Many Americans are loving their organic food, but are they willing to pay a premium on their dwellings just for the convenience of living close to their favorite natural food stores?
According to recent data, the answer is yes.
Yahoo! Finance analyzed data of US homes that are located nearby a Whole Foods or Trader Joe’s, and discovered that property values that are within a certain distance from these shops increased by as much as 40% since they were initially bought.
It’s a well-known fact that living close to attractive amenities – such as green space or public transit – can have a positive effect property values. Now you can add Whole Foods, Trader Joe’s, and even Starbucks to that list.
People simply want quick and easy access to their favorite places to do their grocery shopping or grab a premium cup of joe. They’ll look at neighborhoods near stores that they are used to visiting because it gives them a sense of comfort and familiarity. Stores like these are typically considered high-end compared to others within the same niche, and contribute a sense of esteem to a community.
Does Proximity to High-End Shops Really Result in Faster Property Appreciation?
A number of studies have recently been conducted to find out whether the effect of a Whole Foods or Trader Joe’s is legitimate, and if being close to such prestigious stores really does cause faster appreciation in home values.
Within a year or two after a Whole Foods opens in an area, the median price for homes within a quarter mile of the store appreciates 9% more compared to homes outside of this radius. Similar results have been found with Trader Joe’s: median home prices within a quarter-mile radius of the natural food store appreciates 10% more compared to homes further out.
From 1997 and 2014, properties close to a Whole Foods or Trader Joe’s appreciated in value by 140% and 148%, respectively, compared to the average national property appreciation of 71% during the same time period.
But perhaps we should be determining whether it’s these shops that have an effect on the neighborhood, or if it’s the other way around? Are these areas already up-and-comers, and the powers-that-be behind Whole Foods have simply done their homework when it comes to pinpointing communities that are already experiencing gentrification and have a population that will show the most interest?
Of course, every major retailer won’t just arbitrarily open its doors in just any random community: a certain amount of research goes into choosing the right location to open a store, such as an existing clientele base, the potential to expand customer reach, and the cost to build and lease. These retailers enlist the help of third parties with access to mapping software that collects data on the demographics and the health of sales in specific areas.
Don’t Expect Rise in Values Right Away
While the numbers certainly help the effect of a Whole Foods and Trader Joe’s on home values hold water, property values won’t necessarily spike the moment these shops open their doors. While desirable shops nearby certainly do have a positive effect on property values, the effect will typically be seen over several years.
You’ll most likely see a faster increase in value after completing major home renovations, such as a new kitchen or new roof, compared to the value of other homes on the block.