Alpharetta Real Estate » Are These Real Estate and School Statistics Meaningless?

24Feb

Are These Real Estate and School Statistics Meaningless?

categories: Alpharetta Real Estate, Schools

A few weeks ago, the AJC Homefinder published an article implying that the SAT scores of an area high school drove the average sales price.

The argument went that Higher SAT Scores => Higher Average Sales Price. The first rule of statistics, other than there is a statistic to prove every point, is that correlation does not prove causation. It is possible for two statistics to be positively, or even negatively, correlated and still have nothing to do with each other.

For instance, many people gain weight as they get older. Does aging cause obesity? Hardly not. Not being active and eating the wrong food causes obesity.

When I read the Homefinder article I immediately thought to myself that the opposite hypothesis was true: Higher Average Sales Price => Higher SAT Scores. It is the classic chicken and egg problem: what came first? Was an area wealthy first and that helped the schools perform well or did the students pull an average area up by its bookpack straps and cause other parents to want to move there, which drove up the home values?

Of course, there really is no "right" answer. The Homefinder was simply trying to put a real estate edge on a topic, because that is what they do: write about real estate to sell newspapers/advertising. But if we really analyze it, good schools are more often than not the result of good community and family situations. That is, families with one stay at home parent, two parent families, stability, discipline, educated parents, involved parents, low crime and violence…you know, family values and community involvement.

To say that schools drive home prices…all we can say is that there is a correlation. What is more accurate, and the title of the Homefinder article, is that schools do "make" the sale. If given a choice to purchase a home in an average or outstanding school district, a family will always pick the outstanding if they can afford it (and find a house they like - or may settle on one they don’t like as much).

The Homefinder article points out that over a hundred homes were sold in one intown school district and only seven in an adjacent district. Clearly schools matter. Schools are the number one thing that prospective buyers in the area ask me about when considering different areas. [Check HERE for more school comparision data.]

And sellers in good school districts, Milton in particular, always want to put a premium on their home because of the "quality of the schools." The numbers below show that the average price in Milton High School district has increased faster than in the other districts.

So, let’s look at some meaningless statistics ;-> The Homefinder article gave average sales price and SAT score for two Gwinnett and Cobb County high schools. Unfortunately they didn’t publish the numbers for North Fulton, so I went and crunched the numbers for all six North Fulton High Schools, just for curiosity’s sake. [Note: If you are interested in average sales price in other high school districts, like Forsyth or Cherokee for instance, just call me and I'll gladly crunch those numbers for you.] Here is what I found for North Fulton High Schools:

Average Home Price and SAT Score by Neighborhood in North Fulton

School		2005	2006	2007
Alpharetta High School
	Avg. Home Sale	$421,312	$420,242	$402,578
	Avg. SAT Score	1045	1596	1647
Centennial High School
	Avg. Home Sale	$338,386	$347,722	$368,874
	Avg. SAT Score	1104	1638	1639
Chattahoochee High School
	Avg. Home Sale	$355,858	$391,857	$378,804
	Avg. SAT Score	1120	1666	1654
Milton High School
	Avg. Home Sale	$470,740	$506,144	$566,015
	Avg. SAT Score	1114	1641	1641
Northview High School
	Avg. Home Sale	$393,529	$438,162	$448,068
	Avg. SAT Score	1145	1670	1702
Roswell High School
	Avg. Home Sale	$361,958	$367,418	$399,384
	Avg. SAT Score	1097	1663	1689

Here is my biggest finding: if you look at the price per point of SAT result, the best place to buy a house is in the Northview High School District. There, one SAT point costs you $236.53. How is that for a meaningless statistic? Centennial and Milton have the highest price for a point of SAT at $245 per point. Again, meaningless, but fun to calculate.

It is interesting to see the averages by school district, a number that is not readily available elsewhere, and it shows that the most expensive district to live in (Milton) doesn’t have the highest SAT scores. There are tons of other factors at play here. Bottom line is that all the schools are good and that the housing opportunities are just different in each.