Publication Date: Wednesday, June 01, 2005
Guest Opinion: Battling a Palo Alto myth: housing prices driven solely by schools
Guest Opinion: Battling a Palo Alto myth: housing prices driven solely by schools
(June 01, 2005) by Wayne Martin
Supporters of Measure A, the $493 annual parcel tax, state that good schools drive up housing prices.
There's a basis of truth in this claim. But are our good schools the primary reason for local house price appreciation? Of course not.
Home prices generally demonstrate "weak" and "strong" linkages to various "decision variables" in a buyer's perception of the value of a property. For instance, ocean-front property generally is much more expensive than equivalent properties not located on the water.
Such a "strong" linkage between a property's perceived value and such a "variable" could command a considerable increase in price. For voters considering Measure A's hefty $493 yearly price tag, how effective is the Palo Alto Unified School District in increasing (or maintaining) home prices?
Over the past 35 years, prices in Palo Alto have undergone a meteoric rise. In 1970, the median price of a home was $33,900. By 2003, the median price was an astounding $1 million-plus -- an overall increase of 3,142 percent in only 35 years.
While there is no doubt that some people have chosen Palo Alto because of its schools, are the schools the only reason that people move to Palo Alto?
Palo Alto is a desirable place to live for many reasons. Palo Alto is home to tens of thousands of high-paying jobs. It's close to Stanford University. There's easy access to highways and mass transit. We enjoy beautiful streets and neighborhoods, great shopping, unmatched city services, minimal crime and fantastic weather. Certainly ALL of these variables come into play when people decide to buy a home in Palo Alto.
For many homebuyers, public schools aren't even part of the decision equation. After all, fully 75 percent of Palo Alto residents have no children attending Palo Alto schools.
Last year, proponents of a new parcel tax floated the rumor that Palo Alto property values would "tank" if such a tax were not levied. Balderdash. It didn't happen.
In fact, local house prices have gone up fully 20 percent since the defeat of that measure. According to the May 21 San Jose Mercury News (citing Dataquick Information Systems), Palo Alto zip code 94301 saw the median home price increase by 27 percent, while zip code 94306 saw a similar price jump of 17 percent.
Given the generally robust rise in home prices in the rest of Santa Clara County, where the schools are not considered as good as Palo Alto's, there would seem to be only a "weak" linkage between rising home prices and local schools at the current time.
Yet taxes ARE part of every homebuyers' decision equation. Nobody likes to pay new taxes that aren't needed. Likewise, nobody wants to live in a community held hostage over threats of decreased property values if new parcel taxes are not levied.
The decision to vote "yes" or "no" on Measure A should be based on solid information about school district financing and budget planning. Proper budget stewardship by the school district can ensure that we maintain our great Palo Alto schools without a new parcel tax. Look at the facts. Vote sensibly, which I think means "No."
Wayne Martin is the head of Palo Altans Against Measure A, and was a leader in the group opposing Measure I, the last parcel tax measure. He can be e-mailed at wmartin46@yahoo.com.
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