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Public School Reform, Expectations, and Capitalization: What Signals Quality to Homebuyers?

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  • Velma Zahirovic‐Herbert
  • Geoffrey K. Turnbull

Abstract

This paper offers new evidence on how housing markets capitalize school quality information. We use school assessment measures and house transaction data from a single school district that is coterminous with a unified city‐county local government to examine the effects of two school assignment policy changes. The unusual school district‐city‐county government structure minimizes properly tax rate and public service variation across observations, reducing the source of one problem that plagues many capitalization studies. The school reassignment events reveal direct ties between school quality capitalization and households' expectations—the latter reflected in private school enrollment and tax referendum voting. Different school performance measures convey different information to home owners. In particular, student test scores do not affect house prices when broader school performance measures are published. Prices respond to measured school improvement, but improvements in a given school are more highly valued than being reassigned to a better school.

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  • Velma Zahirovic‐Herbert & Geoffrey K. Turnbull, 2009. "Public School Reform, Expectations, and Capitalization: What Signals Quality to Homebuyers?," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 1094-1113, April.
    • Handle: RePEc:wly:soecon:v:75:y:2009:i:4:p:1094-1113
    DOI: 10.1002/j.2325-8012.2009.tb00948.x
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    References listed on IDEAS

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    Cited by:

    1. Crocker H. Liu & Patrick S. Smith, 2023. "School quality as a catalyst for bidding wars and new housing development," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(4), pages 785-818, July.
    2. Shikong Luo & Alan Tidwell & Sherwood Clements, 2022. "Does Political Uncertainty Affect Residential Development?," The Journal of Real Estate Finance and Economics, Springer, vol. 65(4), pages 572-592, November.
    3. Geoffrey K. Turnbull & Minrong Zheng, 2021. "A Meta‐Analysis of School Quality Capitalization in U.S. House Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(4), pages 1120-1171, December.
    4. Eli Beracha & William G. Hardin, 2021. "The housing price premium associated with charter schools," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(4), pages 1267-1289, December.

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