Letter to the Editor: EG School Impact on Real Estate Market

by | Dec 18, 2014

By Justin Mandese

The purpose of this letter is to explain the dynamic relationship between the perception of the East Greenwich School System and the local real estate market. With the East Greenwich School Committee and superintendent considering several impactful initiatives for the 2015-16 school year, it is crucial to understand the ramifications of the implementation of said initiatives, will have on the local real estate market.

As a top-producing local real estate agent, I am lucky enough to have proprietary data at my disposal, as well as an “expert-level” understanding of the behaviors of those looking to purchase a home in Rhode Island. I intend to explain the reasons why I believe the real estate market has already violently shifted, as a result of the perception of the school system, as well as some other important factors.

Statistical Data

According to Statewide MLS, as of the date of this letter, the following statistics hold true for the number of home sales in Rhode Island, broken down by municipality:

 

RI EGRN NKNG CVEN WARW SKNG BARR
YTD 2014: 8228 163 286 388 1003 340 216
YTD 2013: 8284 205 299 412 990 318 220
Difference: -56 -42 -13 -24 13 22 -4
Percentage: -0.7% -20.5% -4.3% -5.8% 1.3% 6.9% -1.8%

 

Other municipalities with relevant data to note:

 

ESID LINC CHAR WOON WEST PROV EPRO
YTD 2014: 163 140 124 164 244 411 379
YTD 2013: 163 170 108 145 212 474 345
Difference: 0 -30 16 19 32 -63 34
Percentage: 0.0% 17.7% 14.8% 13.1% 15.0% 13.3% 9.8%

Analysis and Interpretation

It is blatantly obvious that East Greenwich has realized the most dramatic change in 2014, with a loss of over 20% in volume, year-over-year. Lincoln, a municipality that has consistently been compared to East Greenwich for its neighborhoods, school system and lifestyle, is also off nearly 18 percent. The next closest in the loss column is Providence (excluding the East Side), with a drop-off of over 13 percent.

I believe the effects of “enhancing” the gaming experience at Twin River, such as the uncertainty revolving around traffic, demographic shifts and similar factors, play a significant role in explaining the loss in Lincoln. Unfortunately for East Greenwich, I cannot seem to think of any similar catalysts that would explain their decrease.

It is no secret that the “calling card” for recruiting potential buyers to East Greenwich, has consistently been the reputation of their school system. Just talk to any local real estate agent – is there even a need to ask a mother or father, with 2 or 3 kids in tow, why they are looking at the 4-bed, 2.5 bath home in EG? Traditionally, buyers are drawn to EG from other municipalities in RI, regional locations in and around New England, and even as far as overseas – again, mostly due to the strong reputation of their schools.

Even though common performance metrics may not be slipping, buyers still seem to be fading on the “can’t miss” schools in EG. In fact, “Greatschools.org,” the self-proclaimed “…independent nonprofit and the leading source of school information for families,” rates all of East Greenwich’s schools as “10s,” with the exception of Frenchtown Elementary, which rates as a “9.” No other community in Rhode Island has such a high percentage ranking … not even Barrington.

Other important factors have to be mentioned here, which certainly maintain their influence on the real estate market. Affordability is certainly a factor that prohibits buyers from flocking to EG. East Greenwich now boasts the 8th (out of 39) highest residential property tax in the state. In addition, over the same period as the drop-off in volume, the average sale price in EG has been $443,712, which is nearly 55 percent higher than the state average of $287,000.

Conclusions and What the Future Holds 

So if the school system is to receive the lion’s share of the credit for attracting buyers to East Greenwich, then should it not also receive the majority of the criticism for why volume is way down?

As I mentioned in the introduction, the East Greenwich school administration and School Committee are considering a few initiatives for the near future. Of most significance, and what is drawing the attention of many EG parents, is the implementation of full-day kindergarten across the district. Currently, East Greenwich is one of only 7 or 8 districts in the state that does not already have a full-day kindergarten already in place. As I have argued throughout this piece, this is exactly the type of initiative that needs the full support of all EG residents, as home values are directly tied to the success of our schools.

Having spent time with many EG parents who are feverishly pushing for all-day kindergarten in the 2015-16 school year, I can say that support for this initiative is at an all-time high in EG. In fact, I would argue that the recent election of three new school committee members is mainly attributed to the campaign support from these this group. The aptly named “Full-Day Kindergarten for East Greenwich” group communicates primarily via email and Facebook, with an occasional brainstorming session thrown in the mix. Their presence and voices at local meetings have certainly had, and will continue to have, an impact on school initiatives.

From what I have seen in 2014, the potential buyers who have been considering EG, as well as other municipalities in RI, seem to be doing the math in their heads, and EG, although still desirable, has begun to finish second to its competitors. With a thriving Main Street and unparalleled access to both Providence and the South County beaches, I see no other significant indicators that would account for such a decline in volume. I strongly encourage Supt. Mercurio, as well as the School Committee, to ensure that initiatives such as full-day kindergarten are implemented beginning in the 2015-16 school year and encourage more East Greenwich residents to start paying attention to what the “branding image” of East Greenwich is and how it is affecting their real estate values.

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25 Comments

  1. Gene Dumas

    Hi Elizabeth. I don’t think I’m buying what you’re selling. 1:1 is a stretch.

    Gene Dumas

    Reply
    • Elizabeth McNamara

      Gene, sorry for the confusion. It’s a letter to the editor from Justin Mandese, a resident. I’d welcome a rebuttal, if you’d like to write one.

      Reply
  2. Heather Larkin

    Who wrote this piece? The byline says Elizabeth McNamara but it’s clearly a real estate agent.

    Reply
    • Elizabeth McNamara

      My bad – it was written by Justin Mandese, a resident.

      Reply
  3. Therese Vezeridis

    Agreed, the Quality of our School System directly impacts the Value of our Property.
    Agreed, more quality learning could take place if Kindergarten was extended beyond the mere 2-1/2 hours.

    Reply
  4. Eric Carpenter

    You know, there are many people in town who’ve lived here a long time, and aren’t looking to sell their homes, and who would like to see the spending on the schools slow down a little bit. Their property taxes are plenty high, and any resultant rise in home values from increased spending don’t really do much for them other than cost them more money each quarter. Top-producing local real estate agents don’t really care much about those people because they don’t put any money in the real estate agents’ pockets.

    Reply
    • Concerned Parent

      Even though you may not be looking to sell you house in the immediate future at some point you may and if we do not keep up with educational standards your house will significantly decrease in value. Not only that but a dive in the value of real estate will determine who moves into your neighborhood. Have you had the opportunity to look at the research regarding full day k, do you know that 70- 80% of school districts have full day k ? With many more coming on line in the near future. Did you read the ad hoc committee report on full day k where they say that full day k has a $3 dollar return for every $1 spent on it? Do you know that the Town has adopted common core standards and those standards are nearly impossible to meet without full day k. Certainly the town has a responsibility to ALL of its tax payers but when you look at all of the above it would be penny wise and pound foolish to not approve it. Do you know how much money the Town and school committee spent on chrome books without any research regarding proven educational benefits? Finally do you know that Barrington implemented full day k this year and there real estate figures are not down nearly as much as our town and historically they have tracked our town in real estate highs and lows?

      Reply
  5. Russ

    “So if the school system is to receive the lion’s share of the credit for attracting buyers to East Greenwich, then should it not also receive the majority of the criticism for why volume is way down?”

    Quite the over simplification. That change could easily be the product of natural variability, evidence of a “trend” only because of the short period selected. It’s akin to saying that because the onset of winter was the cause of temperatures dropping one day, it must therefore signal the end of winter if temperatures rise the next.

    Consider that 2013 was among the highest years on record…
    http://patch.com/rhode-island/eastgreenwich/single-family-home-sales-on-the-rise-in-eg
    “217 single family units sold [in 2013], a 25% increase of the year before and a 40% increase over the slimmest year in 2011.”

    So a 20% decline is actually evidence of a 5% increase over two years and 20% increase over 3 years.

    Reply
  6. Dean Benjamin

    Looking at just one year in sales in EG, certainly would not be an accurate reflection of home values and the correlation to the school programs, either current or proposed. Instead, draw upon the last decade of sales that would demonstrate the change in our market in either direction and look at the enrollment figures. By only looking at 2014, the assumption would be made that they aren’t children in the schools. But, it is my understanding that Meadowbrook was at capacity this year.
    And while the school system is a piece to why someone resides in EG, it is not the only reason. There are many couples that choose to not have children or have children that are not currently enrolled in the public schools ( either in the college level or enrolled in private) and yet they still want to be in EG. Why? It’s our location, our thriving Main Street, our proximity to the water and general quality of life.
    As a resident for 15 years, I still consider myself an ” outsider” at times, as my youth was not spent here, being able to relate to old locations ( Almacs and the like!), but I do find my conversation occasionally referring to landmarks that have left us in the past decade.
    As a realtor in East Greenwich for 10 years, I have been witness to many families leaving East Greenwich after the kids are grown and are ready to downsize. It is this trend that worries me the most, as what will remain- oversized homes that younger buyers ( read: smaller families) don’t want or cannot afford?
    As a parent with a child just starting the school system, I could not be more excited about the opportunities that are available for her on a daily basis ( even if it is only on a 1/2 day right now!) with the EG schools, its staff and the parents who are so passionate. Would a full day benefit her? No- as she will be finished with Kindergarten in 2015. Do I support the Full Day? Absolutely. Did I support the senior services improvements recently on our ballot? ( increased spending that will effect our tax base) You betcha.

    Reply
    • Heather Larkin

      I had a similar thought after reading this. It seems a stretch to link a drop home sales in a given year specifically to the lack of full day K. I would be surprised if a family chose Warwick or Coventry over EG and that was the deciding factor.

      Reply
  7. Let's Be Honest

    As a “top producing” real estate agent with “expert-level” understanding that was apparently garnered over your 3 years of experience in real estate sales,(http://goo.gl/92KuLN),and the 2 houses that you have sold in the last 12 months, I would assume that you would know that using sold units would not be an accurate measure to bolster your argument. What you failed to mention, but was available to you is that the median sold price for homes in EG is up by 5-6% over the last year.

    But I digress. If I am to understand your points:

    1. Housing sales are down over the last year in EG, which to me, means people are not moving out, but staying. While this is bad for real estate sales people, stability in home ownership tends to enhance a community, not harm it. Lack of “volume” is a sales problem, not a community problem.

    2. As you indicated, schools are a very important part of marketing to potential buyers when homes are available. As you also stated, all of EGs schools are performing among the best in the state, by any measure, including independent rankings, which rate EG as #1, above all of those other districts that do have more people moving out and selling their homes. Perhaps people who bought homes here for educational purposes are staying and happy with the excellent education that their students are receiving.

    3. As you said, the average price of a home in EG is significantly higher than a typical home in RI. Based on your assertion that schools are a primary reason for people to want to buy in a municipality, that would indicate that the schools are having a positive impact on the prices, and as supply is not meeting demand, those prices are up 5%-6% over last year when volume was significantly higher.

    “So if the school system is to receive the lion’s share of the credit for attracting buyers to East Greenwich, then should it not also receive the majority of the criticism for why volume is way down?” Yes, those who were attracted to EG for the education are staying and that does affect volume, as you said. But that’s a salesman issue, not a problem for the community. And houses are selling here for more money than comparable homes in other communities and for more than they did last year. So, what’s the problem, exactly?

    Prices also may not reflect the current economic climate of the state (wherein your graph indicates that sales in EG are actually +14% over the state average. I would imagine that high taxes on overpriced (comparably) houses may be a turn off as well.

    All of that being said, I have the most difficulty understanding how all day kindergarten will make a significant change for the better in the housing market.

    While it may provide a better foundation for some students, and remove a daycare problem for some parents… it will also add well over $1,000,000 each year to the taxpayer rolls.

    Will even higher taxes add value to your “proprietary data” that you use to sell those homes when they are available?

    I have no horse in the “All Day K” race, but significantly higher taxes, or the elimination of programs that benefit kids at the upper levels of schools will not enhance the opportunities to sell homes in EG either.

    All day kindergarten would be nice, but very expensive, and the argument that somehow more people will want to move out and sell homes because of that seems extraordinarily flawed. People may move out, but it will be due to even higher taxes. I guess that will be good for your business…

    Reply
    • I live in East Greenwich

      Let’s be honest. EG schools are not ranked #1 by any independent ranking agency.

      Reply
    • Justin Mandese

      @ Let’s Be Honest – I appreciate your take on my analysis. Just to set the record straight, my sales volume is recorded mostly under our team MLS ID, which is why you had trouble finding my actual sales history on your own. I am the second highest producer on the #1 real estate team in RI and #1 REMAX team in New England (currently #52 in the nation). Hopefully that speaks to my “expertise” level that you took issue with.

      I respect your opinion that perhaps there is less turnover, due to the fact that people are choosing to stay in town longer. Perhaps that will hold true over time. I do know that turnover in EG has hovered around 4-5% (forgive me, I will look for that source this week), but maybe we are headed for a decrease.

      You mentioned that supply is not meeting demand. Right now, there are 83 active listings in EG, with an average days on market of 116. Of those properties, 8 have been listed over 200 days. While I agree that inventory has been down this year, I would argue that pricing has been more of the issue, as the number of price reductions continues to rise. With the aforementioned “strong” sales year in 2013, sellers decided to price their homes on a continued incline in 2014 — but the buyers weren’t “buying” it. Which leads me right back to my argument…why not? If EG was on the rise over the past few years, what held buyers back from pulling the trigger in 2014? I hold steady that the school system, the #1 turn-to marketing initiative for any real estate agent, is not doing the trick anymore.

      As for the all-day-K argument – I’m not sure where you are drawing your numbers from? Superintendent Mercurio presented the Ad Hoc committee’s report on feasibility of all-day-K to the school committee, this past Tuesday night. Were you there? If not, here is a direct link to the report. https://docs.google.com/document/d/1LSysuxJxcLvSn28Whq9dWtghkoT3UqEt6s4NA5uYnQM/edit

      As you will see, the full implementation of this initiative for the 2015-16 school year, runs at a total cost of just under $800k. There are also some alternatives to full implementation listed, with significantly lesser initial costs. Members of the school committee, as well as Dr. Mercurio, have repeatedly stated that they are looking to accomplish their goals without having to ask the town council for an increase in budget that would require an increase in taxes.

      As you will also notice, EG is now 1 of less than 10 districts in the state that do not have an all-day-K program. You will also notice that we are also included in the approximately 20% of towns in the nation that do not have all-day-k. With common core standards continuing to be strengthened and with full-day pre-K programs becoming the norm, how does it make any sense not to have a kindergarten school day, which enables kids to establish the foundation for the “upper levels of school”. A penny spent now, will save more when the kids reach high school.

      Reply
      • Let's Be Honest

        So, the reason homes aren’t selling as fast (but are selling for 5-6% more) is that EG doesn’t have all day K? You realize that only affects families who would have children of a very specific age, right? Going into one specific grade level or younger? I find that to be an unbelievable leap. As someone with school age children who has purchased two homes, before (while planning) and after children (before school ages), whether or not all day K was available was not part of the discussion, the overall quality of the schools and the elementary school that they would attend was a priority.

        Homes staying on the market for a long time tend to reflect the cost more than anything. If they are overpriced, won’t come down to realistic market rates or are above $500,000 they are much less likely to move in this economy in this state. Not a mystery as to why they aren’t moving. There are a glut of $500,000+ houses on the market. K or no K. The market isn’t there for them here. Or anywhere else.

        Reply
  8. Jane Schaefer

    The Kindergarten curriculum is now what was a first grade curriculum 25 years ago. Then, first graders had the luxury of learning that curriculum in a full day program. We are now asking younger, less neurologically mature children to master the same content in HALF THE TIME. There should be no argument. Full day Kindergarten is way overdue. As a parent who had 3 kids go through EG schools (the last graduating this year) I can say they were definitely prepared for college. Let’s not pressure them as 5 year olds and allow them the good start they need to succeed. By the way, the Chrome Books are wonderful as my daughter’s backpack has “slimmed down” by 30 pounds. Many college materials and courses are online even within a classroom context. This is the future of educational materials, especially in the college setting. As for the property taxes, I feel strongly that those who are childless contributed to my kids’ education via their property taxes, which I am deeply grateful for, and I will pay it forward by doing the same as my youngest graduates.Schools are the heart of the community and the community is what adds value to the real estate here.

    Reply
  9. Therese Vezeridist

    Agreed. My husband and I only looked at properties in East Green & Barrington 32 years ago. Our 2 sons attended the EG Public Schools from K-12 during which time I was an active volunteer in the PTG. Although they graduated 16 and 14 years ago, we still enjoy living in EG for its lifestyle: Main St with more than 2 dozen restaurants, easy access to Rt. 95, Airport, marinas, shops. Now I am active volunteer as Board member of the East Greenwich Chamber of Commerce to make the town an even better place in which to live, work and raise a family.

    Reply
  10. EG Villager

    The correlation between offering all day kindergarten and home sales can not be inferred from a single year of statistics – that has been made clear by a number of comments. Further, of the communities sited to support the position all of them, but Coventry, offer all day K. (http://www.rikidscount.org/matriarch/documents/13_Factbook_Indicator_53.pdf).

    Barrington has changed their curriculum and will offer four different options to parents enrolling students next year. http://www.dailyherald.com/article/20141118/news/141118464/. They are clear that half day K is their core offering – the approach they took appears to be one that considered education and “customer” (parents/students) expectations, not the economics of the real estate market.

    The merits of providing a full day of public education for children just beginning their tenure should be evaluated and determined by the educational benefits, not home sales.

    I also echo the comments that identified low home sales means people are staying in East Greenwich ! Selling a home indicates that there is a reason to leave!

    I would like to think that the School Committee and Town Council will consider all of the services that should be provided to ALL of our residents, not just a small number of families with young children starting school. The 2012 Kids Count report sited earlier indicates that East Greenwich had 121 kindergarten eligible students – the numbers reported to start the program in EG for renovation of buildings and staffing is close to a million dollars. Using just the annual staffing numbers expected ($800,000) the per student cost to ADD a half day of kindergarten is about $7,000 a year. I know there are many private opportunities in EG for kindergarten type activities (socialization, music, art, nap time) and wonder if the costs are similar.

    Spending other people’s money for all village services is the responsibility of our elected officials – all day k is just one service and the merits of this offering has nothing to do with how many homes sold last year.

    We would like to stay in EG, we moved in almost 20 years ago and our daughters graduated from EG high school, but looking ahead high property taxes will drive our decision to leave or stay for the long-term. Our needs and expected offerings of the “village” will naturally change. And our decision will be based on the benefits we receive for the amount it costs us to remain here as compared to similar benefits offered somewhere else for less money. I would like to say our house is NOT for sale!

    Reply
    • I live in East Greenwich

      @EG Villager, Barrington 220 district you mentioned is in Chicago. I used to make the same mistake.

      Reply
    • Justin Mandese

      @EG Villager – thank you for your comments. Two things I’d like to respond to:

      “The merits of providing a full day of public education for children just beginning their tenure should be evaluated and determined by the educational benefits, not home sales.”

      If you truly believe this statement, then I encourage you to read the data which has been made available both locally and nationally. If we were to take all other considerations out of the argument, then the implementation of this initiative is an absolute no-brainer.

      “Spending other people’s money for all village services is the responsibility of our elected officials – all day k is just one service and the merits of this offering has nothing to do with how many homes sold last year.”

      Ok, so this is a responsibility for our elected officials. If you noticed, the village just elected 3 new school committee members. They are all staunch supporters of all-day-K, which is no coincidence, because the swell of support for this initiative is no longer able to be ignored. I encourage you to view the Ad Hoc committee’s report which was presented to the school committee on Tuesday.
      https://docs.google.com/document/d/1LSysuxJxcLvSn28Whq9dWtghkoT3UqEt6s4NA5uYnQM/edit

      Who is responsible for electing our official’s? It’s us!!! So if the support calls for it…which it seems to be, then you should be happy to know that this will be implemented in the near future.

      Reply
      • Heather Larkin

        There are no SC members (new or previous) who think full day K is a bad program. Please stop perpetuating the myth that there are dark forces in play who have been keeping their foot on K’s neck. Or that there are SC members or administrators who DON”T want what is best for students. It’s not helpful, it’s divisive.

        Reply
        • I live in East Greenwich

          Heather, Some of them want to stay status quo. They won’t go above and beyond.

          Reply
  11. EG Villager

    Thank you for the correction, the offerings in Chicago still sound terrific !

    Reply
  12. Gene Dumas

    I’m pleased to read all these differing comments. Good, healthy, mostly unbiased debate. Let’s make it a PLUS SUM venture for ALL EG residents!

    Happy Holidays and a Great New Year!!

    Reply
  13. Concerned Parent

    As far as all the School Committee members being on board. I wish that were true. Unfortunately, one board member was overheard at a local eatery being negative about full day K. The bottom line is as of October ( the ad hoc Committtee report uses older numbers because they rely on the Kids Count report) 29 school districts in RI had full day k according to RIDE. I am aware of 3 more that will be implementing within the next year or two that leaves EG as one of four districts left to not implement or even approve it. Not a group I think our Town should want to be in.

    The FACT is that over 80% of national and RI school districts have implemented full day K. The FACT is that research has shown the benefit of full day k extends beyond the k year. The FACT is our community has adopted common core and needs full day k to be successful in common core. The FACT is that budgets are a symbol of what is important to a community since we have not found the money to make this happen. You can say all you want that you are supportive of it but until we are ready to put our money where our mouth is our community is not really in support of full day k. The FACT is that full day k has a return on investment of $3 for every $1 spent on it. The FACT is that almost every community in RI has realized all of the above and found the money to implement full day k and we have not putting us behind the eight ball on this issue.

    Reply

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