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There are many things that impact home values in any given area. That said, one factor that many homebuyers tend to overlook is how home values are impacted by school zones. Thus, in this article, we will go over how and why this is the case.
If you are looking for a home, then you probably have a budget in mind, which is a good thing. However, in order to stick to that budget, you should have a clear understanding of the common factors that influence the price of a home. One factor that always seems to play a role in the price of a home, in particular, is the quality of the school system. This makes sense. After all, a lot of people who are looking for a home have children (or are planning on starting a family) and want to make sure their children will have access to quality education.
As a result, homes in the best school districts, on average, sell for higher prices than comparable homes in less-coveted school districts. At first glance, it may appear as though good schools are entirely responsible for this added value. Yet simultaneously, on average, more affluent homeowners live in more sought-after school districts. So, what does this mean? Well, it means you must do your research in order to make the best decision for you and your family.
Numerous surveys have consistently shown that the majority of homeowners are willing to go over their budget price for the perfect home and the location certainly plays a role. In this manner, the quality of the school system or district absolutely factors into the right location.
When people think about going over budget, they often think about a higher monthly mortgage payment; however, other costs are going to increase as well. For instance, you might need to pay a higher down payment, pay more in home insurance to protect the home, and pay more in property taxes. Therefore, you might find yourself asking if the move is truly worth it?
Whether or not the move is worth it is always going to be a subjective decision. Therefore, you need to decide what matters most to you and your family and compare this to the premium that is put on the home. For example, the school rankings and test scores are certainly important factors. At the same time, they only tell one small part of the story.
For example, you also want to see how much money the school district spends on each of its students. The more money they spend, the more they care about their students. You also want to think about the diversity of the school district as well, as this is closely correlated to the overall quality of the education each student receives. Compare these factors to your budget to see if it is worth the price of living in that school district.
If you have children and want to provide them with the best education, you can buy a home in a better school district. Alternatively, you could buy in a less desirable neighborhood and enroll your children in private school if you want to potentially stay within your budget. In order to make your decision here, you will need to consider the difference in home prices and the cost of private school. You can compare the price of the home in a good school district with the price of a home in a less optimal school district plus the cost of private school. This will allow you to see if it is more or less than the cost of a similar house in the better school district.
That said, this will not necessarily address affordability due to the fact that depending on the mortgage rate and your down payment, covering the extra cost over a 30-year mortgage may result in lower monthly payments—that are less than the cost of private school tuition. What’s more, you also need to factor in the added taxes and insurance as previously mentioned.
If you do not have kids, however, you may think that purchasing a home in a less than ideal school district can save you money and allow you to buy a nicer house. But the reality is that it is usually better to buy a home in a good school district even if you do not have children now because those areas tend to hold their value, and it will likely be easier to sell your home when you move.
Ultimately, even though the home price difference between better school districts and lesser districts does exist, that does not necessarily mean that it is entirely due to the schools themselves. For instance, since affluent homeowners prefer better schools, more expensive homes are built near these schools. Furthermore, these areas tend to have other things people want and are willing to pay for – walkability, public amenities like nice parks, cultural facilities, restaurants and shopping, and less crime.
Therefore, it is in your best interest to investigate school districts and home values before making assumptions. If you are willing to move your family to the suburbs, you may find that access to good schools does not cost you more. This is especially true in areas where good schools are the norm rather than the exception.
Do you have questions about home loans or obtaining a mortgage before you start the home shopping process? Or are you simply ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.
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