February 5, 2016
Movin’ on up with TJ’s and Whole Foods?
TheStreet.com quoted me in Houses Near Trader Joe’s or Whole Foods Reap Better Property Value Returns. It opens,
The internal debate for people who are shopping for a home is never an easy one, as the location and potential for the property value to rise might outrank the appearance of the brick and mortar edifice. But new research from Zillow has reiterated beliefs that resale value should remain the higher priority.
Even first-time home buyers are aware of the importance and value of determining the resale value of a condo or house.
After examining 17 years of housing data from 1997 to 2014, Zillow, the Seattle-based real estate website, determined that homeowners realized greater gains when they were in close proximity to Trader Joe’s and Whole Foods, the national grocery store chains. The analysis included examining the values of condos, co-ops and houses within a mile of 451 Trader Joe and 375 Whole Foods locations, totaling nearly 3 million homes. The median value of these homes was compared to the median values of all homes during the same time period.
“These grocery stores are doing a great job of identifying places ready for quick home value appreciation,” said Svenja Gudell, chief economist of Zillow. “A Whole Foods or Trader Joe’s opening is a signal for home shoppers or homeowners that this is likely to be an up-and-coming location.”
One emerging trend is the desire of homebuyers to live in neighborhoods where walking to local stores and restaurants remain a feasible option.
“As more people are priced out of city centers and head to the suburbs, homebuyers still want amenity-rich neighborhoods and a more urban feel,” she said. “These stores are definitely among those amenities that are attractive to buyers.”
Other Amenities Sought
These two grocery stores resonate highly with consumers, and their preference has increased to the point where they have asked specifically if either one is within walking distance at showings of homes, said Samantha DeBianchi, CEO of DeBianchi Real Estate, a Fort Lauderdale, Fla. real estate firm.
“The old adage ‘location, location, location’ is really true,” she said.
The research conducted by Zillow revealed that through 2014, the homes located a mile of either Whole Foods or Trader Joe’s were valued at more than twice as much as the median home throughout the U.S.
Since these two grocery stores are always constructed in neighborhoods where the gross income is higher than the average salary, whether this phenomenon is simply a self-fulling prophecy is anybody’s guess.
Zillow contends that the stores provide the inertia to push up home prices, even in neighborhoods where the prices were falling behind those in the city itself. They also examined the effect of the construction of the stores on the property value three years before and after the opening of 40 Trader Joe’s locations and 40 Whole Foods stores. After a store opens, the prices of homes start to exceed those in the city overall.
“I am still skeptical of the claim when it comes to those two stores, but I would say that when you buy near a major amenity when it is under construction, you often see a bump when it is complete,” said David Reiss, a law professor at Brooklyn Law School.
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