Increase in school property taxes linked to increase in home values
One study from the University of Delaware found that states with higher property taxes also have higher median home values. According to their analysis, for every $1 increase in local property taxes, corresponding home values rise by an estimated $34.27 on average. The study also reported that states with higher property taxes in general — much of which goes to fund schools — typically experience higher median home values overall.
The graph below estimates the positive impact the Jeffco Schools mill and bond would have on home values of an average Jeffco home currently valued at $250,000. The net tax impact of the mill and bond is $36.70, and home values could rise $139 in the first year — nearly four times the return on investment! More gains would be expected during the years that follow.
Jeffco homeowners can expect to see an increase in home values from a successful mill and bond, according to studies from around the country. This graphic shows the increase in home value that an average Jeffco homeowner might see from a successful Jeffco School mill and bond.
Other studies post similar results. For example, one 2002 study demonstrated Jeffco homeowners can expect to see an increase in home values from a successful mill and bond, according to studies from around the country. This graphic shows the increase in home value that an average Jeffco homeowner might see from a successful Jeffco School mill and bond. The reader can see that home values increased by an average of $20 for every dollar the state spent on education.
School district quality is also linked to higher home values. All homeowners in a community benefit from good schools — whether or not they have children enrolled in those schools — due to the correlation with district quality and home values.
“Better funding does improve school performance,” wrote John Mackenzie in the study “Public School Funding and Performance.” He also noted that local funding has a greater impact on school performance than state or federal money and that correspondingly, the costs of property taxes going to schools was “more than offset” by the capitalized benefits that in turn enhance home values.
Other studies analyzing home value and schools show a similar effect. In one study, an increase in school test scores resulted in higher home values of $16,000 on average.
Home values around the country show strong ties to school quality. The Wall Street Journal reported in 2010 that A-rated schools in Florida added approximately $10,000 more to home values than a B school in 1999. Today, the difference in home values in an A-rated school neighborhood can be as much as $50,000 on a $300,000 home.
Likewise, home values of properties in the Seattle suburb of Bellevue, Washington are up to 15 percent higher than homes just outside the boundaries of the school district. Even homeowners without school-age children generally support school mill levies because it makes good economic sense to keep their home values high, said Bellevue real estate broker Michael Orbino.
Even with the housing slump, home values in good school districts have not seen the same declines as elsewhere. Homes in good school districts tend to sell quickly, regardless of the real estate market.
In California, Minnesota and Massachusetts, home values in quality school districts saw a drop of only half as much as surrounding areas. In Irvine, California, the price per square foot dropped 18 percent compared to 33 percent outside the district. This was true in the Minneapolis suburb Edina, (14 percent compared to 27 percent) as well. The effect was particularly pronounced in Andover, Massachusetts, where prices fell only 4 percent in comparison to 16 percent for the larger Boston metro area.
Denver Metro Association of Realtors sees close ties to home values
Knolls said the Denver Metro Association of Realtors endorsed the Jeffco Schools mill and bond in part because of the close ties between schools and home values.
“We believe the leadership of the Jeffco school system have been prudent in managing the budget without negatively impacting the classroom,” Knolls said. “Frankly, any further cuts will impact the quality of education in Jefferson County.”