Schools are clearly important in preparing students for rewarding jobs, but the economy reflects that importance, says N.C. State University’s Dr. Mike Walden. “One area is real estate. Many economists, including myself, have over the years looked at the impact of school performance on the local real-estate market.
And it stands to reason that there will be a link — that is to say that when a household is buying a home, if they know that the schools serving their home seems to do better (have better performance), they may be willing to pay more for that home in order that their children will do better in school (at least they hope they will do better in school).
“And the research, again, seems to support that. There is some new research, however, … out of the University of Florida, that found that grades that a central government — like a state government might assign to schools (and this is becoming more popular) — also seem to be used in households’ decisions about buying homes and also seem to influence housing prices.
“That is to say, very simply, that what this study found is that the grading of schools in Florida and the level of those grades … did impact the level of housing prices. And, again, this is consistent with the other research. But I think it also goes a further step in to say that these grades which have been developed — the developers of those grades — need to be very, very careful because not only are they ranking schools and giving some performance indicator for schools, they also are influencing the real-estate market.”Category: Economic Perspective