A few weeks ago, the Knock team met in Park City, Utah for our first company-wide offsite event. We brainstormed a lot and bonded even more.
During a breakout session, one of our team members shared his family’s story of the difficulties they faced trying to find the right school for his child. Despite living in a neighborhood they liked, my colleague and his wife were not happy with their second grader’s school. This feeling was exacerbated the day another student brought a gun into the child’s classroom.
Thankfully, no one was hurt. However, the incident put this family in an interesting predicament. They asked themselves, “Do we shell out for private school for our kids, or do we move?”
They did the math, and decided that moving to an area with a better school system was the most cost-effective solution.
How do you decide what's best for you?
Local school quality is a huge factor when families are deciding where to buy a home. Some 37% of U.S. millennial homebuyers and 41% of Gen X homebuyers reported to the National Association of Realtors last year that school quality influenced their choice in a neighborhood.
In Atlanta, dynamics like housing demand and gentrification are leading to overcrowding and reconfiguration of public schools. This results in quite the shake-up for homebuyers who were influenced by local schools.
As it stands, 31% of public elementary schools in Atlanta are rated “below average” – a considerably higher rate than middle schools and high schools that are deemed the same.
Given all of this, we wanted to investigate whether it’s more cost-effective for homeowners in Atlanta to sell their houses and buy near an "above average" school, or send their kids to private schools. Keep in mind that the average private elementary school tuition in Metro Atlanta is $12,005 per year.
We went about this by collecting home prices within a two-mile radius of schools that received a “below average” grade (3 out of 10 or less) on GreatSchools.org. If the median price of homes was at least $180,000, we flagged it.
(It may seem like $180,000 is a low benchmark, as the median price of homes in Metro Atlanta is $220,000. However, because we are talking about affordability, we wanted to encompass a wider range of households.)
We quickly came across several schools that were rated “below average,” yet surrounded by homes that sold for at least $185,000 last year.
For example, homebuyers within two miles of Park Street Elementary School in Marietta paid a median of $195,000 for their homes in 2016. Folks near Hightower Elementary in Doraville paid $255,000. Most surprisingly, buyers surrounding Jackson Elementary School in Roswell spent a median of $270,000 last year. Yet, all of these schools were rated three out of 10 by GreatSchools.org.
By contrast, homes within a two-mile radius of Shiloh Elementary School in Snellville went for a median of $175,000 last year. Dacula Elementary is surrounded by homes that sold for a median of $210,000. And in Avondale Estates, buyers paid $259,000 within a two-mile radius of Fernbank Elementary School. These schools, and many others in similarly priced neighborhoods, were rated 10 out of 10 by GreatSchools.org.
We can easily make the argument here that it is possible for homeowners near low-performing schools to sell their homes and then buy within the same price range near a top-performing school.
As always, there’s a caveat. After pulling the data and mapping the addresses of the “below average” schools vs. the “above average” schools, we realized something.
Check this out.
The red markers indicate "below average" schools, where homes within a two-mile radius were sold for a median of $185,000 or more last year. The green markers indicate "above average" schools, where homes within a two-mile radius are similarly priced. (You can click the map for more details.)
It answers the question why homes near "below average" schools in Marietta and Smyrna were a median of $190,000 and higher, while the median prices for homes near the "above average" schools in Snellville and other areas were significantly less.
These “below average” schools are in closer proximity to Atlanta and in thriving areas. The “above average” schools in similarly priced neighborhoods are farther away. There's a good chance homeowners are making a trade-off to live in these cities that are within commutable distance to Atlanta.
There are countless top-performing public schools in Marietta and Smyrna, but living near them comes at a higher price. The median cost of homes in Marietta is $254,000. In Smyrna, it’s $266,000. So, those neighborhoods near “below average” schools where homes cost a median of $195,000 and $201,000, respectively, might seem like a fair trade-off to live in these cities.
In short, these homeowners could certainly buy less-expensive homes and send their children to public schools ranked 10 out 10, but in most cases, it would require moving farther out.
Ultimately, if homeowners want to send their children to top-performing schools, they have three options: pay for private school, move farther away from the city or invest an additional $50K to $100K for a home near an "above average school."
If moving farther out isn't an option, the answer is clear: In the long run, it is more cost-effective to sell your home and buy another in an area with better-performing public schools. A private K-8 education for just one child comes out to $108,045, on average. For homeowners who pay upwards of $185,000 for their houses and live near "below average" schools, it makes a lot of sense to sell and buy a slightly more expensive home near an "above average" school.
We get it ‒ you’re probably sitting there thinking that we're saying all of this as if it’s easy to just sell a house and buy a different one in a snap. Here’s the thing: It is pretty simple, if you get hip on how to trade in your house. To get an idea of how you can sell and purchase in one transaction, read about the Knock Trade-In method.