Smithers Journal of Education:
CONSIDERATIONS OF LOCAL IMPACT
SMITHERS JOURNAL OF EDUCATION #2
WHAT EVERYBODY IN SMITHERS NEEDS TO KNOW ABOUT EDUCATION
Tuesday 19 July 2016
The effect of Smithers beginning to offer Boeing-787-quality education would be to increase Smithers attractiveness as a place to live and work and do business, and therefore the effect would also be to increase property values.
But by a lot or only a little? In the Toronto-area example below, the introduction of improved schooling seems to have triggered "insane bidding" and at the end of three years a doubling of nearby house prices. (Typos have to be forgiven in the exVancouverite comment immediately below — how many of us have discovered that once you hit SUBMIT in a hastily-composed comment, editing becomes impossible?)
How Much Do School Rankings Affect Real Estate Values?
The first question that the above example calls to mind is whether the doubling may have been, at least in part, caused by a widespread jump in house prices over the entire Toronto area — which the two graphs below suggest was not the case. The three-year interval described above seems to have been around 2000 to 2003, over which interval the graphs show no spike in house prices, but rather only an annual increase of about 5%.
Real estate property price trend in Toronto
Whenever anybody wants to know school quality in Canada, they turn to the Fraser Institute rankings, as for example does realtor Brook Ewert, the top of whose very long web page on the subject is reproduced below:
However imperfect the Fraser Institute rankings may be, there exists no better reflection of school quality, and to ignore them would in most cases amount to accepting total ignorance on a subject of vital importance.
Anyone studying the effect of school quality on property values, then, has no choice but to rely on Fraser Institute rankings, as for example TheRedPin had no choice in its study from which excerpts have been reproduced below. Of course every study will arrive at different estimates of the effect of school quality on property values, and it is understandable how TheRedPin estimates are less startling than the doubling of prices that we saw in Richmond Hill — understandable because that Richmond-Hill doubling may have occurred when what was widely perceived as a very poor school was replaced by what was widely expected to be a very good school, whereas TheRedPin seems to have omitted the very best schools from consideration (the independent schools), and compared the better of the remaining public schools not to the worst schools but only to the Toronto average. Among TheRedPin necessarily-muted conclusions can be found, for example, that a Toronto townhouse will cost 42% more if located near one of the better public schools:
And so where might a future Smithers increase in property values be predicted to lie on the continuum which we have seen ranging from 45% to 100%? It is possible to imagine that a Smithers real estate jump might lie toward the high end, and perhaps even way beyond the high end.
Consider first that the seeming cause of the Richmond-Hill house-price doubling may not have been a particularly outstanding school. Don't know how it ranked in 2000, but in 2012 it was a respectable but far from jaw-dropping 13/781:
from the Fraser Institute, covering the 2014-2015 school year, ranks Richmond Hill Secondary as 25/676, which again might be considered respectable, but falling short of Boeing-787-quality. And finally the very highest Richmond Hill ranking that I could find is 10/627 "in the most recent five years" in the same Fraser Institute report as just cited.
Why I fail to be impressed by all such Richmond Hill performance is that the examinations that feed Fraser Institute statistics are easy examinations, so easy that in earlier writings I referred to them as LOWLY examinations, and which I would on this occasion typify as sub-Boeing-787-quality examinations. As a reminder, here is one question of the four asked of BC 12-year-olds in Grade 7 that I cited earlier in Smithers Journal of Education #1:
When exams are in the LOWLY realm as above, even a perfect Fraser Institute rating of 10.0/10.0 and ranking of 1/781 fails to impress, and yet it is performance only in the LOWLY realm and that nevertheless fell short of perfect that seemed capable of doubling house prices in Richmond Hill.
But then what jump in house prices might be expected from the arrival in Smithers of a Boeing-787-quality school in which 12-year-olds in Grade 7 were perfectly answering questions in the LOFTY realm, questions like the following?
No one can answer such a house-price question with any confidence because it lies entirely within uncharted waters. But it is a corollary to this inability-to-answer that is of utmost importance — that at the same time no one can reject the possibility that the effect of the arrival of a Boeing-787-quality school in Smithers could be phenomenal.
Of course the purpose of the Canyon Creek School is not to elevate real estate prices, it is to give students the best education possible, and by so doing keep all their career paths open. If they apply to the Harvard Law School or the Stanford Medical School or the Computer Science and Engineering School at MIT — or anything whatever — they will be admitted and they will be awarded scholarships and they will graduate magna cum laude and they will deliver the valedictorian address. That is the primary benefit of the Canyon Creek School. This primary benefit is not one that will be delivered to only a few model students, it will be delivered to students who today are performing only modestly in regular school and to students who today are not at all thriving in regular school and to students who have been written off as unpromising by the regular-school system. The primary benefit will be the discovery and development of the hidden genius that lies within every child.
At the same time, however, economists have noticed a benefit beyond that which accrues to the student enjoying the improved education — namely a large expansion of national wealth, as can be read in Chapter 1 of my article Genius Is The New Normal.
And our discussion in the instant paper now proposes that the introduction of improved schooling can have a powerful and immediate impact on the local community as well.
That powerful impact can be described broadly as an enhancement in the attractiveness of the school-improved community, and that attractiveness happens to come with a convenient measure — property values. The more attractive an area is made, the more people want to live in it, and so the higher do real estate prices climb. Climbing real estate prices are an inescapable concomitant of any community improvement. If you improve health care in Smithers, real estate prices will go up, but would that be a reason to block improving health care? It's the same with education, and it's the same with everything. If Smithers patches the cracks in its sidewalks or picks up the litter in its parks or repaints the lines on its roads or adds an ambulance to its fleet — Smithers real estate prices will go up. To be against rising real estate prices is to be against all improvement, against all progress. It is utterly impossible to make a town a wonderful place to live without people bidding increasing amounts of money for the privilege of living in it.
And so in this way, improved schooling becomes a legitimate and powerful tool in the hands of city planners and of economic-development promoters — they can make an area thrive culturally and economically by improving its schools. If the school improvement is of noteworthy magnitude — say an improvement from LOWLY to LOFTY education which registers as noteworthy even in the international arena — then a cultural and economic renaissance can be delivered more quickly to a community, and requiring a smaller capital investment to trigger, than is attainable by any other means.
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