How education fuels house prices

My scope has been creeping more than normal this week, I'm not sure why... but anyway, via The Daily Dish, Mike Konczal of Rortybomb shares an original thought on the housing bubble in a guest post at The Baseline Scenario:
I think the most obvious embedded option inside a mortgage that isn’t discussed is the option to educate your children at the local school district. If sending 3 kids to a private high school at your old houses costs $5,000/year, and if the new house’s public high school is free and equally good then taking a $60,000 bath on the house is break-even. Completely rational.


I’d really like to see some hard research into how much our desire to educate our children in the best way possible has driven subprime and the housing bubble.
Makes perfect sense to me. Particularly because sending three kids to private school for only $5,000/year sounds like an awfully good deal to me, so the embedded value could be even higher.

1 comment:

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