in with every real estate office in the area and they all have access to websites listing the API scores for all schools in any given area. Education is most definitely a top priority for families buying in our area," Reid said.
One of his clients who lived in Saratoga but not in the Saratoga school district was paying close to $40,000 a year in tuition to send four children to a private elementary school.
"They decided it was worth it to sell their home in Saratoga and buy a more expensive home in Saratoga with Saratoga schools. That was three years ago and they have not regretted their decision to send their children to Saratoga schools or in the appreciation they have realized over the time period. They also were able to save money in not paying private school tuition."
Property values are definitely influenced by quality schools; Stefan Walker, an associate broker with Alain Pinel Realtors in Los Gatos, says it makes a huge impact on buying decisions. "We live in an area that is highly education-centered and buying into one of the top school districts is a deciding factor in a majority of home purchases. Since the demand in these neighborhoods is so much higher, values have been bid up over time. Values decrease dramatically when crossing the boundary into a lesser district," Walker said.
Since schools are such a key component of value, there is an impact on all those who live in the area. "It's not only families with kids that pay close attention to school districts, it's singles, empty nesters and investors. The acquisition cost in a prime district is dramatically higher, so the cost must be weighed against the benefits that come with higher demand--higher appreciation and less exposure to value fluctuations," Walker said.
Many people are prompted to move due to school considerations. Walker has worked with families that bought their first home in a nice neighborhood where the schools were good but not great and then decided after their children reached school age that they needed to upgrade school districts.
"Sometimes they sacrifice housing quality to make the move to a better school district. I've seen this in all sub-markets, not just going from bad schools to good, but often from very good schools to top notch," Walkers said.
Investors also scrutinize schools to see if they can identify an area where schools are improving but the market has not yet caught up. "They can often reap huge rewards. Look what has happened over the last five to 10 years in West San Jose around Lynbrook High. The Willow Glen and Cambrian areas of San Jose may well be a good place to look for this type of investment."
Dennis Byron of Byron and Associates also believes schools have a major impact on the housing market--and it doesn't matter whether someone has children in the schools. "The housing factor is the same. If you want to get a higher value for your home and you want a home that will retain its value, look to the schools," he said.
As an example, Byron says a house in a Los Gatos/Saratoga school district is easily 10 percent higher than a house outside the district, even if the address is still Los Gatos. Schools also have reputations and even though one school may have a higher test score, it may not be as desirable as another.
"I handle many people transferring from China and Japan. They have one thing in common. They want to send their children to Gunn High School in Palo Alto. This is one of the factors that keep the prices up in the Palo Alto and Mountain View area," Walker said. "Almaden is also a very desirable area. It is outside any major city and away from major business, but the fact that the schools are superb keeps the market out there active."
