Real Estate

When buying real estate, in addition to other considerations, like view, condition, privacy, style, acreage, or a bedroom on the first floor, school district rankings can be a factor in the buying decision, as are property taxes. Both can be important to buyers. But just how important?

A look at the public school districts

Even if you have no children to send to public school, potential home buyers should identify the property’s school district and school. School district boundaries are surprising, illogical, and don’t coincide with town, zip code, or even county boundaries. Real estate listings on Realtor.comor real estate brokers’ websites may not include correct school district or individual school information. For Dutchess County the most certain answer can be found by inputting the property address on Dutchess Parcel Access (gis.dutchessny.gov/parcelaccess). Another source is Niche.com, which not only identifies the school district, but also provides ratings for the relevant elementary, middle, and high schools, and lists real estate for sale in the district. 

In northeastern Dutchess County, there are seven school districts that include six towns in the northeast corner stretching north into Columbia County and west to Rhinebeck and Red Hook on the Hudson River. Each of these districts have very different performance ratings and demographic profiles. 

It would be advisable for buyers with school-age children to do their own research on school performance. A realtor isn’t permitted to advise them. According to Julie King, who manages the agents of William Pitt Sotheby’s in Litchfield County, “Real estate agents can direct buyers to third-party sources of objective data about schools, such as the state’s Department of Education website, or sites like Niche or Great Schools to do their own research. Agents should not give their own opinion on a school’s quality or make statements about which districts are ‘good’ or ‘bad.’ Fair housing laws prohibit agents from engaging in ‘steering,’ which could lead to discrimination.” 

Across Dutchess County, school performance as gauged by New York State varies widely. In Webutuck, only 26% of students in third to eighth grade are deemed proficient in English, whereas 71% of students in Rhinebeck make that rank. Many factors contribute to this disparity among schools, with a high percentage of English language learners and an economically disadvantaged student population responsible for much of the difference. For the curious, the New York State Education Department website (data.NYSED.gov) provides granular details by individual school, including performance by grade and gender, AP courses, school spending, and composition of the student body.

Every institution gets graded these days. The chart on page 22 shows the online rankings of area high schools from three different sources. US World News & Report publishes national ratings that list Rhinebeck’s High School at number 1,211 in the nation and Webutuck at 13,427. These grading systems are subjective and not totally consistent. For example, Webutuck High School receives a B- from Niche but only a three out of ten from Great Schools. 

One young couple with a newborn that I know wanted to move out of New York City and researched schools in our region. They decided to build a house in Milan partly because the property is included in the Rhinebeck School District. To get a personal feeling for a school and whether it might be right for you, one can check out the school’s website and calendar, attend a PTA meeting, talk to parents, go to a basketball game, or attend a school board meeting. 

Private schools might be an option for some

Proximity to private pre-K and prep schools is an alternative for some parents who buy a great house in a challenged school district. Across the border in Connecticut, The Hotchkiss School has been selected as the Number #1 Prep School in the nation by Niche, which gives high marks to all of the area prep and day schools. 

Talented local students can receive substantial financial aid from these institutions. According to Niche, 36% of Hotchkiss students receive financial aid averaging $56,854. Also, under New York State law, school districts are required to provide bus transportation to independent and religious schools for students who live in their school district. For example, students that live in Pine Plains may request free bus transportation from the district to take them to private schools like Dutchess Day in Millbrook. For families moving from New York City, the availability of good public and comparatively inexpensive private schools with free transportation makes real estate in Dutchess County attractive.

Buyers without children still pay school taxes

New York State school taxes, which typically comprise more than half of the local property tax bill, by themselves can be an important consideration when buying. The tax on a $500,000 house ranges from a high in Red Hook of $8,050 to a low of $3,385 for Taconic Hills in adjacent Columbia County. Compared to Westchester County, our region’s school taxes are lower, but so is the ranking of many of our public school districts. 

The big question: Do public school ratings affect real estate prices?

Numerous news articles have appeared stating that excellent school districts raise real estate values by anywhere from 10% to 20% over similar homes in average districts because of higher demand from families and greater resale value. Other sources claim that 40% of all buyers with children under 18 are influenced by the quality of the school district when selecting a home. 

Is that true in our real estate market, where national trends don’t necessarily apply because of lack of new housing developments, varied housing choices from estates to mobile homes, slim inventory, and a predominance of wealthy second home and empty nest buyers not interested in school ratings? 

Gauging the impact of area school district performance and tax rates on real estate prices is difficult given the complex Venn diagram of overlapping town, school, zip code, and county boundaries. To attempt to determine whether school performance has impacted real estate prices in northeastern Dutchess County, ten years of real estate sales of single residence homes were analyzed for Milan, Washington, Stanford, and North East from New York State Sales Web – the only source that captures both town and school district information. 

In rural northeast Dutchess County, most towns send their students to at least two school districts and sometimes as many as four. Children from the Town of Milan may attend the highly rated Rhinebeck or Red Hook School Districts or the Pine Plains School District, which also extends into adjacent Columbia County. Comparing the median price of real estate purchases in the four school districts in the Town of Stanford, for example, is surprising. Millbrook, the highest rated district for Stanford property owners, had the lowest median home price of $325,000. Webutuck was the highest at $765,000. Not what would be predicted based solely on school rankings. These are ten-year sales numbers and do not reflect median price levels today; however, results are generally consistent with the current median price levels. One conclusion is that the town and tax rate may be more relevant to housing value than the school district.

What is different about the towns in northeast Dutchess County?

While families do relocate to our area and adjoining Connecticut, northeastern Dutchess County is an active second home market and attractive to retiring empty nesters. This is especially true at the higher end of the market, where a million-dollar house seems like a bargain compared to a similarly priced one-bedroom Manhattan apartment. 

Doug Maxwell, partner at Upstate Modern, which designs and builds striking contemporary houses in Milan, shared his thoughts on the findings. “I’m not that surprised. Typically, our clients, who are looking at higher-end homes toward the top of the market, are not overly concerned about school district. It doesn’t come up as a buying consideration that often. There are certainly exceptions for younger families looking for the Rhinebeck area to be their primary home, but most are purchasing as a second home or have kids out of grade school. I would expect that mid-market homes might have a stronger price premium by school district, but above a certain price threshold this isn’t surprising to me.”

Everyone asks about property taxes in New York

Every buyer, even those of luxury estates, is concerned about how much they will pay in property taxes – again northeastern Dutchess County seems like a bargain compared to northern New Jersey or Westchester. While the quality of the school system may not be relevant to a buyer, school taxes typically comprise over 50% of property taxes.

It’s difficult to prove a historic, verifiable connection between school district rankings and single-family home prices, except to suspect that an excellent public school district with low school taxes like Rhinebeck may make a property more attractive to some buyers with school age children. 

It’s also possible that properties in underperforming school districts with high taxes, like Dover, may adversely affect median home prices. But what is the cause and the effect? 

“In southern Westchester, where we’ve lived for 35 years,” said one couple currently selling in Westchester and buying north, “it’s generally accepted that the strong public school systems are one of the most important drivers of home prices. Many people are willing to pay exorbitant home prices to gain access to the local public schools. Now that our kids are grown, it’s a relief not to have to factor the quality of local schools into our decision process as we hunt for a retirement home.” •