Friday, October 2, 2020

Market Remains Hot, Schools Still Major Driver

I have found myself working with some buyers in that aggressively pro-seller price range right around $400-500k and even in the $350k range. The market dynamics are very different in the higher ranges leaning slightly in favor of sellers but the market will not tolerate an overpriced listing in the $500k plus price range. Once buyers start peering though the windows of homes under half a million dollars sellers are demanding the sky and yielding little on terms and price.

Let there be no doubt record low interest rates are driving buyers to the market, especially those at or near the bottom price ranges. This is it, if rates pop up a bit or prices continue to soar the entry level buyers will be left holding an empty bag.

Schools continue to be a major market driver, but buyers with school age children should do more than casual research on schools before plunging into a hyper inflated locale based solely on local reputation. Great Schools an Niche Schools both offer fairly in depth looks at district wide ratings as well as individual school performance. 

One thing to consider when looking at an area such as Camas, WA which has a local median home price of roughly $525k. Camas Schools are well regarded on most if not all school monitoring sites, and well regarded in the local community as well. However there are two important things a home buyer may want to consider. First, there are two other school districts nearby that may be rated slightly lower but it is in some cases the difference between an "A" and an "A-" or "B+". Second Camas happens to have the highest property taxes in the area and that is an additional homeowner burden.

Comparing 98607, Camas to say 98683 which is the Cascade Park and Fishers Landing area of East Vancouver you will find that each area is served by excellent schools. 98607 is A rated by Niche Schools and 98683 is B+. The median home price in 98683 runs about $415k a full $110,000 less and the property tax millage rate is about 30 basis points lower in 98683 as well. The savings on the home could pay for two kids to spend 5 years each in a private school. 

I bring this up only because I have watched people frankly overpay for a property in a specific school zone when other much better values existed in areas with near equal school performance and in some cases BETTER ratings. Buyers should do serious research into schools before spending tens of thousands of dollars extra for a house because it is in the school district everyone around the water cooler says is best. This is of particular importance when the budget is tight.

I have written about schools many times, and one thing that Washington State can hang its hat on, is our strong and powerful constitutional language protecting schools. Even the "worst" schools in Washington are often better than the best schools in many other states. 

One final note about schools. When looking at school ratings one should use a few tips to regulate the emotion. Remember that many apps use at least some local reviews and that the "yelp" effect can skew the results. A few angry people venting over a nothing burger should carry little weight. Also individual test scores at a specific campus are not as big a factor in the overall quality of education as looking district wide. If the same school district has two elementary schools one is rated a "2" and the other a "9" there is much more to that story than one is crappy the other is great. School districts tend to employ district wide curriculum and teacher standards including student teacher ratios. There are apps that rate entire districts and that is just as important and maybe even more important than the specific campus results.

How could the same district have such different outcomes? Well this does in fact happen and it is often due to the demographics in the local area. Some areas may serve a lot of professionals others may serve a large factory with high paying vocational jobs. Different demographic groups have different views on education. Also the schools will ebb and tide as the local family population moves through various cycles and campus populations fluctuate accordingly. Today's overcrowded high school could be just right in a few years as the neighborhood evolves. 

The district ultimately provides an opportunity for all students to succeed be they college bound, vocational students, or athletes. The policies and quality of the district are at the very least equal weight to individual campus performance. 

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