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Study: Better schools, fewer foreclosures

Current or potential parents in the Washington, D.C., area may be looking for foreclosed properties to save a little money, but if they are looking in a district with highly rated schools, they are probably out of luck. A new analysis for Developments by Location Inc., a company that collects and analyzes data for businesses and consumers, shows that the percentage of foreclosure sales were lower in areas with higher-rated schools.

The company looked at six months of sales data collected by RealtyTrac Inc. in 2011. Five metro areas were chosen from around the country to represent the general market. In addition to having lower rates of foreclosure sales, homes in areas with better-ranked schools also sold for higher prices and cost more per square foot.

According to Location Inc.'s chief executive, it is difficult to find a foreclosure in a good school district. He, along with a colleague, conducted the research and found the link between school district rankings and foreclosure sales.

The link between school districts and foreclosure sales, however, may not be direct. One economist believes that the link between the two is ultimately income. Districts with better-ranked schools attract higher-income families, who in turn pay taxes and better fund the school system. The monetary cycle results in and causes both factors.

In addition, higher-income homeowners were less affected by the housing crash. The top third of homes dropped 26 percent in value while the bottom third lost 37 percent. Even as the housing market crashed, schools remained an important factor for home buyers, leaving certain districts less devalued than others.

Source: The Wall Street Journal, "One Antidote to Foreclosures: Good Schools," Matthew Strozier, Nov. 16, 2011

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