Changes in City and Suburban House Prices during a Period of Expected School Desegregation

Abstract

During the last decade the courts have given attention to public school segregation which results from residential segregation. The precedent was established that when the past actions of school authorities in drawing attendance zones served to create or maintain school segregation, desegregation plans using busing could be imposed as a remedy.' At the same time, neighboring suburbs with their own school systems have not been included in the desegregation plans of affected cities, thus creating the option of moving to the suburbs in order to avoid busing.2 This paper reports on a study of house prices in Columbus, Ohio and neighboring suburbs during a period of increasingly imminent school desegregation. Most research on desegregation has examined changes in enrollment patterns; such a focus yields only an indication of relative shifts in demand for housing. This study directly observed changes in house prices. The study used Multiple Listing Service (MLS) data on 5888 sales between May and August for the years 1975 through 1979. Year to year comparisons were made which matched six suburbs to contiguous city neighborhoods which have similar types of housing. The purpose of the study was to determine the size of any change in the ratio of city to suburban house price differentials and the timing of those changes with respect to major events in the desegregation process. Year to year changes in the ratio of suburban to city house prices can be expected given a relative increase in demand for suburban houses and a housing supply which is inelastic in the short run. Following a typical capitalization argument, suburban and city house prices should in equilibrium adjust to expected school desegregation such that at the margin households are once again indifferent between a suburban or city location. It was hypothesized that the greatest capitalization impact of expected desegregation would be concentrated upon large houses (defined to be houses with four or more bed* I gratefully acknowledge the financial support of the Ohio Board of Realtors. The research has benefited