Whole Foods and Trader Joe's Definitely Increase Home Prices

By Adam Campbell-Schmitt |

Photo Composite: © Kansas City Star / Joe Raedle / Getty Images

Many city dwellers have a love/hate relationship with gentrification. Especially in places like Brooklyn or L.A.'s hipper 'hoods, people move to areas seeking some sense of authenticity or identity. It's a selling point. But those same people usually want nice stuff, too. For a lot of us, that includes two major retailers who perfectly straddle the line of desirable and detestable: Trader Joe's and Whole Foods. And whether or not you can afford to live near those stores is actually driven, in part, by the stores themselves. Online real estate hub Zillow recently published findings about home prices in relation to the grocery chains (based on research dating back to 1997) as a bonus chapter to their 2015 best seller Zillow Talk: Rewriting the Rules of Real Estate.

"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," Zillow Group's chief economist Stan Humphries explains. And before you question whether this is just correlation and not causation, Humphries points out that, "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."

Indeed, Zillow's research confirms that even in neighborhoods where home prices are on the decline, the advent of a Whole Foods will reverse that trend. Upon opening a Trader Joe's, nearby homes would appreciate 10 percent more than the city's average. As of 2014, if your house is located within one mile of either store, the value is double that of the average home price nationally. That's great news for home owners, but for lower-income buyers looking to reap the benefits of a changing urban landscape, it's yet another barrier to staying in their own city.

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