If you’re looking for an edge in buying a home that will appreciate in value, Zillow researchers may have found just what you’re looking for.
The real estate website recently analyzed the values of millions of homes near dozens of Trader Joe’s and Whole Foods, finding that these grocery stores and higher home values are definitely related.
Specifically, Zillow found that homeowners saw their values increase more rapidly if they were closer to one of these grocers. Between 1997 and 2014, homes near the two grocery chains were consistently worth more than the median U.S. home. By 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, the analysis found.
Of historic and anecdotal note, the original location of Whole Foods in Austin, Texas, is now a Goodwill thrift store. The surrounding neighborhoods remain some of the city’s most expensive. At the time of this writing, a two-bedroom, two-bath condo unit just up the street was listed for $899,900. According to Zillow, the median home value in Austin is $290,300.
Trader Joe’s original store on Arroyo Parkway in Pasadena, Calif., is still in operation. At the time of this writing, a two-bedroom, two-bath condo down the street was listed for $778,000. According to Zillow, the median home value in Pasadena is $710,000.
“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,” said 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.”
The Starbucks Effect
About a year ago, Zillow did a similar analysis of Starbucks, looking at the relationship between property values and proximity to the coffee chain. That analysis found that homes within a quarter-mile of Starbucks increased in value by 96% between 1997 and 2014. The national average for that period was 65%.
Zillow’s analysis also found:
- The median home within a mile of a future Whole Foods store appreciates more slowly than other homes in the same city before the store opens. In the months before the stores open, the trend reverses and flips, so that after the stores’ opening dates, homes near Whole Foods appreciate more quickly than other area homes.
- Homes near future Trader Joe’s locations were appreciating at close to the same rate as other homes in the same city before the stores opened. After the opening date, however, Zillow found a clear boost in home appreciation rates. Two years after a Trader Joe’s opened, the median home within a mile of the store had appreciated 10 percentage points more than homes in the city as a whole over the previous year.
- These two brands are obviously very good at choosing locations that will appreciate faster in the future, or are actually spurring home appreciation growth – or some combination of the two.
Remember, a good credit score can help make housing more affordable in any area since it generally entitles you to better rates on a mortgage. As such, it can be a good idea to check your credit before you apply for a mortgage. You can do so by pulling your credit reports for free each month at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.
More on Mortgages & Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Refinance Your Home Loan With Bad Credit