What's a School Worth to a Neighborhood? A Spatial Hedonic Analysis of Property Prices in the Context of Accommodation Reviews in Ontario

Abstract

Due to a change in capital funding formula, many school boards across the Province of Ontario engaged in Accommodation Reviews to rationalize the supply of school capacity. This process led to numerous school closures and raised important policy questions regarding the economic value of a school in terms of its capitalization into property values and, by extension, how the closure of a school might affect local neighborhoods. To explore these questions, this research uses spatial hedonic methods to estimate the implicit value of accessibility to schools in the City of Hamilton, Ontario. Spatial Durbin model results provide evidence of a significant negative correlation between distance to schools and housing prices in the Canadian context. This suggests that accessibility to schools is capitalized into property values and that the closure of a neighborhood school may result in potentially significant losses of economic value in communities.