“Location, location, location!”

When my husband and I bought our first home back in 2004, we heard that phrase a lot. Since we were young newlyweds with no children, we interpreted it to mean proximity to great restaurants and fun cultural attractions.

But later—after learning the word “escrow” and welcoming a baby—we discovered the real reason: school zones and property taxes. Homes in new, up-and-coming neighborhoods are zoned for terrible, crumbling schools. Homes in a great school zones that are also close to work are too expensive for many young families. Affordable, family-sized homes in great school zones with low taxes only exist in the sprawling suburbs and exurbs.

By now, most of us are familiar with the conventional wisdom on urban sprawl: Evil developers, shameless capitalists, white flight, and selfish soccer moms create sprawl. They do so at the expense of the natural environment and without regard to the dynamic, exciting possibilities of city life or the detrimental effect on our waistlines.

Regular readers of The Freeman are also familiar with the countervailing libertarian argument that zoning laws contribute to sprawl by segregating different land uses. Federal land-use policies have also been accused of promoting sprawl.

But cities and school boards also play a role.

North Carolina State University finance and real estate professor Bartley Danielsen’s latest research finds that many families with young children like to live in hip, urban downtowns—until those children are old enough for elementary school. In Chicago, he found that stroller-to-backpack ratios (a measurement of babies and toddlers to school-age children) in the city were exactly the reverse of those in the suburbs and exurbs. In other words, it’s not the birth of a child that causes parents to seek suburban bliss, it’s that child’s entrance into kindergarten.

Chicago’s low-performing schools, Danielsen concluded, contribute considerably to sprawl around the city. More specifically, parents’ lack of choice drives sprawl. If Chicago allowed parents to choose their children’s schools without regard to location, he argues, many young families would remain downtown and commute to school instead of moving to the suburbs and commuting to work. (Even better, he says, would be building charter schools in the inner city.)

Danielsen’s preliminary investigation into Vermont’s school system, where counties without schools offer vouchers, suggests that choice improves neighborhoods. By assigning schools, school boards are shaping demographic patterns—usually in ways they don’t intend.

A public-school-choice bill making its way through the Louisiana legislature may test the hypothesis further. The bill will allow students who attend failing public schools to switch to higher-performing public schools. The proof of the pudding will be whether parents, to some degree, stop fleeing fashionable cities for remote suburbs.

City councils and county commissions also shape demographic patterns through tax policy. Higher property taxes in cities than in unincorporated areas of surrounding counties encourage citizens to move in order to find more affordable property. Lower taxes and reduced fees for water, sewer, and trash collection combine to save county residents considerable money when compared to their city counterparts.

Even in places where property taxes are relatively low, living in the county is cheaper than living within city limits. Raleigh, North Carolina, provides a case study. Residents and businesses in Raleigh pay $0.9166 per $100 of assessed value. Residents outside the city limits in Wake County pay just $0.5340 per $100. Raleigh’s downtown assesses an extra $.0786 per $100. Another area close to Raleigh’s center assesses an additional $0.10. Those two extra assessments drive prices up—and demand down—close to the city’s central business district.

The combination of higher taxes and worse schools drives families with children away from city centers, contributing considerably to sprawl.

For proponents of both markets and cities, the public policy implications are clear: Cities can encourage dense growth without resorting to costly regulations or draconian land-use laws. A good start would be scrapping the higher taxes levied on central business districts or areas targeted for redevelopment.

A few policy options exist for school boards. Danielsen recommends building charter schools in inner cities to keep school-aged children downtown. But to some extent that strategy has been tried. Many cities located magnet schools in low-income neighborhoods in the 1970s and 1980s to no effect. Parents were likely prevented from permanent housing choices by the random nature of magnet assignments. The same objection applies to using charter schools to fight sprawl.

A better policy would be to allow parents to choose any school in the district, as long as they provide their own transportation. Such a policy would allow parents to base their housing choices on factors other than school zones, fundamentally changing the housing market. (A law allowing North Carolina students to attend any public school in the state was briefly considered this year. But the “open enrollment” bill was tabled when many districts objected.)

City policies are their own worst enemy. Taxes, school zones, and local land-use guidelines are all obstacles to individuals who want to live, work, and raise their families in the city center. For healthy urban growth, cities should scrap the “urban planning” and just let markets work.