Capitalizing consumer school ratings into residential listing prices: evidence from Greater Houston

Purpose This paper aims to estimate how much of a consumer-facing school rating is capitalized into the price at which a home is offered for sale and to test whether that rating displaces the official state accountability score in a large metropolitan market that has received little direct attention in the capitalization literature and is unusual in having no conventional zoning. Design/methodology/approach Log-linear hedonic price regressions are estimated on 2,332 active detached single-family listings collected from Realtor.com in November 2025 and matched to assigned public high schools. Because the GreatSchools rating is invariant within each school-assignment group, the identifying variation is across 27 groups. Standard errors are clustered by school-assignment group; significance is verified by wild-cluster bootstrap, and a 27-group aggregated regression is reported as a conservative benchmark. Findings A one-point increase in the GreatSchools rating is associated with a 4.57% higher listing price, about US$15,733 at the sample median of US$344,082, rising to 4.65% with school-district fixed effects. The aggregated 27-group estimate is 3.59% per point. Entered jointly, the rating retains its full association while the Texas Education Agency score is indistinguishable from zero. The rating–price relationship is linear, with no evidence of convexity. Research limitations/implications The dependent variable is an asking price in a single cross section, and parcel coordinates are unavailable, so spatial dependence, flood exposure and attendance-boundary sorting cannot be tested. The estimates are capitalization measures conditional on observed controls rather than causal willingness to pay. The listing-level estimate may overstate causal willingness to pay, while the 27-group estimate provides a more conservative benchmark. Practical implications Valuation and automated appraisal models may benefit from including the consumer-facing rating alongside official accountability measures. Because the rating co-varies with student composition and neighborhood characteristics, its capitalization also raises affordability, residential sorting and equity questions. Originality/value The paper provides a metropolitan-scale capitalization estimate for Greater Houston, prices the rating households encounter during search rather than the official accountability measure and studies the listing-price margin, which has received far less attention than the transaction price.