Starbucks: Caffeinating Home Values Since 1997

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If you think coffee is only good for getting you moving in the morning, this new study will wake you up. Apparently, it can also provide a jolt nearby home values.

That’s according to Zillow CEO Spencer Rascoff and Chief Economist Stan Humphries. In their New York Times bestseller, Zillow Talk: The New Rules of Real Estate, they crunched the numbers and found that houses located within a quarter mile of a Starbucks location appreciated more quickly than houses overall.

Rascoff and Humphries knew the traditional guideline for finding real estate that would appreciate the most – good schools, easy access to major job centers, or a quick drive to the grocery store. They wanted to dig deeper.

“We were looking for other markers that could tell us where home values would appreciate the most, and in doing the research, we found that if you live near a coffee shop, chances are your house outperforms other houses further away,” Humphries said. “When we dug even deeper, we found that living close to a specific coffee shop – Starbucks – was the best indicator your house would out-perform other houses in the area.”

This trend held true nationwide, although results varied by region. In North Texas, there was a 7.2 percent difference during the time measured.

 

Starbucks graph

 

“Homes in the Dallas-Fort Worth metro appreciated 49.7 percent between January 1997 and December 2013,” Humphries said. “But if you look just at homes in the Dallas-Fort Worth metro and within a quarter mile of a Starbucks, you see the Starbucks effect: Those homes appreciated 56.9 percent.”

Humphries said they were surprised by how decisive the results were.

“Over the past 17 years, we found that homes within a quarter mile of a Starbucks doubled in value, whereas the average home in the U.S. appreciated 65 percent over the same time,” he said.

The “secret sauce” for the “Starbucks effect” could be the coffee giant’s methodology for picking store locations.

“Their approach is actually similar to how homebuyers [are advised] to search for a home,” he said. “They analyze data – in their case, they assess traffic patterns and nearby businesses – and then work with local experts in the area to advise on specific location and store design.”

So the next time you spot a Starbucks, tip your latte to the chain for caffeinating more than just sleepy patrons.

 

 

Leah Shafer is a content and social media specialist, as well as a Dallas native, who lives in Richardson with her family. In her sixth-grade yearbook, Leah listed "interior designer" as her future profession. Now she writes about them, as well as all things real estate, for CandysDirt.com.

1 Comment

  1. Candy Evans on February 18, 2015 at 2:58 pm

    It even works in the boonies: up in Lucas, Keller Williams Realtor Tom Grisack tells me the folks in Fairview and Lucas are tickled pink (or maybe green?) they can go from grounds to grounds in 15 minutes!

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