Buyers Also Face Shortage of Quality Schools

May 23, 2017

Home buyers aren't just having difficulty finding a house in a low-inventory environment. They're also struggling to find quality schools for their children.

While enrollment in schools has increased, state and local funding for construction of new schools is down. Though governments spent $12.6 billion on elementary school construction in 2016—which is the highest amount in six years, according to Census data—it reflects a 31 percent decrease compared to 2008. At the same time, enrollment has risen by 4 percent, Bloomberg reports.

"Spending declined during the recession mainly because 80 percent of that spending is local dollars, and the local governments didn't have the money," says Alex Donahue, deputy director for policy and research at the 21st Century School Fund, a nonprofit in Washington, D.C.

Schools are still trying to play catch-up from the housing crash, analysts say. Many states opted not to raise taxes to close budget shortfalls, instead deferring maintenance costs on existing facilities and holding off on building new ones, says Elizabeth McNichol, a senior fellow at the Center on Budget and Policy Priorities. School funding is often driven by property tax revenue, but local governments were limited in their ability to raise property taxes when home values were falling.

Because schools are often a selling point for house hunters, a period of lower investment in education has implications for school districts, housing experts say. Public schools nationwide need an extra $46 billion annually to maintain and update existing buildings and pay for new ones, according to the 2016 report from the 21st Century School Fund. Georgia, Florida, and Texas are the only states that have exceeded the minimum capital construction and maintenance spending levels needed, Bloomberg reports. On the other hand, 18 states have spent less than 60 percent of the amount needed.

Source: “The Next Shortage Facing Young Homebuyers: Good Schools,” Bloomberg (May 19, 2017)