In the highly competitive world of real estate, parents are increasingly willing to pay a premium to live near top-rated schools, even if it means sacrificing other aspects of their lives. This trend is particularly evident in Toronto, where the demand for quality education has led to a significant premium on homes in desirable school catchment areas. The data reveals that living near the top-rated public schools in the Greater Toronto Area (GTA) can command a premium of around $60,000 to $70,000, or 5-7% for detached homes and 4-6% for attached homes. This premium can be even higher in British Columbia, reaching up to 10.5%.
The reason for this premium is multifaceted. Firstly, the decline in standardized test scores across Canada has made school ratings more important for homebuyers. In British Columbia, around one-third of students were not meeting literacy expectations just before the pandemic, with that number rising to 40% from 2021-22 onward. In Ontario, only half of Grade 6 students met provincial standards in math in 2024-25, a significant drop from 20 years ago when the figure was 60%.
Secondly, the wealthy homeowners in these areas often enroll their kids in private schools, which can skew the school rankings. In super-affluent neighborhoods, the price is not reflected in school rankings, as the wealthy are not bound by the same financial constraints as the general population. This can lead to a perceived ranking that affects the market prices, even if the data does not support it.
The impact of this trend is far-reaching. Parents are paying consultants thousands to help their kids get into top universities, and the demand for private school enrolment is climbing. This trend is not limited to Toronto; in Metro Vancouver, 20 of the region's 25 highest-ranking communities for school scores are in West Vancouver, with a median premium for a detached home near a highly rated school hovering at $250,000.
However, there are some exceptions to this trend. Some ultra-affluent neighborhoods in Vancouver, such as Shaughnessy, do not have high school scores, despite their high median home prices. This can be attributed to the small size of the top-school enclaves in West Vancouver, which makes it difficult to pin down the exact premium.
In conclusion, the premium on homes near top-rated schools is a complex issue, influenced by a variety of factors, including the decline in standardized test scores, the enrollment of wealthy students in private schools, and the perceived ranking of school catchment areas. While this trend may be driven by the desire for quality education, it also highlights the importance of considering the broader implications of such decisions, including the impact on property taxes and the potential for higher incomes in these areas.
