Parents looking to buy a home in a top-rated school district premium area face a significant financial burden, according to a recent analysis.
In Los Angeles specifically, purchasing a home in an exemplary school district requires annual housing costs that essentially consume a median-income household’s entire yearly earnings.
Real estate firm Redfin analyzed home sales across 81 major metropolitan areas from January to June of this year. The data revealed that the national median price for a home in a public high school district rated 8 to 10 out of 10 was $580,000. This is $150,000 higher, or 35% more expensive, than the overall national median home price of $430,000.
The bigger issue than the home price itself is the income-to-cost burden. Buying a median-priced home in a top school district requires an annual income of approximately $159,157. This is about $41,000 more than the $117,995 needed to purchase a standard median-priced home. Meanwhile, the national median household income stands at just $87,599.
The situation is much more severe in Los Angeles. When a median-income household buys a home in a top school district, housing costs soar to a staggering 99% of their income. This practically means a family must spend almost everything they earn exclusively on housing.
While standard homes in LA already require 72% of household income, moving into a top school district pushes that figure to 99%. This represents the most severe housing affordability burden in the entire country. San Jose at 85%, San Diego at 81%, and Oakland at 74% also highlight how major California cities dominate the top of the list.
An interesting exception is Anaheim in Orange County, an area with a large Korean population. The median home price in the Anaheim Union High School District was $1,325,000, only 6% higher than the overall median price of $1,250,000. This is virtually the lowest premium among all surveyed cities.
Redfin attributes this to the fact that about 70% of schools in the Anaheim area are classified as top-tier districts, giving it the highest proportion in the nation. Because good schools are relatively common, scarcity premiums for specific districts are not as high. However, because baseline home prices are already exceptionally high, the income-to-cost burden for top-tier district homes still reached 82%.
Nationwide, the barrier to entry for quality school districts remains high. Median-income households could afford only 13% of listings in top school districts—about 1 out of every 8 homes. By comparison, 27.6% of standard homes fell within the purchasing power of median-income earners.
On the other hand, Philadelphia, which boasts the highest school district premium, saw top-tier homes priced at $600,000, a massive 93.5% higher than the city’s overall median price of $310,000. Fort Worth also recorded a high premium of 81.7%, followed by Akron at 78%, and Detroit at 77.2%.
Ultimately, in California, the question of ‘how much more expensive a home is because of a good school district’ has taken a backseat to whether buyers can afford the already inflated baseline prices. In particular, the 99% income ratio in Los Angeles clearly illustrates just how out of reach homeownership has become for middle-class families chasing better educational environments.
