Matthew Yglesias notes today that, at least in theory, affluent families in good school districts have little incentive to push for improving educations in bad school districts. If we could wave a magic wand and improve the quality of underperforming rural and urban school districts, "suburban property owners are screwed, since a significant proportion of their home equity is tied up in the proposition that owning property in District X entitles your children to a superior education."

Here's a bit of anecdata to support this, from an article in today's Commercial Appeal (obnoxious registration required) about White Station High School, a Memphis public school with a very high reputation:

It's that mystique that ratchets up home prices in the neighborhoods around White Station High, and causes homes to sell 10 days faster than most Zip Codes in the metro Memphis area. Prudential Realtor Laura Zarecor sold her clients' home at 4792 Cole in two weeks. One open house is all it took.

Brock mentions below the hypothesis that a significant portion of the value of real property in the suburbs is related to school quality, and that improving inner-city schools would reduce this value.

It seems to me that parents, for the most part, want good schools rather than better schools. While the Memphis city school system does exhibit this relationship—property values in the White Station High enrollment zone are higher than those in, say, the Ridgeway or Egypt Central zones—I’m not sure this applies once a certain baseline is crossed; I don’t believe there is this contrast among property values between Germantown, Houston, and Collierville high schools in the (separate) Shelby County district, even though I’m fairly certain there is an academic pecking order among these schools.

The only areas we might expect this effect is where jurisdictional transfers take place: for example, where new annexations by Memphis shunt students in southeast Shelby County from the county system (e.g. Germantown High) to the city system (e.g. Kirby High, which has never had a very good reputation). In these cases, we’d expect a precipitous drop in property values, particularly for “middle-class” homes; my anecdotal impression is that this, in fact, did take place. But I’m not sure the same effect would have been there if students had been sent to known “good” city schools like Ridgeway or Cordova.