The Four R's

Reading, 'Riting, 'Rithmetic & Real Estate

(page 1 of 3)

As we all know, owning a small slice of the American dream in Marin requires an amount of money many people consider either shocking (if they’re trying to buy here) or laughable (if they’re loving their three-figure mortgage payment elsewhere in flyover country).

Chalk up much of that monster monthly bite to the cost of California living. The Golden State demands a premium for its attractions and we pay it. The price of admission for many cities in Marin, though, is even higher. Beyond the obvious reasons for this extra tariff—easy commute, great scenery and the general joie-de-vivre zeitgeist that permeates the Marin mindset—one factor stands out: The public schools in places like Mill Valley, Tiburon, Kentfield and Ross are great, as good as much ritzier private schools.
More simply, these local schools have the magnetism to entice an increasing number of families into buying some of Marin’s priciest real estate so they can gain access to an excellent—and free—public school education.

A million here, a million there

Not so long ago, seven digits to the right of a dollar sign meant real money. Having a “million bucks” meant being set for life. Millionaires were the richest of the rich.

Today, $1,000,000 is the new $1,000. Millionaires don’t rate on the Forbes 400 Richest Americans list. They’re all billionaires. Game shows give away millions like ATMs spit out twenties. Who Wants to Be a Millionaire? the TV show asks. The answer is everyone—especially anyone intent on living in parts of Marin.

How much house does a million dollars get you here? Here’s a recent example from the multiple listings on Ricardo Road in Strawberry priced at $1,195,000:
“Experience outdoor, resort style living at its best! Sunny, charming 3 bedroom 2.5 bath two-story home featuring hardwood floors. French doors from the living and dining room open on to the enticing patio, pool and fully fenced yard…Award winning Mill Valley schools and easy commute.”

Nice house, right? Sunny, a pool, add-ons­—all good. But let’s face it: at 1,900 square feet with three bedrooms it’s a pretty standard suburban home not unlike this one advertised on Sereno Way in Novato:
“Great San Marin opportunity adjacent to Mt. Burdell on oversized corner lot! This home includes an updated kitchen, updated second story baths, newer roof, all new doors, fireplace in living room, solar heated swimming pool…and a great location next to open space!!!”

Same number of bedrooms and baths, same size and even more exclamation points. This house was selling for $825,000.

Why is Mill Valley worth $370,000 more than Novato? Two things—both noted in the first ad: “Award winning schools and easy commute.”

Well, of course, you say, it’s that real-estate location thing. And indeed that’s some of it. That’s why San Francisco workers will pay more for the shorter commute from Sausalito than for the longer one from Novato. (Highway 101 from Highway 37 to the Richmond Bridge exit is rated the fourth worst Bay Area commute.)

But there are plenty of close-in suburbs where houses are much cheaper. From Mill Valley, where the median home price is about $1 million, it’s 15 miles to San Francisco’s Financial District. From Millbrae, where the median home price is $750,000, it’s only a mile farther. The difference in value doesn’t take place on the freeway, but in the classroom.

Millbrae’s public schools test significantly lower than Mill Valley’s, which, like those in Tiburon, Ross and Kentfield, are among the highest rated in the Bay Area. Therein lies the trade-off for families in Marin—pay more now for a house, but save big money in the long run by not writing checks for private school tuition.

Private schools run from the merely expensive to better-have-a-money-manager-in-the-family. Elementary schools range from $7,900 for St. Hilary’s in Tiburon to $12,000 for Montessori de Terra Linda School in San Rafael to $22,900 for Marin Country Day in Corte Madera. High school is even more—from $13,600 at Marin Catholic in Kentfield to $29,000 at Branson in Ross or at Marin Academy in San Rafael.

A 13-year private school education—let’s say nine years at St. Hilary’s and four at Marin Academy—would set a family back $191,000 in today’s dollars. Multiply by two or three or four children and for many families public school starts to look like the better, or perhaps the only, option.

The financial gain of not paying that tuition can be substantial, even by the standards of well-off Marin, where the median family income is $99,713, almost twice the national average. That cash can be leveraged into a bigger house or more expensive neighborhood with better public schools.

Rob Lee, executive vice president of California Mortgage Advisors in San Rafael, crunches the numbers: a family who spends $20,000 a year on private school tuition could use that $1,600 a month to finance an additional $240,000 home loan. At $30,000 in tuition, the mortgage capacity grows by $400,000. That’s a lot more house—and a great investment considering that a Mill Valley home bought in 1996 for the median price of $425,000 has appreciated 158 percent, an average annual return of 13 percent.

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