Is Free Public Education a Myth? Housing Prices Reveal the True Story

The quality of nearby schools is a major consideration for families deciding where to live. A 2012 American Planning Association survey found that schools are one of the top three priorities on which people want local planners to focus. School quality has a direct effect on the racial, ethnic, and economic segregation of neighborhoods (often, low-income and racial and ethnic minority households find it too expensive to rent or own homes in areas with high-quality schools) and affects urban planners’ desire to build equitable communities. In this study, Shishir Mathur analyzed the impact of school quality on home prices, controlling for other factors, in the Fremont Unified School District in California. He used data on parcel and property characteristics, attendance zone boundaries, school quality data on characteristics including race or ethnicity and proficiency levels, and Census data to measure neighborhood quality. He posits that estimating this effect can help state and local governments and school districts allocate resources more efficiently and effectively.

Key findings

• A one-standard-deviation increase in the quality of elementary, middle, and high schools increases the price of an average house 20 percent.
• For typical households in the Fremont Unified School District, the impact of school quality on housing prices is more than three times greater than the impact found in studies in other regions. This impact matches the cost of private education for a child.
• Urban planners and policymakers need to recognize the effects of schools on residential segregation and begin prioritizing access to high-quality education the way they do access to transportation infrastructure, libraries, parks, and other services.
• Policymakers should provide incentives for construction of affordable housing in neighborhoods with high-quality schools. They could do this, among other changes, through minor refinements to the Low-Income Housing Tax Credit program.
• Local governments and school districts should collaborate to integrate and streamline processes that affect each entity, including decisions surrounding land use, transportation, and zoning, as well as school siting, renovation, and expansion.