Introduction

The quality of the public school district is a very common factor influencing families as they decide where to purchase a home.  In my experience, it is often one of the most important factors as families decide where to conduct their home search or to short-list prospective areas around Cincinnati before they begin searching homes in earnest. With this in mind, I sought to compare school quality with the cost of homes to help families make more informed decisions among the many school districts in the Cincinnati area. The Ohio Department of Education (ODE) Performance Index was compared to median sales price, a hypothetical monthly mortgage payment, and the median sales price per square foot of home. This comparison helps identify school districts that provide the best education for different budgets.

Table 1. All School Districts in the Analysis, Ranked by ODE Performance Index

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SFHypothetical Monthly Payment
Madeira City109.171$380,000$437,209$172.59$193.16$2,127.06
Indian Hill Exempted Village107.96$785,000$882,381$196.76$204.64$3,793.76
Mariemont City107.391$391,500$448,687$175.91$190.25$2,332.99
Wyoming City105.901$382,000$401,756$164.84$160.42$2,211.35
Sycamore Community105.731$410,000$453,274$151.40$160.85$2,216.54
Mason City104.54$385,000$429,667$124.77$134.55$1,936.29
Loveland City101.11$370,000$371,522$133.21$139.44$2,064.17
Forest Hills Local100.806$272,000$333,516$133.18$134.93$1,535.34
Lakota Local97.117$316,000$344,482$121.43$126.95$1,678.80
Milford Exempted Village96.933$300,000$299,433$127.55$135.39$1,663.48
Oak Hills Local96.424$175,000$212,506$113.83$120.44$962.55
Southwest Local95.007$255,450$257,415$112.46$125.48$1,335.86
Deer Park Community90.689$190,000$188,386$140.36$145.55$1,142.65
Three Rivers Local90.437$313,250$290,725$121.46$128.02$1,728.64
Fairfield City86.475$229,500$236,749$116.65$120.45$1,190.81
Norwood City84.295$166,500$181,134$114.37$122.19$933.44
Northwest Local79.735$186,000$211,206$109.84$113.08$1,081.89
Princeton City78.303$208,000$251,808$124.75$125.42$1,122.40
Finneytown Local77.878$176,000$182,653$96.04$98.36$1,185.15
Winton Woods City65.537$172,000$186,760$102.18$103.95$1,104.89
Mt Healthy City61.666$147,100$154,084$99.00$105.81$904.80

Results

Median Sales Price and ODE Performance Index

Figure 1 displays the relationship between ODE Performance Index and median sales price for the school district during the third quarter of 2020 (Q3 2020). There is a strong positive relationship between the two measures. The median home price for Q3 2020 was $380,000 or higher for the five highest ranking school districts in this comparison (Table 1). School districts closest to the bottom right corner of Figure 1 have the best combination of school quality and lower price.

Figure 1. Median Home Price by ODE Performance Index

Limiting public school districts to those with a median sales price of less than $350,000 identifies Forest Hills Local, Lakota Local, and Milford Exempted Village as the top three school districts in terms of ODE Performance Index (Table 2).

Table 2. Top 4 School Districts with Median Sales Price Under $350,000

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SF
Forest Hills Local100.806$272,000$333,516$133.18$134.93
Lakota Local97.117$316,000$344,482$121.43$126.95
Milford Exempted Village96.933$300,000$299,433$127.55$135.39

Reducing the maximum median sales price to under $300,000 drops Lakota Local and Milford Exempted Village, and the top three school districts are then Forest Hills Local, Oak Hills Local, and Southwest Local Schools (Table 3).

Table 3. Top Three School Districts with Median Sales Price Under $300,000

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SF
Forest Hills Local100.806$272,000$333,516$133.18$134.93
Oak Hills Local96.424$175,000$212,506$113.83$120.44
Southwest Local95.007$255,450$257,415$112.46$125.48

The top three school districts with a median home price under $250,000 are Oak Hills Local, Deer Park Community, and Fairfield City Schools (Table 4).

Table 4. Top Three School Districts with Median Sales Price Under $250,000

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SF
Oak Hills Local96.424$175,000$212,506$113.83$120.44
Deer Park Community90.689$190,000$188,386$140.36$145.55
Fairfield City86.475$229,500$236,749$116.65$120.45

Finally, Oak Hills Local, Deer Park Community, and Norwood City Schools have the highest ODE Performance Rankings among districts with a median sales price of less than $200,000 (Table 5).

Table 5. Top Three School Districts with Median Sales Price Under $200,000

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SF
Oak Hills Local96.424$175,000$212,506$113.83$120.44
Deer Park Community90.689$190,000$188,386$140.36$145.55
Norwood City84.295$166,500$181,134$114.37$122.19

The top school district choices for quality at more affordable home prices are Forest Hills Local, Oak Hills Local, and Deer Park Community Schools. However, there are two major shortfalls of this approach. The first is that the median home price doesn’t always accurately describe the affordability of a school district. For example, the district with the highest median home price, Indian Hill Ex Village, includes areas of Sycamore Township where smaller, 3-bedroom homes can be purchased for under $300,000. Similarly, the median sales price for homes in Fairfax, which is part of Mariemont City Schools, was $188,000 during Q3 2020. If you know where to search within some of the top 5 school districts, there is an opportunity to purchase homes for well under the median sales price. Another problem with this approach is that even though sales price is the main driver of the affordability of a home, property taxes also play an important role. The next comparison involves ODE Performance Index and a hypothetical mortgage payment that includes property taxes and insurance (PITI) to help account for these differences.

Hypothetical Mortgage Payment and Performance Index

Sale price is the major determinant of home affordability, but there are other factors as well. Property taxes for residential, owner-occupied real estate within the Cincinnati area can vary from 1.7% to as much 3.5% of total market value. That is equal to a difference of about $415 per month for a $250,000 home. This can create large differences between the sales price you can afford in one tax district compared to another. Therefore, a hypothetical mortgage payment assuming the purchase of a home at the median sales price with 20% down, a 30-year fixed rate mortgage at 2.87% APR, an estimate of the homeowner’s insurance, and the property tax was calculated for every school district (Table 1). This hypothetical mortgage payment was compared to the ODE Performance Index for each public school district (Figure 2). The same relationship is observed as for median sales price, with hypothetical mortgage payments increasing as the ODE Performance Index increases. The top 5 school districts by ODE Performance Index have a hypothetical monthly mortgage payment of at least $2100. As with Figure 1, the highest ODE Performance Index at the lowest cost is found at school districts that are closest to the bottom right of Figure 2.

Figure 2. Monthly mortgage cost vs ODE Performance Index

The benefit of evaluating a hypothetical mortgage payment is that it reveals a wider variation in cost for similar performing schools compared to only comparing school districts by sales price. For example, five of the top six schools have very similar ODE Performance Indexes and median sales price (Table 6). These are Madeira City, Mariemont City, Sycamore Community, Mason City, and Wyoming City Schools. The range in ODE Performance Index is from 104.54 to 109.171.  The range in median home sales price is from $380,000 to $410,000, or a range of about 7.6% around the mean. However, the range in hypothetical monthly mortgage payments is from $1936.29 to $2,332.99, or a range of about 18.6% around the mean. This is twice the variation in cost implied by the sales price alone and is primarily a result of the different tax rates for the five school districts.

Table 6. Variation in Sales Price and Hypothetical Monthly Payment Among Five Similar Districts

DistrictODE Performance Index 2018-2019Median PriceHypothetical Monthly Payment
Madeira City109.171$380,000$2,127.06
Mariemont City107.391$391,500$2,332.99
Wyoming City105.901$382,000$2,211.35
Sycamore Community105.731$410,000$2,216.54
Mason City104.54$385,000$1,936.29

Focusing on school districts with a hypothetical monthly mortgage payment of under $1800 reveals Forest Hills Local, Lakota Local, and Milford Exempted Village as the top three school districts in terms of ODE Performance Index (Table 7).

Table 7. Top Three Districts with a Hypothetical Monthly Mortgage Payment Under $1800

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SFHypothetical Monthly Payment
Forest Hills Local100.806$272,000$333,516$133.18$134.93$1,535.34
Lakota Local97.117$316,000$344,482$121.43$126.95$1,678.80
Milford Exempted Village96.933$300,000$299,433$127.55$135.39$1,663.48

The top three school districts in terms of ODE Performance Index are Oak Hills Local, Southwest Local, and Deer Park Community after limiting the school districts to those with hypothetical monthly mortgage payments of under $1500 (Table 8).

Table 8. Top Three Districts with a Hypothetical Monthly Mortgage Payment Under $1500

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SFHypothetical Monthly Payment
Oak Hills Local96.424$175,000$212,506$113.83$120.44$962.55
Southwest Local95.007$255,450$257,415$112.46$125.48$1,335.86
Deer Park Community90.689$190,000$188,386$140.36$145.55$1,142.65

Oak Hills Local, Deer Park Community, and Fairfield City are the top three school districts in terms of ODE Performance among schools with a hypothetical monthly mortgage payment of under $1250 (Table 9).

Table 9Top Three Districts with a Hypothetical Monthly Mortgage Payment Under $1250

DistrictODE Performance Index 2018-2019Median PriceAverage PriceMedian $/SFAverage $/SFHypothetical Monthly Payment
Oak Hills Local96.424$175,000$212,506$113.83$120.44$962.55
Deer Park Community90.689$190,000$188,386$140.36$145.55$1,142.65
Fairfield City86.475$229,500$236,749$116.65$120.45$1,190.81

Median Price Per Square Foot and ODE Performance Index

The last way of comparing the home sales data from Q3 2020 and the ODE Performance Index is to relate school quality to the median sales price per square foot. This will identify those school districts that that will allow the buyer to find a bigger home for the same price compared to districts with similar ODE Performance Districts. The school districts in Figure 3 that are closest to the bottom right offer the biggest homes for the money while also delivering above average performance. Standouts in this measure include Mason City Schools, Oak Hills Local, and Southwest Local. Buyers whose criteria places a premium on the outright size of the home in addition to school quality will find their money goes further in these school districts.

Figure 3. Median Price Per Square Foot and ODE Performance Index

Discussion

This is a thorough analysis of the relationship between school quality according to ODE Performance Index and the cost of the home. Property taxes, which are often overlooked or underappreciated, were also included to provide a more real-world measure of cost. The goal was to highlight those school districts that provide the best quality education at the lowest relative cost so that home buyers can make a more informed decision. As mentioned previously, a major drawback of the approach is that the median home price was used as a measure of home affordability in the district. In many cases, the median home price does not fully measure the affordability of a specific school district. The very definition of the median means that half the homes sold in a particular school district sold for less than that amount. Buyers can find homes in many of the highest priced school districts for under $300,000, an amount that is at least $80,000 less than the median sales price. It is also important to stress than any single measure does not fully capture the strengths and weaknesses of a particular school district. Buyers are encouraged to compare various methods of evaluating schools and to reach out directly to the school administration for specific questions. I hope you found this helpful and interesting; thank you for reading.

Methods

Not all public school districts within the Cincinnati area were included in the analysis. Small school districts with few home sales during the third quarter of 2020 were excluded since the small number of sales reduced confidence in the accuracy of the sales data. Also, Cincinnati Public Schools were excluded because the size of the school district encompasses many neighborhoods with wide-ranging home values, and the schools within the district vary widely. This variety in home values and school performance within Cincinnati City Public Schools limits the usefulness of the home sales data and ODE Performance Index at the district level. Table 1 displays the school districts that were compared and the measures used in the comparison.

The Ohio Department of Education (ODE) Performance Index for 2018-2019 was chosen as the measure for district-wide public school quality. Reducing school quality to a single number will inevitably miss important aspects of school quality and may emphasize other differences between schools that do not actually reflect their quality. While all measures of school quality will have limitations, the ODE Performance Index was chosen since the methodology for determining the score is clear and widely applied across Ohio.

The cost of homes in specific school districts was determined from sales data in the Cincinnati Multiple Listing Service for the third quarter of 2020. The median home price was used to determine a hypothetical total monthly mortgage payment assuming a 30-year fixed rate mortgage at the average interest rate (2.87%) in the Cincinnati area for September 2020. Homeowner’s insurance was estimated as $600 per year for every 1000 square feet. The resulting monthly principal and interest was combined with property tax rates for each district and an estimated monthly home owner’s insurance cost to create a hypothetical mortgage payment that includes principal, interest, taxes, and insurance for a home at the median sales price.

References

Butler Country Rates of Taxation https://www.butlercountyauditor.org/Portals/0/PDF/2019%20Tax%20Rates.pdf

Butler County Tax Calculator   https://propertysearch.butlercountyauditor.org/content/TaxCalculator.xlsx

Warren County Rates of Taxation                           https://www.co.warren.oh.us/Treasurer/Rates/2019.pdf

Hamilton County Rates of Taxation                    https://www.hcauditor.org/pdf/re_100k2020_taxpayer.pdf

Ohio Department of Education 2018-2019 School Year Performance Index http://education.ohio.gov/getattachment/Topics/Data/Report-Card-Resources/Report-Card-Data-Forms-and-Information/Report-Card-Lists-and-Rankings/Performance_Index_Rankings.xlsx.aspx?lang=en-US