Universal school choice would transform real estate

A new Arizona law which funds all the state’s K-12th grade children to attend a school of their family’s choosing, public or private, has been widely hailed as a landmark education reform, although evidence suggests the benefits will go far beyond academics. Studies by the Manhattan Institute, New Jersey’s E3, and Connecticut’s Yankee Institute all show that subsidizing students to use alternative placements would save any state millions each year.

But perhaps the most unexpected promise of universal school choice is the impact it would have on area real estate markets, simultaneously lowering the cost of what families must pay for a desirable home, improving the value of distressed areas, and equalizing the quality of life between rich and poor communities. Indeed, the only thing more surprising than such sweeping demographic effects is the person who first explained why school vouchers, education tax credits, or some other choice plan would inevitably trigger them: Massachusetts senator Elizabeth Warren.

It was nearly two decades ago when Warren, then a professor at Harvard Law School, published what is still regarded as a breakthrough study on the causes of personal bankruptcy, The Two-Income Trap (2003). The biggest reason for adults going broke, her research showed, was not wasteful spending at the mall, fancy vacations, or some other stereotypical profligacy. It was people with children over-extending themselves to buy a home in one of the relatively few US communities with good public schools.

For Warren, the obvious way to not only reduce the national bankruptcy rate but help all families financially was to employ the one education policy that could break the unfair connection between quality K-12 schools and pricy zip codes. School choice, she wrote in her book, would “relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools.”

Warren also realized that providing families with an alternative to local public schools had enormous potential to reverse the decline of blighted urban areas. To illustrate the point, she often cited the case of the University of Pennsylvania, which for years had been struggling to keep parents with young children from abandoning a decaying Philadelphia neighborhood near campus.

Nothing Penn tried could stop the exodus until someone in the administration hit on the idea of building and maintaining an alternative to the local public elementary school. Almost overnight, the community stabilized as parents discovered they did not have to move to a more expensive area in order to provide their kids with a good education.

Warren’s near decade-long crusade for school choice ended abruptly in September of 2011, when she announced her run for Republican Scott Brown’s senate seat in deep blue (read “teacher union-dominated”) Massachusetts. But evidence that the establishment of free or low-cost alternatives to local public schools can improve all but the wealthiest residential areas has continued to accumulate.

A 2015 report by the Civitas Institute attributed a tripling of the population in once-sleepy Wake Forest, North Carolina — as well as a boost in median family income to $30,000 above the state average — to the 1998 opening of a regional charter school, followed by a low-cost K-5th grade private academy in 2007. And research on Vermont’s unique “tuitioning system,” which allows towns to forego building their own public schools in return for providing local children with private school scholarships, has shown that communities with school choice have above average home values.

But perhaps the most interesting example comes from the work of Episcopal minister Marty McCarthy, who since 2000 has rehabilitated multiple distressed areas in and around Charlotte, NC, by opening inexpensive private, parochial, and charter schools. His success eventually came to the attention of one of the state’s largest developers, who donated land for construction of a low-cost academy near a new housing project, knowing that it would attract homebuyers. “You do the school,” the developer told McCarthy, “and I will give you the land for free.”

Although the case for Arizona’s universal school choice law was based largely on its academic promise, North Carolina University professor of finance and real estate Bartley Danielsen believes its enactment signals a major reversal of what he calls America’s unnecessary “spatial sorting.” That is, the arbitrary separation of people by school boundaries, such that “the quality of life — schools, family income levels, poverty rates, crime rates — (on) either side of the line becomes drastically different.”

This development will obviously help America’s poorest the most. But as Elizabeth Warren herself once observed, it will also provide relief to the millions of middle-class and even upper middle-class parents desperately struggling to maintain a residence that gives their kids access to a good school.

William Mattox, director of the Marshall Center for Educational Options at Florida’s James Madison Institute, agrees. “If you remove the artificial [zip code] barrier to quality education,” he says, “those that commute to work will be free to live in places closer to their jobs — towns they once would not have considered.” Conversely, those who can work from home could now go as far out as they want, “even to another state.”

Given how badly US schools have regularly scored in international comparisons, it is understandable why Arizona’s pioneering enactment of a universal school choice policy would be celebrated as a long-overdue educational achievement. But future historians may well view the law as the catalyst for a far more sweeping transformation of American society.

“Arizona has done us all a favor,” Maddox says, adding that even its biggest supporters may not yet appreciate just how big that favor is.