The Key Takeaway
In this comparison, identical new homes from the same builder were advertised at prices approximately $60,000 higher in Cottage Grove and $80,000 higher in Woodbury than in Farmington due to something called “Location Value”.
Location value includes many factors, and the three communities are not perfect substitutes. Still, the consistent premium in both SoWashCo communities supports that school-district quality and reputation may be meaningful contributors to local housing demand and property value. This holds true for existing homes as well.
Good schools matter because students deserve a strong education. They also matter because the strength of a public school system can influence the long-term desirability and financial health of the communities it serves.
Public schools matter first because of the education and opportunities they provide to students. But their effects can extend beyond the classroom.
Research has consistently found a relationship between school quality and housing demand. Families may be willing to pay more to live in communities associated with desirable schools, which can contribute to higher property values for homeowners whether or not they currently have children enrolled.
To see whether that relationship might be visible locally, I compared advertised new-construction prices for identical homes offered by the same builder in Woodbury, Cottage Grove, and Farmington.
The comparison does not prove that schools caused the entire difference in price. Housing markets reflect many factors. But it does show that otherwise similar new homes were priced substantially differently across these communities, and it helps illustrate why school quality and reputation can have financial significance for the broader community.
What Determines a Home’s Value?
A useful way to think about a home’s value is to divide it into three broad components:
Location value reflects the desirability of the surrounding area. It can be influenced by schools, commute times, nearby employment, shopping, restaurants, parks, public services, taxes, neighborhood characteristics, and other community amenities.
Land value reflects the lot itself, including its size, location within the neighborhood, views, topography, and other physical characteristics.
Improvement value reflects what has been built on the property, including the house, garage, landscaping, upgrades, and overall condition.
When estimating the value of an existing home, appraisers generally compare it with recent sales of similar properties and adjust for meaningful differences. That process works well for estimating the total value of a property, but it is more difficult to isolate how much of the value comes specifically from location.
New construction provides one way to examine that question.
Why Compare New-Construction Prices?
Builders commonly advertise a starting price for each floor plan offered in a neighborhood. That price generally represents the base home before optional upgrades and lot premiums. Within the same neighborhood, differences among floor-plan prices primarily reflect differences in the homes themselves. The homes share the same general location, while the advertised starting prices assume a base lot.
The analysis becomes more interesting when the same builder offers the same floor plan in different communities. Because the house design is the same, comparing its advertised starting price across neighborhoods helps reduce differences attributable to the structure. If the base lots are also reasonably comparable, the remaining price difference is more closely associated with location:
This does not isolate every factor within location value. It does, however, provide a more useful comparison than placing unrelated homes from unrelated builders side by side.
Comparing Woodbury and Farmington
On October 22, 2025, we recorded the advertised starting prices for three floor plans offered by the same builder in a new Woodbury neighborhood and a new Farmington neighborhood:
For each of the three floor plans, the advertised starting price in Woodbury was approximately $80,000 higher than the price for the same floor plan in Farmington.
The consistency across all three plans is notable. The price difference did not grow or shrink with the size of the home. That suggests the builder was placing a similar location premium on the Woodbury neighborhood regardless of which floor plan a buyer selected.
It is important to be precise about what this means. The comparison shows an $80,000 difference in advertised starting prices between these two developments at that point in time. It does not establish that SoWashCo Schools caused the entire difference. Woodbury and Farmington also differ in commute patterns, amenities, taxes, development conditions, buyer demand, and other characteristics.
To explore those factors further, I added a third community.
Adding Cottage Grove to the Comparison
The same builder also offered the same three floor plans in a new Cottage Grove neighborhood:
The Cottage Grove starting prices were approximately $60,000 higher than the corresponding prices in Farmington and approximately $20,000 lower than those in Woodbury.
That creates a useful comparison because Woodbury and Cottage Grove are both served by South Washington County Schools, while Farmington is served by a different school district.
Schools Are One Part of Location Value
The three communities differ in several ways.
Woodbury offers some location advantages that Cottage Grove does not fully share, including different commute access and a larger concentration of shopping, restaurants, and other amenities. Those differences may help explain why the Woodbury homes carried an additional premium over the Cottage Grove homes.
Cottage Grove and Farmington are not identical either. No comparison of three developments can control for every difference in land, neighborhood design, builder incentives, local taxes, planned amenities, or market demand.
Even with those limitations, the pattern is worth considering:
- Woodbury and Cottage Grove share the same public school district.
- Both SoWashCo developments had substantially higher advertised starting prices than the Farmington development.
- Woodbury carried an additional premium that may reflect its other location advantages.
The comparison is consistent with the idea that school-district reputation contributes to housing demand and location value. It does not tell us exactly how much of the observed price difference should be attributed to schools.
Does This Apply to Existing Homes?
The analysis uses new construction because identical floor plans make it easier to reduce differences attributable to the house itself.
That does not mean location matters only for new homes. Buyers of existing homes also consider school boundaries, commute times, taxes, neighborhood amenities, and community reputation. Those preferences are reflected in the prices buyers are willing to pay.
But this analysis should not be interpreted to mean that every existing home in SoWashCo contains exactly $60,000 in school-related value. Existing homes vary widely, and market conditions change over time.
The more defensible conclusion is that the school district appears to be one meaningful part of the location value associated with SoWashCo communities.
What Does This Mean for School Funding?
School referendums and property-tax increases create real costs for homeowners. Those proposals should be evaluated carefully based on the district’s demonstrated needs, financial management, expected results, and long-term plan.
Housing value is not a reason to approve every request automatically.
It is, however, one reason homeowners without children currently enrolled still have a financial interest in the quality and reputation of their public schools. A strong school system can support community demand, while a sustained decline in confidence may make the area less attractive to some prospective buyers.
The financial question is therefore broader than the annual tax impact:
- What educational need would the funding address?
- Is the proposal financially responsible?
- What outcomes should the community expect?
- What would happen if the district did not make the investment?
- How could either decision affect confidence in the school system and community?
Those questions deserve evidence, not a predetermined answer.