The Starbucks Effect: How Businesses Can Affect Home Values

Posted by Lindsay Gough on Monday, February 2nd, 2015 at 7:28am.

When selling your home, keep in mind that there are many different factors that contribute to the resale value. A recent study shows that one business, one coffee house in particular, is increasing property values of the homes around it.

And yes, that coffee house is Starbucks.

A recent study printed in the book, Zillow Talk: The New Rules of Real Estate by Spencer Rascoff and Stan Humphries, explains how Starbucks is affecting the real estate market. While homes have appreciated by an average of 65% since 1997, homes near Starbucks have appreciated by 96%. To compare, homes near Dunkin Donuts appreciated by 80%, which is still better than the national average, but not as fast as Starbucks. Home prices near Starbucks have recovered more quickly than those near a Dunkin Donuts.

Correlation does not mean causation, however. There are two possible explanations: either Starbucks is choosing locations where home values grow faster than the national average, or the coffee chain itself is actually driving up home sales.

To test these possibilities, researchers at Zillow ran a study. They looked at homes a quarter-mile away and homes a half-mile away from different Starbucks. What they found was that home values appreciated more the closer they came to a Starbucks.

“Starbucks has become a major indicator in determining the market value of a neighborhood, so, yes, your high-priced lattes do affect the real estate market,“ explains Joanna Fantozzi, reporting on the story at the Daily Meal.

Researchers talked to Arthur Rubinfeld, who is in charge of choosing Starbucks’ locations. Starbucks uses extensive data analysis to choose their locations, but also a little bit of creativity. “It’s an art and a science.” he told reporters.

While Starbucks doesn’t have as large a presence in St. George as it does in other parts of the country, this study does show how a single company or entity can change the home values in the area. As St. George continues to expand and grow, it will be important for residents and elected officials to choose businesses that can boost and improve property values.

While many people complain about increase traffic to large shopping centers, popular restaurants and stores can improve the surrounding real estate market and make it easier to sell your home. Talk to your St. George real estate agent about ways to increase your home’s resale value.

 

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