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Author: chopsueycp Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127236  
Subject: Paying high for a great SD - a big risk? Date: 5/2/2012 3:38 PM
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Hello all,

What is the general sentiment of this board on paying a considerable amount more for a house just because it's in a fantastic school district?

Should I consider it a little riskier to my capital, considering:

A) I'm obviously laying out more money into the housing market and therefore increasing my exposure to it
B) Is it possible for a school district to go downhill... in other words, 10 years from now, the S.D. is not as good, making my house lose its value
C) Surrounding school districts could always get better, thus making this S.D. less valuable, respectively speaking

Note that this is NOT an investment property - it's truly where we want to live - it just happens to be a fantastic school district. We don't even have kids (yet). But I also don't want to be incredibly reckless with my money here, and would like to know the risks in what I'm doing. Are there other risks that I'm not thinking of?

Note that I do want to buy a house *somewhere*... it's just that the value investor in me says that buying a house in a great S.D. feels a little bit like "buying high", and hopefully not someday "selling low", at the highest of stakes and therefore the most to lose.

Just curious of your thoughts on this.


Thanks,
CP
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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122622 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/2/2012 4:55 PM
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Great school districts typically don't just pop up in the middle of no where. Usually there's other factors that make it a desireable neighborhood - such as good jobs, or close proximity to where the jobs are or close-in to a city also make an area desireable. So if those good school districts were good 10-20 years ago and jobs/companies are fairly stable, than there's probably less risk of the school district going downhill.

In my area, the job market's fairly stable, and close-in areas in good school districts typically see higher home appreciation rates (since a good school district and shorter commute is usually a plus for most people) plus didn't see large a drop in prices when the housing market corrected.

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122623 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/2/2012 5:14 PM
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CP,

Given our off board discussion, you know many of my feelings regarding this topic, but since others do not, I hope you will bear with my repetition. This will also allow you to see other people's arguments to my theories, rather than getting them in isolation.

As I have said before, buy one of the best school districts (SD) that fits your needs and that you can afford. In good economic times homes in a good school district appreciate faster and in bad they hold their value better, relative to other districts.

One caveat to this rule is to watch out for taxes and try to get the best value. We had the option to buy in the school district you are looking in, as well as a few others that are similarly excellent, but chose the one we did because taxes for our superior but not creme de la creme school district were close to half of those in the neighboring districts. For those of you who do not know the areas we are talking about, I pay $7500/year in property taxes, and a comparable home in the other districts would have been about $13-14,000/year. For this I get a school district that has been in the top 10% of the nation's high schools for the past few years. In fact, I would put our district up against yours any day, and as the various academic and music competions have shown, it's anyone's guess who will win. Sports you win hands down. This tax break actually results in the price of our SD having homes that cost roughly 20% more than yours. Unlike taxes, we get this back when we sell, however, though the interest spent on the mortgage is down the tubes.

Is it possible for a school district to go downhill... in other words, 10 years from now, the S.D. is not as good, making my house lose its value

Absolutely. One reason for this is lack of funding, such as we discussed regarding the first SD you considered. They are losing jobs, potentially with some plants shutting down permanently there, which will make matters worse. Or they could improve, as is the case for the SD you are now looking into. 20 years ago, it had a pretty lousy reputation. Big houses got built and money moved in. Lots of new schools were built, which is one reason why your taxes are so high. We our constrained in our ability to build, and are making due with our 40 year old school buildings which have housed a consistently good SD over the decades.

C) Surrounding school districts could always get better, thus making this S.D. less valuable, respectively speaking

I have not found this to be the case. Your SD getting better only made ours better too, because of increased competition between the kids and a generally better educated population. Your town does not live independently of mine, and improving SD benefits both of us.

We don't even have kids (yet). But I also don't want to be incredibly reckless with my money here, and would like to know the risks in what I'm doing. Are there other risks that I'm not thinking of?

There is no guarantee that you will be able to have kids, so if that is your only reason for buying there, you might want to grab a starter home for the first 5-7 years of your marriage, after which time you may have school aged kids to consider. However, I recommend good school districts even for those who never intend to have kids, again because of the impact a good SD has on your home value.

FWIW,
IP

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122632 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/3/2012 12:15 AM
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... Are there other risks that I'm not thinking of?...

School boundaries get redrawn periodically. You might buy a house expecting your kids to go to a specific school and but the boundaries are usually redrawn every few years.

In looking at the schools try to judge them on the programs they offer, not things like test scores.

This may sound odd but I live in an area where the schools are done mostly by county and the school district I live in has at least a dozen huge high schools. When I was looking for a house here I had a kid in middle school so I looked at the test scores of the high school which went from really impressive down to below average. In researching this one of the things that I found out was that all the high schools in the school district have nearly identical programs and funding. The differences in the test results were mainly because of the economic demographics of the students and not because of the quality of the high school itself.

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122633 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/3/2012 7:09 AM
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In researching this one of the things that I found out was that all the high schools in the school district have nearly identical programs and funding. The differences in the test results were mainly because of the economic demographics of the students and not because of the quality of the high school itself.

And this is exactly what you want to buy...a neighborhood filled with parents who care. It doesn't matter how much money gets thrown at the school if the parents won't back up the administration, or keep their kids feet to the fire. Your kid can go to the best funded school, but if discipline is not enforceable, your kids classes will be so disruptive that they won't be able to learn anything.

But yes, you are correct that there is more to a SD than test scores. For example, our school district is well known in the area for being great in dealing with kids who have learning disabilities, and because of this people move here specifically if their kids have problems learning. This brings our over all test scores down, but I loved the more accepting and diverse nature of our SD over our other choice which was too monochromatic,(Not the one you are looking at CP, ) and I felt certain that there were plenty of advanced classes and AP offerings for our kids.

PA used to have these great school report cards. Now unfortunately they are all about test scores, and no longer offer all the detail they used to offer.

IP

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Author: YewGuise Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122635 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/3/2012 8:41 AM
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In researching this, one of the things that I found out was that all the high schools in the school district have nearly identical programs ...

In researching different school districts within the same county, where the official curriculum and standards are the same in all schools, I found that in the better-scoring, higher-income district an elementary school principal said, "Our teachers are professionals. They teach the children what the county requires, and also what they need to know."

After we moved, at the high school parents' night, a math teacher admitted, "We don't really follow the county curriculum, but since we have the highest SAT's in the state, they leave us alone."

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Author: chopsueycp Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122639 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/3/2012 4:33 PM
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Thanks for all your thoughts, IP! I have a newfound respect for your SD, haha.


CP

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 122641 of 127236
Subject: Re: Paying high for a great SD - a big risk? Date: 5/3/2012 4:58 PM
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I have a newfound respect for your SD, haha.

CP,

With autism so much more common today than it was when I was a kid, having a SD that is known for dealing with learning disabled is a pretty great thing. I wouldn't go borrowing trouble before it comes to your doorstep, though. It's enough to know you can move 5 miles and have this as an option. There is only so much you can plan ahead. Things happen to change your plans and you just have to do your best with the info you have on hand, not agonizing over changes that must be made for things you could not predict.

I confess I was pretty shocked to find out that our high school didn't meet the AYP targets for test scores last year. It was the kids with the IEP's, the special education kids, that dragged it down. Every other category met or exceeded expectations. Without understanding that our SD is searched out by parents with LD kids, particularly the seriously learning disabled, you can't really understand the reason for the scores.

Learning is a self process, aided by the tools that the school provides and the parental foot up the student's a$$. Our kids have benefited greatly from this SD. Your school choice will do the same, and more if your kids turn out to be sports oriented.

Any offers tendered?

IP

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