Financial analysis on paying more for a house in a good school district

Hi A type BPN parents - I started to create an analysis on the financial costs of buying a home in a "good" school district vs buying in an area that is less expensive but would require a private school.  Before I go down that path, I was hoping someone here knows of an article or blog or perhaps even created a spreadsheet on this topic already.  Ideally there would be some flexibility to make adjustments (private vs catholic, public school k-5 then private vs private all the way, etc...).  I'd also like to hear any thoughts on how the new Republican tax plan has skewed the equation towards private schools.  Thanks!

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We bought a house in Richmond seventeen years ago when you could hear gunfire in the night. Since then the neighborhood has improved immensely and the people who have moved in take care of their properties and are working class folks like the majority of people. We love our home and neighborhood although we wish there were more trees. That being said we have a daughter, now 14. For kindergarten we did private, the East Bay Waldorf School, which we did not like. Then Richmond public school for one year which was overcrowded, an ugly cement pad, and not diverse enough, meaning that because my daughter was the only white/Asian kid in the class she was excluded terribly. Since then we have been commuting her to a Marin Charter school with about 375 kids, very diverse, first through eighth and have been happy overall. Now we must move to get her into a good public high school in Marin so she can continue on with her mates. The gas, traffic, bridge toll has been expensive but it has been cheaper than private school. And we will rent out our home while she is in high school. Why so much effort and work? Because after much research, I am still not confidant in Richmond schools, even the new charter's that are turning education into a business. And being in a small school, and not on a bus either unsupervised has shielded her from the cigarettes, drugs and alcohol that many middle schoolers, are experiencing in bigger schools. 

Ha, I do have a spreadsheet on this! (I guess that means I qualify as Type A?) Basically, it maps out our housing costs over time, factoring in things like Prop 13 increases, tax deductions (yay, forgot that I have to go update it post-GOP tax bill...) and other costs of ownership. Mine is intended primarily to track our "real" cost of housing over time so we can understand what owning a home actually costs (a lot!), but I copied it and plugged in theoretical numbers for a new house when we contemplated moving. It has a column for our annual income and columns for the cost of school/childcare. That gives me a high level sense of what we spend monthly as a percent of our income and how school costs affect that. Broadly, the GOP tax plan affects this math in a few ways: first, because of the changes in the SALT deductions, the same house costs you considerably more annually since you can no longer deduct all of your property tax (and probably not all of your mortgage interest, with current prices!) Second, you can now pay for K-12 tuition from a 529 plan, which is beneficial if you have enough savings to be able to front load contributions to such a plan (i.e., put in the maximum for the next seven years now and allow it to grow tax-free). Since California doesn't offer any other tax advantages for 529 plans, though, it's more or less moot if you aren't in a position to make a large upfront contribution. How these changes will affect private schools is still hard to predict, but in the Bay Area, I do think we'll see more people staying put in houses that they might otherwise have sold, since the Prop 13 tax advantages coupled with the inability to fully deduct interest from larger mortgages and property taxes make moving even more costly in a market that was tough to start with. On the flip side, that might finally put some downward pressure on home prices. We'll have to wait and see.

The last part first. The new tax act favors private schools in one way which does not apply to many parents: it permits 527 plan funds to be spent for elementary and high school tuition, not just college.  That  does not help many parents, since a really huge investment (not deductible) is required to generate enough return on investment (tax free) to even pay for tuition. RonLieber (The Opposite of Spoiled), author, blogger, had an analysis on a recent post with a hypothetical donor (parent, grandparent) who invested $200,000 under the new law, the return on investment of which was tax free, and paid for private school tuition. Not an option for anyone I know, none of my clients, nor most BPN readers.

If you buy in Berkeley, all schools are equally better than average. If you can afford Piedmont, the schools are great!

Once in middle school kids will be very influenced by their peer group, so this is a very important decision you are making.

Good luck

Hi - this is the original poster. Would the person who created the spreadsheet share it, perhaps on google docs?  Thanks!

We were going to do this sort of math and then focused our efforts on purchasing in a good school district (which was not without a considerable amount of stress and financial strain). We couldn't put a price on non-financials like transportation to/from school, friends that are all over the Bay, unknowns about before/after care with some private schools, stress of testing and applying to schools, and an unknown of really what schools will cost by the time our child is of school age. I'd make sure you figure out which of these (and others) are critical to you and include them in some fashion. Good luck!