Tuesday, June 05, 2007

the housing that education built

Last week while exploring some city neighborhoods to gauge the current trends in rental and sales numbers, I was shocked into the realization of how much of a factor that free public education plays into the price of city housing.

Obviously, there is the well known rule that housing in districts known to have "good" public education is in higher demand relative to housing located in districts known to have inferior schools.

While that is certainly an important component of what "adds" value to housing, I was actually focusing more on the counterfactual speculation if public education in general leads to increases in the price of housing solely due to the effect that subsidized education leaving over increased funds available to bid up housing prices.

I find this train of thought interesting to one such as myself, living in a micro-neighborhood where a relatively higher number of students attend yeshiva, a form of private schooling. Looking forward at the prospect of shelling out 10K to send my son to kindergarten is a bit daunting in light that I would like to have a few more kids and not live in debt slavery.

What I realized that day while doing my market homework, when I saw lousy apartments in run-down neighborhoods were paying rents in the ballpark of what I'm paying in this more affluent manicured-front-lawn neighborhood made me think of the factors keeping prices lower around me and higher in those "good" public school neighborhoods are greatly affected in that the average joe around me share higher education expenditures and can't afford to spend as much for housing.

If effect this means that to some extent, the existence of free tuition is benefitting a class of building owners who reap the largess of the taxpayers who subsidize public education to their indirect benefit of increased housing prices.

The people who stand to lose from this proposition are the young professionals just out of school who have yet any substantial cash savings to speak of, nor any [grand-]children which could possibly benefit from this arrangement.

In a way, this also serves to keep the religious, private-school attending crowd living separate from those districts in which it is more common to utilize the public school system making adherence to the religious ghetto more rigid than it would be otherwise.

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