SEATTLE, Jan. 25, 2016 /PRNewswire/ -- Your local grocery market has a lot to do with what happens in your local housing market, according to a new analysis by Zillow featured in the paperback edition of Zillow Talk: Rewriting the Rules of Real Estate (Grand Central Publishing, Jan. 26).
Specifically, Zillow found that homes grow more rapidly in value if they are closer to a Trader Joe's or Whole Foodsi. 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.
"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 first book by Humphries and Zillow Group CEO Spencer Rascoff became a New York Times best seller after its hardcover release in January 2015. The book – out this week in paperback with a bonus chapter about the grocery store phenomenon – draws on Zillow's 10-year history collecting and analyzing real estate data, busting common myths and turning conventional wisdom on its head.
"The grocery store phenomenon is about more than groceries," said Rascoff. "It says something about the way people want to live – in the type of neighborhood favored by the generations buying homes now. Today's homebuyers seek things in neighborhoods that weren't even in real estate agents' vocabularies a generation ago: walkability, community, new urbanism – and maybe we should add words like sustainable seafood and organic pears."
Zillow analyzed the values of millions of homes near dozens of Trader Joe's and Whole Foods to conclude that grocery stores and home values are definitely related.
- According to the Zillow analysisii, 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.
- The analysis clearly shows that homes near the stores appreciate more quickly than homes in the city as a whole. That means the two brands are 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.
Business Insider named Zillow Talk one of the 15 Best Business Books of 2015 and Fortune called it a top five read for 2015. Zillow Talk is available at national and independent retailers including Amazon and BarnesandNoble.com.
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.
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i Zillow analyzed home values of single-family homes, condos, and co-ops within a mile of 375 Whole Foods and 451 Trader Joe's locations around the country, a total of nearly 3 million homes. Then Zillow analyzed the median value of those homes on a national and metro level between 1997 and 2014 compared to the median values of all homes over the same time period.
ii To analyze how the stores' openings affect home values, Zillow looked at home value data and opening dates for the three years prior and three years after opening of 40 Trader Joe's stores and 40 Whole Foods stores. Zillow tracked annual appreciation of homes near each of those 80 locations relative to their cities over the six-year time span.