Dr. Joseph Von Nessen is presenting a research paper examining the effect of school quality on housing prices at the annual conference of the Allied Social Science Associations, which includes the American Real Estate and Urban Economics Association. The paper being presented used a specific statistical method to test the degree to which certain school quality measures are capitalized into housing prices in the Charleston, SC market and can be adapted to determine the effect most housing variables have on prices.
Specifically, during the housing boom years (2001-2007) when the No Child Left Behind (NCLB) legislation was in place, were homebuyers willing to pay a premium for houses zoned for high schools that received a "passing" NCLB rating - known as "adequate yearly progress?" The findings indicate that the answer is yes, and that the price premium was as high as 5%.
This result represents a specific application of a more general modeling technique methodology to quantify how potential homebuyers value a wide variety of non-traded housing amenities (e.g., school quality, proximity to downtown, sidewalks, homeowner's associations, etc…). The process can be used by builders and developers to aid in a cost/benefit analysis when looking to decide on which features are most important to their potential customers.
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