Real estate is about the schools, right?
In The Two Income Trap, one of the ongoing tropes is that the pressure to send one’s children to “good” schools underlies the competition for houses in well-regarded schools systems. Ms Warren and Ms Warren Tyagi explain that women in the workforce increased the spending power of the family. The extra income did not go to runaway spending on clothes and other consumer goods. They say:
“…families where swept you up in a bidding war, competing furiously with one another for the most important possession a house in a decent school district. As confidence in the school system crumbled, the bidding war for family housing intensified, and parent soon found themselves bidding up the price for other opportunities for their kids, such as s slot in a decent preschool or admission to a good college. Mom’s extra income fit in perfectly, coming at just the right time to give each family extra ammunition to compete in the bidding wars – and to drive up the prices even higher to for the things they all wanted.”
I have written about schools on this blog and I have heard how important schools are. In my entry Is living well about the schools? the short answer was “yes!” Even for people without children, “everyone knows” that the price of a house depends on the reputation of the school system.
In The Two Income Trap, the authors quote a study that confirms that
“school quality was the single most important determinant of neighborhood prices – more important than racial composition of the neighborhoods, commute, distance, crime rate, or proximity to a hazardous waste site.” [Emphasis theirs]
The Two Income Trap authors say the solution to the housing crisis is fixing the school crisis. If the competition for schools was neutralized by more opportunity for education that isn’t tied to house location, then the inflation of “good school” towns would cool down.
“Any policy that loosens the ironclad relationship between location-location-location and school-school-school would eliminate the need for parents to pay an inflated price for a home just because it happens to lie within the boundaries of a desirable school district,” wrote Ms Warren and Ms Warren Tyagi.
Do you think that’s a feasible solution? Do you think Ms Warren should take on this one when she’s done with TARP?
Another problem facing young families is the simple lack of affordable family-sized housing anywhere, not just in the “schools, schools, schools” neighborhoods. Where there are larger condo units or houses, they are sold to people who have more spending power than many young families.
Reprinted from BREN, March, 2010.