In this article
Key Takeaways
- Public schools receive funding through local property taxes and state and federal funding. Thus, property taxes and home values are typically higher in good school districts.
- Better schools make neighborhoods more desirable to families, attract businesses such as large retailers and restaurants, and bring in more tax money to fund municipal services and local amenities.
- As neighborhoods improve and demand exceeds availability, home values increase.
- Home appreciation can be impacted by a property’s age and condition, upgrades, location, and broader market factors like supply versus demand and current interest rates.
- US house prices grew 6.6% year on year in March of 2024, following an increase of 6.4% in the previous quarter.
- Appreciation for homes varies state by state and even neighborhood by neighborhood. The highest rates for single-family homes in 2023 were seen in Rhode Island and Vermont, reaching higher than 13%.
- The best mortgage companies, like Moreira Team, are adept at helping first time homebuyers navigate factors such as the quality of a school district in a neighborhood and other market variables that can impact the value and appreciation of your home.
For the first time home buyer, there are many competing factors to consider when choosing a house. Purchasing a home requires you to weigh current mortgage rates, changing government policies, and the overall state of the housing market against your personal needs and ability to secure preferable loan terms.
In short, buying a home takes forethought, a bit of tenacity, and good timing.
Many things can make a neighborhood attractive to a first time home buyer, such as nearness to urban areas and shopping centers, safety, walkability, and cost of living.
School districts often top the list of considerations for families buying a home. But did you know that, even for those without children, school districts can significantly impact the value of your home?
It’s true—school districts are often a bellwether for property values, and good districts typically see faster property value appreciation that outpaces inflation and higher property taxes. School districts can also impact demographics and the complexion of neighborhoods and surrounding businesses.
The best mortgage lenders are often an unddertutilized resource in helping home buyers understand these market factors. At Moreira Team, we specialize in navigating the impact school districts have on your purchasing decisions, the current state of the market, and how to secure the most advantageous loan terms available to you.
Understanding the value impact of school districts on home purchasing is important for first time home buyers. It’s not just about finding a home, but about understanding the factors that can significantly influence your investment. This knowledge will empower you to make informed decisions and navigate the market with confidence.
How are Schools and Real Estate Related?
A primary consideration for parents is how your location impacts which schools your children can attend.
Typically, children will enroll in public schools within the school district where they live, except in special circumstances where a school transfer is approved, depending on your state. Although private schools don’t have these same restrictions, location can limit your access to most public schools.
This is because public school funding is acquired through locally assessed property taxes (at the municipal and county level) combined with state and federal funding.
Therefore, property values and taxes are typically higher in good school districts. The rationale behind this is that the people who benefit the most from these schools are those who live within the district, so they pay for the schools through assessments.
Since parents want their children to attend the best schools, there’s often an incentive to pay at the top end of their budget, versus buying a home in a worse district, even if that home is more affordable and nicer.
How Good Schools Grow Good Neighborhoods
The relationship between neighborhood desirability and school quality means the best neighborhoods become competitive markets for parents looking to purchase a home. Parents who settle in these neighborhoods attract businesses or, in some cases, may start their own businesses in their home communities.
For instance, communities with young families often attract large retail brands and restaurants. Restaurants, in particular, see the benefits of building in these areas, where statistics show families with young children drive dining revenue—an 84% increase over the “average casual dining ticket” when diners eat with children under 13, according to research by The NDP Group.
Residents who pay higher taxes also contribute to other municipal services in and around their neighborhoods. Some of the services that receive funding through real estate taxes include:
- Recreational programs like community parks, events, and sporting programs
- Local government programs
- Police and fire departments and other emergency services
- Infrastructure and land development
These services typically improve as tax-paying populations grow, especially in districts where taxes are higher. As a result, the demand for housing in those areas goes up. When demand exceeds the availability of homes, property values rise.
Property Value Appreciation: How It Works
Many factors can influence how a property appreciates, including changes to the property itself, the surrounding community, and the housing market in general. The best mortgage companies have the industry experience and understanding of current market trends to help you make the best possible home-buying decision.
Factors to consider that can add to a property’s appreciation include:
- Age of the property and upkeep of its condition
- Renovations, remodels, additions, or other improvements
- Upgrades in energy efficiency and home technology
- Location and neighborhood, including the quality of surrounding amenities, businesses, schools, and services
- Economic factors such as current interest rates, supply versus demand, and the overall state of the housing market and general economy
Recent studies show the following statistics about housing appreciation values:
- US house prices grew 6.6% year on year in March of 2024, according to CEIC data following an increase of 6.4% year on year in the previous quarter.
- CEIC’s growth data is updated quarterly from March 1992 to March 2024, with an average growth rate of 5.5%.
- Statista states that the yearly appreciation for single-family homes in the U.S. was 6.5% in 2023.
- The highest rates were seen in Rhode Island and Vermont, reaching more than 13%.
Say you purchase a home for $275,000. At the CEIC rate of 6.6% appreciation, your house would see an appreciation of $18,150 by the same quarter of 2025. Neighborhoods with higher demand will see even higher levels of growth.
How the Best Mortgage Companies Can Help a First Time Home Buyer
The best mortgage companies, like Moreira Team, are your partners in navigating the complex process of making the right purchasing decision for your family. We simplify the process, provide expert guidance, and ensure you have the information you need to make informed decisions. With our support, you can confidently step into the world of homeownership.
Factors like the quality of your school district can impact the value of your home and how that value appreciates over time. The best mortgage companies will guide you regarding market factors that impact property values.
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The Moreira Team is ready to help you navigate the home-buying and loan process so you can start the next chapter of your life. It’s our mission to maintain transparency so you understand each step. Our team has the experience and resources to find a loan that suits your needs at a competitive rate. Get your custom rate quote today and take the first step toward homeownership.