Homes close to Trader Joe’s or Whole Foods locations gain value more rapidly than houses farther from the trendy retailers, an analysis by Zillow finds.
At the end of 2014, homes within a mile of either store were worth more than twice as much as the median home in the rest of the country, according to a new analysis in the paperback edition of Zillow Talk: Rewriting the Rules of Real Estate published Tuesday.
“Like Starbucks, the stores have become an amenity in their own right – a signal to the home-buying public that the neighborhood they’re located in is desirable, perhaps up-and-coming, and definitely improving,” says Zillow Group Chief Economist Stan Humphries. “Like a self-fulfilling prophecy, the stores may actually drive home prices. Even if they open in neighborhoods where home prices have lagged those in the wider city, they start to outperform the city overall once the stores arrive.”
No amount of data analysis can answer this question: Are Whole Foods and Trader Joe’s the cause of rapid appreciation, or are they simply locating in affluent neighborhoods that would see price increases anyway? Zillow punts, saying stores and home prices are “definitely related.”
“The grocery store phenomenon is about more than groceries,” Rascoff says. “It says something about the way people want to live – in the type of neighborhood favored by the generations buying homes now.”