Does Starbucks Brew Higher Home Values?
February 4, 2015
The arrival of Starbucks’ coffee shops may help indicate where higher home values will soon surface, asserts a new analysis from Spencer Rascoff and Stan Humphries’s new book, Zillow Talk. They claim that “Starbucks equates with venti-sized home-value appreciation. Moreover, Starbucks seems to be fueling – not following these higher home values.”
To arrive at their findings, researchers compared a database of Starbucks locations with Zillow housing data, tracking home values within a quarter mile of Starbucks to houses slightly farther away over a five-year period of when a Starbucks location opened.
Homes closest to Starbucks appreciated a little more than 21 percent over five years, while the homes slightly farther away only appreciated just less than 17 percent.
Could it just be a coffeehouse effect? Homes near Dunkin' Donuts reflect a similar trend, but they don’t tend to appreciate as fast as properties a quarter-mile from a Starbucks, the study notes. Between 1997 and 2012, homes located near Starbucks and Dunkin' Donuts followed similar trends in rising home value appreciation. But during the recent housing recovery, homes near Dunkin' Donuts have appreciated 80 percent since 1997, whereas homes near Starbucks have appreciated 96 percent, nearly doubling their value.
But as the study notes, properties near Starbucks locations do tend to start out more expensive. Also, possibly Starbucks and Dunkin’ Donuts are just waiting for a neighborhood’s property values to increase before moving in. As such, there is a question whether Starbucks is the actual cause or the consequence of higher home values in an area.
Regardless, researchers maintain that the study shows homes near Starbucks tend to appreciate at a faster rate than U.S. housing on a whole, and are recovering much more quickly from the housing bust.
Arthur Rubinfeld, who oversees Starbucks’ location selection process, says that the company has about 20 analytics experts around the world scouring maps and geographic information systems data to assess an area’s traffic patterns and businesses.
“The beauty of Starbucks is our understanding of real-estate site locationing,” Arthur said in the Zillow Talk chapter about the analysis. “It’s an art and a science.”
Source: “Are Starbucks Fueling America’s Increasing Home Prices?” HousingWire (Jan. 30, 2015)
Updated: April 07, 2020