Study: School Choice Increases Property Values

Published February 7, 2014

A new study finds school choice increases local property values.

Study authors Robert Shapiro and Kevin Hassett found property values increased in relation to student achievement gains. Expanding charter schools increased student performance in New York City schools. Graduation rates rose, net income rose, and housing demand in these neighborhoods increased.

They also found opening a new charter school is associated with a 3.7 percent increase in home prices in the same ZIP code a year later.

Motivated by the rising value of his own neighborhood when a charter school opened, Hassett thought parents would want to know more than test results.

“Maybe test scores aren’t the best metric of what we’re looking at when we’re giving people choice,” Hassett said. “If we trust that parents are stewards of their own kids, and we see they are lining up to send their kids to this place,… we should celebrate the place, even if it doesn’t make test scores go up.”

$37 Billion in Added Property Value
From 2006 to 2012, New York City graduation rates increased 11.3 percent, the study noted. Hassett and Shapiro deduced this increased residential housing values by as much as $37.1 billion. The authors estimate adding charter schools accounted for more than $22 billion in housing value increases.

A 2009 study examining Edgewood, a San Antonio suburb, found similar results. When this area significantly expanded school choice, numerous people moved there and businesses followed, said study author John Merrifield, an economics professor at the University of Texas at San Antonio.

The results of Hassett and Shapiro’s study are not surprising, he said.

“One place’s gain is another place’s loss, so we can’t use this in a macro sense, but so that districts compete,” Merrifield said. “This is the shortcut to creating a wildfire of spreading school choice…without spending any more tax dollars.”

Benefits to Incomes, Integration
“Universal choice and budget resources tied in part to student enrollments have created much greater competition for students among schools,” the authors note in their study.

A 2012 study found open enrollment policies increased local property values by approximately 3 percent.

“You would expect an even bigger increase from inter-district choice because if you have two school districts you have direct competition,” said study coauthor Randall Reback, an economics professor at Columbia University. “When you expand choice, not only does it increase the house values in places where people are interested in transferring outside of their districts, but can also increase the median income of residents. It can create residential integration as a result.”

The authors plan to replicate the study in other cities, but they have not determined the locales yet, Hassett said.

“There’s going to be a lot of new research on recovery school districts,” Reback said. “Maybe two or three years down the road, I think we’ll see the same results.”


Learn more:
The Economic Benefits of New York City’s Public School Reforms, 2002-2013,” Robert Shapiro and Kevin Hassett, December 2013:

Image by Ben Schumin.