Persistence and variation of schools as housing amenities

Research from the 1980’s to early 2000’s documents that home values reflect characteristics of neighborhood schools, but recent shifts in education and housing could be changing these patterns. In this paper, I first revisit an old question: how are neighborhood school characteristics capitalized into the value of housing? I then ask, how has this capitalization effect changed over time? In particular, I explore variation from 2008–2023, a period marked by rapid change in school choice, recovery from a housing bust, pandemic-related disruptions, and an increasingly competitive housing market. I use a boundary discontinuity design to compare property sales on either side of elementary school boundaries and explore variation in the capitalization of a variety of school characteristics across years and school and housing conditions. Overall, I document average patterns that are highly consistent with past literature, where test scores and student racial and socioeconomic demographics significantly affect housing sales prices but measures of school growth do not. I also find that the capitalization of test scores and student demographics varies over time, coinciding with the prevalence of school choice and the competitiveness of the housing market.