School Grades and Home Prices: An Empirical Exploration of the Housing Market within the Madison Metropolitan School District

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Cox, Lillie Catherine
Schools; school accountability; hedonic studies; homes; housing; standardized test scores; neighborhoods; real estate
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This paper explores the relationship between home sale prices and categorical accountability grades given to the public elementary schools they are zoned to. Using a model similar to the repeat sale model in Figlio and Lucas (2004), which controls for other home, neighborhood, and school attributes, I test for the presence of an independent effect of the categorical grades assigned to schools by the Wisconsin Department of Public Instruction on home sale prices in the Madison Metropolitan School District. While I find no statistically significant relationship between the categorical grades and home prices, I do find evidence to suggest that school attributes outside of reading and math proficiency are incorporated into a home's valuation. I then run a regression to test whether excluding controls for neighborhood differences changes my results, and I find that doing so both lessens the explanatory power of the model and, but for the math proficiency variable, artificially inflates the estimated coefficients on school attribute variables.