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Good News for Realtors: School Choice Boosts Home Values

Most studies of school-choice programs tend to focus on whether the programs improve the academic performance of the students who attend them. A new report, however, explores a very different, if unintended, consequence of school-choice initiatives: their impact on housing values.

In a study published last week by the National Center for the Study of Privatization in Education at Teachers College, Columbia University, a trio of researchers used national data to study changes in
housing values and residential populations between 1990 and 2000 as states introduced inter-district public school choice programs. According to the report, 31 states now offer such plans, which permit parents to enroll their children in schools outside of their assigned school district, and 26 of them were put in place during the course of the study.

What the researchers found was that, when states enacted such changes, population density increased in districts with low-quality schools that were near the jurisdictions with the "good" schools. This came as relatively high-income families moved into those lower-cost areas and, in essence, began to gentrify them. The study calculates that, as a result of those inflows, home values in the cheaper districts rose by as much as $3,631 to $6,342, depending on which calculation the researchers used. Because some of those families left the more-expensive districts with high-quality schools, the overall effect is that home values started to even out throughout those areas.

"Residential homogeneity increases across local districts when excludable local public services become less exclusive," the study concludes.

Led by Erick J. Brunner of the University of Connecticut, the study is not the first to advance the idea that home values rise when choice programs open up. Other researchers have come to similar conclusions using computer models. But the study authors say theirs may well be the first to weigh in with some empirical evidence on the topic.

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