Monday, August 26, 2019

Would You Pay More To Live Near A Nice Grocery Store?






Hello Everyone:

A happy start of the new week to you.  A quick programming note before we get started: Next Monday is Labor Day in the United States and Blogger will be off.  Onward.

Image result for Trader Joe's and Whole Foods
Trader Joe's and Whole Foods shopping bags
msn.com
Trader Joe's and Whole Foods grocery stores are California food institutions.  Both chain stores offer a very fine selection of organic fresh and ready-to-eat food, beverage, and non-grocery items.  Whole Foods offers a very nice salad and hot food bar, sushi counter, coffee bar (great cafe au laits and Americanos), and bakery.   In Blogger's neighborhood, there are two Trader Joe's and a Whole Foods within walking distance, which makes Yours Truly very happy.  If you have not figured it out, Blogger regularly patronizes both stores, Joe's more frequently than Whole Foods.  Another truism, the home values in Blogger's neighborhood are high.  Coincidence?  No.  This is why.

Image result for Trader Joe's and Whole Foods
Which is better for your home value?
businessinsider.com

Both Trader Joe's and Whole Foods are a staples of more affluent neighborhoods and recently begun opening in underserved neighborhoods.  Although their openings are not always welcome (ibtimes.com; Feb. 4, 2014 date accessed Aug. 26, 2014), there is reason to believe that these stores increase the desirability of their host neighborhood.  A 2016 study by real estate website Zillow (zillowmedia.mediaroom.com: Jan. 25, 2016; date accessed Aug. 26, 2019) found that "homes tend to appreciate in value when there is a local Trader Joe's or Whole Food nearby" (citylab.com; Jan. 28, 2016; date accessed Aug. 26, 2019).  Zillow examined city data on a variety of home types--single family, condominiums, and co-ops in over 80 locations across the nation--within a one mile of either store.  Between 1997 and 2014, "the value of these homes exceeded that of the median home in the U.S., according to Zillow's calculations.  And by the end of 2014, these homes were worth more than double the year's median home value" (Ibid).

Image result for Trader Joe's and Whole Foods
A comical side-by-side comparison of shoppers
slideshare.net
 
The Zillow study found,


  • Homes located near a Trader Joe's or Whole Foods had a median of $406,600 and $376, 200, respectively, at the end of 2-14, while the median U.S. home was worth less than $180,000
  • Between 1997 and 2014, homes near Trader Joe's or Whole Foods appreciated an average of 148 percent and 140, respectively.  The typical U.S. home appreciated by 71 percent over the same period.
  • Neither Whole Foods nor Trader Joe's appears to drafting off already hot neighborhoods.  When factoring in store opening dates, homes near both chains began appreciating faster after the store opened than the typical home in their city overall (zillow.com; June 16, 2017; date accessed Aug. 26, 2019)
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What me cause higher home values?
thedailybeast.com
To give you some idea of how much of a home value appreciation a Joe's or Whole Foods can trigger, let us take look at Starbucks.  Starbucks is the most ubiquitous national and global chain coffee shop.  Zillow conducted a study of home values near Starbucks (Ibid; Feb. 13, 2015) and found that they appreciated faster than both the average American home and homes near rival Dunkin' Donuts.  While this may somewhat interest your barista as he or she is taking order, what would you say to the friendly Joe's cashier (they are) while he or she is bagging your chocolate covered almonds?  No worries, Zillow has the answer.

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Dunkin' Donut and coffee
nytimes.com
It is all about the real estate.  With 500 Whole Foods stores and 460 Trader Joe's within a mile radius of each other--for Starbucks, Zillow used a quarter mile radius reasoning that people will walk shorter distances than groceries. "There were a total 1.5 million homes near a Whole Foods and 1.3 million near Trader Joe's" (zillow.com; June 16, 2017) .  Zillow tracked the median home value near either store using historical Zestimate data.  Zillow found that "the typical home near either of these chains both costs more and appreciates faster than the median U.S. home" (Ibid).  The difference between home values near either store and the average U.S. home is greater than the Starbucks effect.  "In general, homes near a Trader Joe's were worth a median $406,600 at the end of 2014.  Homes near a Whole Foods were a median $376, 200, and appreciated 140 percent" (Ibid).  By comparison, "The median U.S. home was worth $176, 800 as of December 2014 and appreciated only 71 percent over the same time" (Ibid).

Image result for trader joe's and whole foods: happy cashiers
Future customer
buzzfeed.com
More recently, data provider ATTOM Data Solutions (attomdata.com; date accessed Aug. 26, 2019) and Zillow examined home values around the United States to find out if organic upscale grocery stores are powering skyrocketing home values or symptomatic of gentrification.

Both companies concluded that there "was a relatively string correlation between home prices and the grocer's location.  Home sellers near a Trader Joe's saw an average return on investment of 51%, while those near a Whole Food saw a 41% increase,..." (finance.yahoo.com; Aug. 25, 2019; date accessed Aug. 26, 2019).  Essentially, "houses near Trader Joe's or Whole Foods began to appreciate more quickly after those store moved in than before--and that they appreciated twice as quickly as the average home in the United State" (Ibid).  Further, having one or both grocery stores fuels the debate over gentrification.

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One of the Trader Joe's in Blogger's neighborhood
yelp.com

Susan Warburg, an agent at Warburg Realty in New York City, told Yahoo,

We have the Trader Joe's downstairs in our building we are selling at 100 West 93rd Street... and a Whole Foods a few blocks away... (Ibid)

After a year, Ms. Warburg observed that the price per square inch of an apartment near the Trader Joe's increased by $300 (Ibid).


  1. However, in an expensive city like New York, where affordable housing is in high demand and residents in all five boroughs are complaining of surging price, it is not clear whether the grocery stores are a factor.  Ms. Warburg's colleague Steve Gottlieb added,


People would pay more to live near a nicer grocery store.  But, I think this might be more of a chicken and egg question.... People of means are more likely to demand nicer neighborhood amenities and higher end market chains are attracted to more expensive/upwardly mobile areas (Ibid)

Image result for whole foods: Beverly Grove area Los Angeles
The Whole Foods in Blogger's neighborhood
foursquare.com

As nice as it is to have both stores in Blogger's neighborhood, not everyone is thrilled with their presence.  Local resistance to encroaching gentrification and attendant rising housing costs have given grocers a case of indigestion.

In 2014, Trader Joe's abandoned its plans to build a store in Northeast Portland, Oregon because activists (ibtimes.com; Feb. 4, 2014 date accessed Aug. 26, 2014) successfully argued "that the store would drive up rents and displace locals" (finance.yahoo.com; Aug. 25, 2019).  The debate around nice grocery stores prompted one urban policy expert to dub Whole Foods (smartcitiesdrive.com; 2013;  date accessed Aug. 26, 2019) the Lewis and Clark of gentrification (finance.yahoo.com; Aug. 25, 2019) because of the company's ability to disrupt the communal status quo in Chicago and Pittsburgh.

This dynamic is reference to what urban theorist Phillip Clay said in 1979 was one of the "four waves of gentrification.  The first wave is the creative class, artists moving into a neighborhood.  A Trader Joe's and Whole Foods is somewhere between the second or third wave (Ibid).  In one respect, these grocery stores are signifiers for the types of changes in the neighborhood and its character.

In Blogger's neighborhood, those changes began in the early 2000s when the The Grove opened.  The Grove brought with it more upscale stores and restaurants.  This was followed by upscale apartment complexes and upgrades to Blogger's complex. There was a Trader Joe's already in the area and the addition of a second outlet and a Whole Foods came within a few years of each other.  To no one's surprise The Grove, the grocery stores, more upscale housing, and other markers of gentrification caused home values to increase.  Blogger finds it odd to hear Trader Joe's described as an upscale grocery store because, really it is not.  It is the kind of friendly grocery store with good food, great customer service, and reasonable prices.  It is the contemporary version of the corner grocery store.  Hard to say if the signifiers of gentrification are the drivers of higher home values but they definitely have a correlation.     

  
   


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