The Value of School Quality during a Pandemic

The COVID-19 pandemic transformed the everyday life of U.S. families during 2020. This paper examines how the dramatic changes to schooling during the COVID-19 pandemic impacted the capitalization of established good schools into home prices in the Las Vegas urban area. Our findings show evidence that the pandemic changes negatively impacted the capitalization of school compared to the pre-pandemic period. We provide hypotheses tests for the potential mechanisms behind this effect. We find that the estimated pandemic effect was driven by the combination of a strong housing demand and a more elastic housing supply during the pandemic period. We estimate a flexible hedonic specification which accounts for unobserved neighborhood quality using a combination of spatial and temporal neighborhood fixed effects. Our estimates account for the spatial distribution in COVID-19 cases, school peer effects, alternative school choices and changes in the housing demand and supply over the pandemic period. Overall, the results tend to suggest that the changes took place during the COVID-19 pandemic adversely affected homebuyers’ preferences for neighborhood public schools.