Insights—The High Cost of Great Schools

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In our insights post about the lowest home prices by various factors, we found that the factor making a city least likely to be affordable was the quality of the schools. In other words, affordable real estate was hardest to find in cities with high school quality.

That isn't surprising, because not only is school quality a very important metric in itself, practically non-negotiable for parents, but it also correlates with a variety of factors. Better school quality is associated with lower crime, a higher median education, better jobs, and more. The chain of social outcomes indeed starts with schools.

In this post we'll explore the relationship between great schools and cost of living in more depth.

• Just to rehash what we talked about in the earlier post, cities with great schools are uniquely expensive. For instance, the median home price of the cheapest city with low property crime was $80,000. But the median home price of the cheapest city with great schools was nearly three times as much!
• Median home price by school quality quintile:
  • Top 20%: $725,000
  • Second 20%: $500,000
  • Middle 20%: $400,000
  • Fourth 20%: $350,000
  • Bottom 20%: $275,000
• Median apartment price by school quality quintile:
  • Top 20%: $2,300
  • Second 20%: $1,900
  • Middle 20%: $1,700
  • Fourth 20%: $1,600
  • Bottom 20%: $1,550
• Number of cities with median home price under $500k, quintile 1 (great schools): 41%
• Number of cities with median home price under $500k, quintiles 3-5 (average and worse): 77%
• Average income tax, quintile 1 (great schools): 4%
• Average income tax, quintiles 3-5 (average and worse): 3.5%
• Average property tax, quintile 1 (great schools): 1.1%
• Average property tax, quintiles 3-5 (average and worse): 1.1%
• When it comes to states, Florida's share of Tier 1s is fewer than half its share of Tiers 3-5. On the other hand, Minnesota, Texas, and Illinois have a disproportionate share of Tier 1s. But the cake is taken by California, which has 17% of cities with lower tier schools but over a third of the cities with great schools!

Besides the property tax finding, which is a bit surprising (one would expect good schools to cost taxpayers more), we find that good schools make cities all-round more expensive, or at least are correlated with factors that increase cost. Particularly notable is the $225,000 premium going from good schools (60-80th percentile) up to great schools (80+ percentile).

For your very own list of recommended cities based on school quality as well as many other factors, take our quiz!