Want a property in a top-ranked district? Prepare to pay more.
When Marjon Dean started searching for a new home in the New Jersey suburbs, she first armed herself with data on the top-ranked public schools in the state.
Taking that information into account, as well as access to public transportation and commute times to New York City, Dean narrowed the list of options for her family's move to four towns: Summit, Chatham, Millburn and Westfield.
Dean and her husband bought a property that was built in the 1920s and that needed work in the Short Hills section of Millburn in October. The price was $814,000, roughly the same amount the couple received in the sale of their similarly-sized but newer home in the Boston suburbs, Dean said.
"There's definitely a trade-off there," she said, but added that buying in one of the state's best school districts is an investment that will pay off for her teenage daughter's education and for the long-term value of her home.
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Many homebuyers looking for real estate in New Jersey are, like Dean, deciding where to buy based on school rankings, a move that is driving demand and prices in the state's high-performing school districts, real estate agents say. Those who place a premium on living within the boundaries of one of the state's best school districts are willing to spend more money and forgo a larger house, a larger yard or up-to-the-moment amenities in order to do so, said Shannon Aronson, a real estate agent with Keller Williams Realty who covers Millburn and surrounding communities.
"For people who place a high value on that, it's completely driving the price because they are not even looking at towns where they can get more value for their money," said Aronson, who is also a member of the Board of Trustees for the Education Foundation of Millburn-Short Hills, a nonprofit group that raises money for the township's public schools.
Home values in the top 10 school districts in the state as ranked by the Pittsburgh-based company Niche range from half a million to nearly $1 million, U.S. Census data shows, with Millburn topping the list at $978,000. By contrast, the median home value is $358,100 in Essex County and $319,900 statewide.
The quality of public education isn't solely responsible for increased home values in the best school districts, which are located in wealthier communities within commuting distance to New York City, but schools play a "very big role," said Lori Ann Stohn, a broker associate with Gloria Nilson & Co. Real Estate's Princeton office.
Clients with children typically prioritize schools when buying a home, she said, but "even if they don't have a family, they are looking at school districts for resale purposes."
There are school districts in New Jersey with higher than average home values and lower-rated schools, such as Hoboken, but that's not common in the state, and two recent studies show that a well-regarded school district boosts local real estate markets.
A Realtor.com analysis released in August found that homes for sale in top-rated public school districts were, on average, listed at higher prices and sold faster than properties nationwide in the first half of this year . The difference between prices and time on market was even greater when compared to homes in lower-rated school districts.
"To put this in perspective, our findings show that, in most markets, families are willing to pay more for a highly-ranked school than an extra bedroom, a shorter commute, and even big home features such as a swimming pool, higher ceilings, sport courts, and even a private dock," the Realtor.com analysis said.
It pays to own a home in a great school district...by this much https://t.co/MBQ2zs1fBq
-- realtor.com (@realtordotcom) August 15, 2016
Victoria Carter, a sales associate for Weichert Realtors's Short Hills office, agreed homeowners will downsize in order to buy a home in a top school district.
"They will sacrifice house," she said. "They will buy something much smaller, much more modest in order to get into the school system."
ATTOM Data Solutions, the parent company of RealtyTrac, also released a report in August that found homes located in a zip code with at least one high-performing elementary school were worth more to start and gained value faster than homes in areas without good schools.
Princeton holds the title of the best school district in the state -- and fifth-best in the country -- in Niche's rankings, which consider test scores, graduation rates, student and parent reviews and other factors.
(Niche excluded school districts for which it did not have enough data, and less than half the state's districts are represented in the ranking. But the top 10 districts are also highly ranked elsewhere and offer a glimpse into what it costs to buy in top-tier districts.)
Princeton is sandwiched between two other districts that also rank near the top in the state: West Windsor-Plainsboro Regional School District and Montgomery Township School District. Each of those districts has a median home value that surpasses $500,000, with Princeton leading the pack at $760,800.
But another one of Princeton's neighbors, Lawrence Township School District, has a home value of $282,600. The township's school district ranked as the 73rd best in the state, per Niche's list.
Stohn attributed that price difference largely to the quality of the schools.
"I can have $550,000 home in Lawrence and that same home go for $650,00, $700,000 in West Windsor," she said.
While Stohn said she has had clients who chose to buy in Lawrence because they could get more for their money and planned to send their children to private school, homebuyers who are "looking for public school education, most of them are coming here and looking for the West Windsor-Plainsboro, Princeton or Montgomery school districts."
Of course, not everyone can afford to buy into one of the state's top districts -- or even a good school district.
Laura Waters, a member of the Lawrence Township Board of Education who writes about public education on her blog, NJ Left Behind, said "a family's ability to buy into a zip code has a direct link with the education their kid is going to receive," raising concerns about equity and access in the state's public education system.
The Interdistrict Public School Choice Program and charter schools offer students the opportunity to opt out of attending their local public school, but those initiatives only serve a small fraction of New Jersey students, leaving most families to rely on their local public school system.
"One way to say it is to say that your house comes bundled with granite countertops and great schools," Waters said. "You have to buy your way into the best district."
Dean, who works in sales for Microsoft and who moved to New Jersey because of her job, said she considered living in nearby towns but ruled them out because "the schools weren't as good or you would have to send your child to private school."
"As much as we were investing in a home and as much taxes as we were paying," she said, "it wasn't a good use of money."
Erin O'Neill may be reached at eoneill@njadvancemedia.com. Follow her on Twitter @LedgerErin. Find NJ.com on Facebook.