More Complicated Than You’d Guess

So, how big a premium do homes in stellar school districts fetch?

Conversely, how much of a discount is baked into the price of homes in poor school districts?

Two Sides of Same Coin

Step #1 is to realize that one size doesn’t fit all — that is, the discount/premium varies depending on several variables:

Such as:

–Exactly how much better (or worse) is the adjacent school district?  The bigger the absolute gap, the bigger the difference.

–Location within the district.  A home just outside a desirable school district — where kids can walk to a school bus stop — will be discounted less than a similar home far away from the boundary.  Of course, that’s assuming . . .

–Open enrollment policy.  What is the desirable district’s policy towards students who live outside the district?  The more open the policy, the smaller the discount for homes in the adjacent district(s); the more restrictive, the bigger the discount.

–Home size/features.  One would expect that a 1 BR/1 Bath condo — likely occupied by a couple or single — would have few or no school-age kids, and therefore the school district premium/discount would be small.

By contrast, a 4 BR/4 Bath home with over 3,500 square feet would probably be owned (at least at some point) by a family with several school-age kids, in which case the quality of the school district looms large.

Murky Comp’s

How does one begin to assign a value to all of the above variables?

If you’re lucky, you don’t have to:  there are one or more good Comp’s where that’s already been done.

The ideal match-up:  two identical homes on the same block or neighborhood, that both recently sold, and that straddle a school district boundary.**

In reality, the Comp’s are seldom that straightforward.

Either the homes vary in condition, style, or features; sold in different markets (more than six months apart); or the locations are not so identical.

Of course, it’s often the case that higher home values in areas with high-demand school districts can be attributed to other pluses as well, overstating the “good schools” premium (see below).

Cost-Benefit Analysis

Not everything associated with good schools is an unmitigated positive:  local property taxes can be higher, too.

Are good schools worth it, financially-speaking?

At least anecdotally, you’d guess “yes”:  that is, higher taxes are more than recouped by higher property values when it comes time to sell.

In the mean time, I’d argue that many other benefits are associated with good, local schools:  things like more cultural amenities; better and more interesting restaurants; well-cared for public spaces (and plenty of them); and arguably even better personal and community values.

It’s just not clear what’s the chicken and what’s the egg.

**Economists have a term for this:  “ceteris paribus,” the presumption that everything else remains the same.

See also, “Is There a Discount For Homes Located Across From a School?”; “What’s It Worth?  Accounting for a Basement Bowling Alley (But Preferably Not)“; “How Appraisers Account for a Bowling Alley in the Basement (Ideally)”; “Best Places to Live:  The Public Library Test”; and “Discounting for a One-Car Garage.”

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Twin Cities Staycation: Streak of 60’s in February!

by Ross Kaplan on February 19, 2017

Enjoying a Kansas City Winter . . . in Minneapolis

What does it feel like when normally frigid February temps are instead in the 60’s?

Not just once, but a couple days in a row!?!

It’s like a collective mid-winter “staycation” for the metro area’s 3 million inhabitants.

New Normal?

Growing up, whenever my Kansas City relatives expressed sympathy for having to endure the harsh local winters, my response was:  “it may be frigid, but at least it’s cold enough to have real winter sports (skiing, hockey, sledding, etc.).  You just have perpetual brown for 3 months — and tornadoes in January.”

While I may have said that, I never really believed it, and I was always secretly a little jealous of those easy winters further South.

Fast forward a couple decades, and exceptionally mild Minnesota winters appear to be the New Normal . . .

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Buyer: “Too Low!” Seller: “Too High!” (Huh?!?)

by Ross Kaplan on February 18, 2017

The Upside Down Negotiation

Normally, it’s the Buyer who insists on a lower price, and the Seller, a higher one.

The exception?

When the two parties to the transaction are long-time friends, and the subject matter is a used car (pictured with its new primary driver, my 17 year-old son, above).

To get the deal done, my buddy (and car seller) agreed to come up $500 and I agreed to come down $500.  🙂

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Slow Scanner: “Ahhh, So THAT’S What the Holdup Is!”

by Ross Kaplan on February 17, 2017

Smarter Printers Necessitate Better Security

It turns out that it wasn’t just my imagination.

About a month ago, what had ordinarily been a brief delay to scan and email documents suddenly became . . . much longer (in some cases, as long as 20 minutes).

High Tech Swiss Army Knives

The explanation?

Today’s sophisticated, combination scanner/copier/faxes include hard drives for storage, and are networked to multiple computers.

While that makes the devices more useful, it also makes them potential targets for hackers.

To protect clients and agents, Edina Realty added extra security software.

Presumably, other vigilant brokers are doing likewise . . .

See also, “Memo to Home Buyers, Pre-Closing:  Be VERY Careful Who You Wire Money To.”

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“What Didn’t the President Know, and When Didn’t He Know it?”

February 16, 2017

WSJ:  “Spies Keep Intelligence From Trump“ [Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.] That’s one way to protect against treason. Namely, keep the President and his inner circle out of the loop, so they can’t betray any […]

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17 Reasons (at least) Why It’s Never a Good Idea to Exaggerate a Home’s Square Feet

February 16, 2017

Homes That Don’t Measure Up (Literally) Hush, little baby, don’t say a word. Papa’s gonna buy you a mockingbird And if that mockingbird won’t sing, Papa’s gonna buy you a diamond ring And if that diamond ring turns brass, Papa’s gonna buy you a looking glass And if that looking glass gets broke, Papa’s gonna […]

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2017 Edina Realty “Circle” Awards

February 15, 2017

Realtor Bragging Rights Professionals who are coached from Day #1 in the business never to be “secret agents” can hardly be expected to be shy when they receive a sales honor. Especially one as meaningful and hard-earned as an Edina Realty “Circle” award, handed out annually to the company’s top agents (mine is pictured above). “Birds […]

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Saturday(!) Open House Stampede

February 14, 2017

Current Twin Cities Inventory of “For Sale” Homes:  < 9,000 Units** Exactly how tight is the Twin Cities housing market at the moment? So tight that Saturday open houses are mobbed, never mind Sunday. One Edina Realty – City Lakes agent reported that 60 people came through her Saturday open last weekend. **At the peak […]

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