Study: School choice increases property values

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A new study finds school choice increases local property values.

In “The Economic Benefits of New York City’s Public School Reforms, 2002-2013,” Robert Shapiro and Kevin Hassett found that property values increased in relation to achievement gains. Expanding charter schools increased student performance in New York City schools. Graduation rates rose, net income rose, and housing demand in these neighborhoods increased.

They also found that opening a new charter school is associated with a 3.7 percent increase in home prices in the same ZIP code a year later.

Motivated by the rising value of his own neighborhood when a charter school opened, Hassett felt parents would want to know more than test results.

“Maybe test scores aren’t the best metric of what we’re looking at when we’re giving people choice,” Hassett said. “If we trust that parents are stewards of their own kids, and we see they are lining up to send their kids to this place…we should celebrate the place, even if it doesn’t make test scores go up.”

$37 Billion in Added Property Value
The study found that from 2006 to 2012, New York City graduation rates increased 11.3 percent. Hassett and Shapiro deduced that this increased residential housing values by as much as $37.1 billion. The authors estimated that adding charter schools accounted for more than $22 billion in housing value increases.

A 2009 study examining Edgewood, a San Antonio suburb, found similar results. When this area significantly expanded school choice, a lot of people moved there and businesses followed, said study author John Merrifield, an economics professor at the University of Texas At San Antonio.

The results of Hassett and Shapiro’s study are not surprising, he said.

“One place’s gain is another place’s loss, so we can’t use this in a macro sense, but so that districts compete,” Merrifield said. “This is the shortcut to creating a wildfire of spreading school choice…without spending any more tax dollars.”

Benefits to Incomes, Integration
“Universal choice and budget resources tied in part to student enrollments have created much greater competition for students among schools,” the authors wrote in their study.

A 2012 study found that open enrollment policies increased local property values by approximately 3 percent.

“You would expect an even bigger increase from intradistrict choice because if you have two school districts you have direct competition,” said study coauthor Randall Reback, an economics professor at Columbia University. “When you expand choice not only does it increase the house values in places where people are interested in transferring outside of their districts, but can also increase the median income of residents. It can create residential integration as a result.”

The authors plan to replicate the study in other cities, but have not determined locales yet, Hassett said.

“There’s going to be a lot of new research on recovery school districts,” Reback said. “I’d like to study Douglas County, Colorado, [which has] neighboring counties that don’t allow choice. Maybe two or three years down the road I think we’ll see the same results.”