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Schools Closing? Why You Should Care as an Investor

Nampa School District Announcement Affects Any Real Estate Investor

The Nampa School District recently announced the closure of four schools in Nampa, Idaho. While this news is disheartening, it is a trend in our area and throughout the United States. Let’s delve into some of the reasons cited for these school closures and explore why, as an investor, you should be concerned about schools and their potential closures.

Schools closing is typically seen as a negative development, and the recent Nampa School District (NSD) announcement has been met with quite a bit of sadness and anger, understandably so. As we will see, school districts, particularly high-performing ones, are crucial for parents. Today, I will show you why high-performing schools should be important to you as an investor. First, let’s examine some reasons why schools might close down.

Low Enrollment and Deferred Maintenance

Low enrollment is the primary reason cited for many school closures. Census data indicates a decline in birth rates, which undoubtedly impacts school enrollment.

Another significant issue is the millions of dollars in deferred maintenance required by many older school buildings. The rising materials and labor costs during this inflationary period have only exacerbated the situation. However, this only paints part of the picture, as while some schools are closing, others are thriving. So, what gives?

Changing Demographics

Often, changes in school enrollments can be best explained by analyzing shifting demographics and typical patterns of city expansion. For instance, since 2014, the Nampa School District has seen a reduction of about 2,000 students. However, during the same period, Nampa’s population nearly doubled. This raises the question: where did the children go? Many newcomers to Nampa are older and don’t have school-aged children. Additionally, the trend of having fewer children plays a role in reducing enrollments.

Moreover, as cities expand outward, inner-city schools often lose students to districts in newly developed areas. Another significant factor is the rise in charter schools. Many local charter schools in Nampa have experienced a slight increase in enrollments.

Why Care As a Real Estate Investor?

The correlation between schools and real estate property values is significant. Numerous studies have shown that high-performing school districts positively affect local property values. Many buyers and renters with children prioritize good school districts over other factors when searching for a new home. They value access to quality education without the additional cost of private schooling.

According to the National Association of Realtors (NAR), 53% of buyers with children consider school quality crucial in their housing decisions, and 43% are willing to pay more for a home in a better school district. The same sentiment is prevalent among renters.

While some parents manage to change their child’s school district, such transfers are often challenging to secure. Moreover, charter schools usually enroll students through a lottery system. If your number isn’t drawn, you may have to wait another year. Also, consider the logistics of school transportation. While school buses are free in Idaho, only some children can walk to a bus stop if it’s too far from home.

Research has shown that homes in high-performing school districts tend to be larger, with more bedrooms and square footage, leading to higher sustained property values. These homes are more resilient during market downturns because of the high demand for quality education. Even in recessions, families prioritize access to better schools.

In Conclusion

If you’re investing in real property, it’s crucial to understand the importance of school districts when purchasing rental properties. Higher demand for homes in good school districts translates to higher rents and less turnover, increasing your cash flow and reducing costs associated with tenant changes.

In summary, when choosing a property to invest in, consider the quality of the local schools and their proximity. Homes closer to top-rated schools typically have a higher value. Buying a property is akin to running a business, and you must consider your end customer’s needs. Start your research with tools like Google, Greatschools.org, Niche.com, and Schooldigger.com, and stay informed about the educational landscape to make savvy investment decisions. For more insights, contact our team at info@mywealthbuildersrealty.com.

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