Starbucks Predicts Real Estate Values

Explaining the Starbucks Effect

When thinking about purchasing a home, people usually hope to buy in a stable or up and coming neighborhood. Everyone likes to believe that their home and neighborhood will increase in value over time, thus increasing their personal wealth. A new article has just been posted explaining that the opening of a new Starbucks location actually helps to predict a rise in home values. Buying a home can be a daunting experience for anyone, so it might seem odd that Starbucks could actually prove to be a big help. 

Everybody Loves Starbucks

Starbucks appears in our minds to be a sort of aspirational brand. On any given day, most people could choose to spend $4 on coffee if they really wanted to, but Starbucks represents a lifestyle where this simple luxury is allowed to be commonplace. Anybody can buy a coffee at any time, but Starbucks likely makes most of it's money from repeat daily visitors, most of whom are probably high-income earners. Intuitively, it seems to make sense that Starbucks would choose to open stores in high-income areas. 

Starbucks Makes Predictions

According to data by Zillow, homes located within 1/4 mile of a Starbucks location have appreciated 96% in 17 years, compared to 65% for all other homes. Homes located near a Starbucks location have increased at almost twice the national average. This appreciation effect tended to be the strongest within 1/4 mile of a Starbucks location and then began to dissipate further out. This is surely good business for the coffee chain. 

While it is impossible to claim that Starbucks is now the ultimate authority on home price trends, the numbers are pretty remarkable. If you are in the market for a new home, you might want to consider searching nearby a Starbucks!