Housing Values in Relationship to Proximity to Certain Stores

By Kyle James on 17 March 2016 0 comments

Finding a home in the right neighborhood can be a daunting task, especially if you're on a strict housing budget. But according to recent studies, you should also add the proximity to specific stores into consideration when looking for your next home. Having these stores in your neighborhood can actually boost your home's value.

Starbucks

According to Zillow Talk: The New Rules of Real Estate, ever since 1997, homes located within a quarter-mile of a Starbucks appreciated in value at an average rate of 21%, while homes within a half to quarter-mile rose in value by 17%. In contrast, homes located within the same distance of a Dunkin' Donuts, and not a Starbucks, only appreciated in value by 15%.

Zillow makes the argument that a Starbucks in the neighborhood isn't the result of higher home prices, but in fact, is the cause. Whether home buyers see a Starbucks as a sign of an up-and-coming neighborhood, or a testament to a sense of community where people meet and interact with each other, there's no arguing the data that shows a nearby Starbucks to be something to look for when house hunting.

Whole Foods

The proximity to a Whole Foods grocery store is another excellent thing to look for when shopping for a new home. Zillow discovered that between 1997 and 2014, a strange phenomenon occurred when a Whole Foods announced they were coming into a new neighborhood.

At first, median home values within one mile of the future Whole Foods grew slower than other homes in the same city. But as the grand opening grew nearer, that trend started to reverse dramatically. Once the store opened, homes within one mile appreciated much faster than other homes in the area. While Zillow can't fully explain this phenomena, they point to an overall increase in a neighborhood's desirability as the root cause.

Trader Joe's

Similar to Whole Foods, the proximity to a Trader Joe's is an indicator of a neighborhood with growing home values. Whether it be the perception of a healthy lifestyle or a safer neighborhood, Zillow also found that homes within a mile of a Trader Joe's had appreciated by 10% more than other homes in the area during the two years after a location's grand opening.

According to Zillow CEO, Spencer Rascoff, "the grocery store phenomenon is about more than groceries, it says something about the way people want to live — in the type of neighborhood favored by the generations buying homes now. Today's homebuyers seek things in neighborhoods that weren't even in real estate agents' vocabularies a generation ago: walkability, community, new urbanism — and maybe we should add words like 'sustainable seafood' and 'organic pears.'"

When comparing homes near a Trader Joe's to those near a Whole Foods, TJ's appears to be the clear winner. According to a recent RealtyTrac study, which analyzed the values for 2.3 million homes, they found that houses near a Trader Joe's location "have a higher value on average: $592,339, 5% more than the $561,840 average value for homes near a Whole Foods." Also, homes near a Trader Joe's have appreciated by a whopping 40% on average, while similar homes near a Whole Foods have only appreciated by 34%.

While it should be pointed out that causation does not always imply correlation, I think it's safe to assume that looking for these stores in a neighborhood is worth adding to your arsenal of factors when shopping for a new home. This is especially true when you consider the amount of money and effort that these corporations put into scouting new neighborhoods for potential store locations that will be profitable.

Have you ever used the proximity to these stores as a way to determine the desirability of a neighborhood?

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