In 2015, Zillow’s CEO, Spencer Rascoff, and Chief Economist, Stan Humphries, found that homes within a quarter of a mile to Starbucks appreciated more quickly than homes nationwide during a 15 year period. Today, Rascoff and Humphries are looking at the possible effects that living near a Whole Foods or Trader Joe’s may have on median home values. Just like it was and still is an advantage to be a “Starbucks house”, is it an advantage to be a “Whole Foods house” or a “Trader Joe’s house”?
Right off the top, take a look at Detroit as a starter. Whole Foods decided to open in downtown Detroit in 2013. (No grocery chain had opened in downtown Detroit in a decade.) Median home sales went from $19,000. in 2009 to $80,000. in 2015, according to the Detroit Free Press!
Now, take a look at the gaps in median values with home proximity to Trader Joe’s and to Whole Foods as compared to the average U.S. median home worth of $176,800 in December 2014. From 1997 to 2014, the average U.S. median home appreciation was 71%. Homes within 1.5 miles of Trader Joe’s, according to Zestimate data, had a median worth of $406,600. and an appreciation rate of 148% between 1997 – 2014. Homes within 1.5 miles of Whole Foods had a median worth of $376,200. and an appreciation rate of 140% between 1997 – 2014.
Is it Trader Joe’s or Whole Foods making the difference in those appreciation rates? It’s hard to say but RealtyTrac came up with similar data in 2016. Its data showed Whole Foods homes appreciated in median worth at the rate of 34% over the national average and that Trader Joe’s homes appreciated in median worth at the rate of 40% over the national average.
Obviously, retailers such as Trader Joe’s and Whole Foods consider many factors when deciding upon potential locations, factors such as the right sized space, how much it costs to rent/buy in that location, the abundance of existing clientele, the potential to reach a wider customer base, demographic information and the success of sales by geography, etc. Ideally, retailers favor locations that are in the process of undergoing widespread changes so that the locations can be considered to be investments in future customers down the road.
Detroit, our starter example, was experiencing a perfect storm scenario of widespread changes when Whole Foods was considering a move into its downtown. Foreign investors were pouring into the area; corporations were being lured back into the downtown center; price advantages were almost too good to ignore. When Whole Foods decided to make its move, Whole Foods became another asset to the neighborhood, another reason to set down roots in downtown Detroit.
Just as good schools, commute times, comparable sales prices, proximity to “necessary” community amenities are definitely part of the home buying decision making process, according to Greg Hague, CEO of Real Estate Mavericks in Scottsdale, AZ. “…people look for a home by community. And people begin making their home buying decisions based upon (what’s in those) communities and neighborhoods before they pick their real estate agent.” “If you remove those businesses (like Trader Joe’s and Whole Foods), those communities are not as desirable,” says Ronald McInerney, owner of Domus Appraisals in Yonkers, NY.
So yes, it’s good to be a Whole Foods, Trader Joe’s and/or Starbucks house. Just ask Seattle, Chicago, Boston, Philadelphia…and most certainly, Detroit.