Why is it news that houses are worth more when located near perceived high quality stores?
The Wall Street Journal writes in "When it comes to home values, is it better to own near a Wal-Mart or Target?" about how houses are worth more when they are near Target discount stores--which have the reputation of being fun and trendy--than they are near Walmarts, which are perceived to appeal to low income shoppers.
(Because of this reality, it shouldn't be a surprise that the company's move in center cities such as Washington have so far been less successful than they expected. The photos in this article showing Wal-mart out-of-stocks are almost three years old, but the "new" Walmarts in DC often look pretty similar.)
From the article:
Data firm RealtyTrac reports that the average home in areas where a Target Corp. store is located is worth 72% more than a home near a Wal-Mart Stores Inc. location. In Target areas, homes are worth $307,286, versus $178,249 for Wal-Mart locales.Similarly, there have been stories about how houses are worth more near Trader Joe's and Whole Foods. From the Zillow press release "Homes Near Trader Joe's, Whole Foods Stores Appreciate Faster":
In addition, people who own homes in areas where Targets are located saw more appreciation on their houses than in areas with a Wal-Mart. ...
Back in 2014, data from Kantar Retail showed the average Wal-Mart shopper had annual household income of $53,000, nearly 25% less than the average for the typical Target shopper. The latter chain’s average consumer also skewed younger.
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.But that higher property values connote to proximity to Trader Joe's over Whole Foods ("Why It's Better to Live Near Trader Joe's Rather Than Whole Foods," Time Magazine). That makes sense to me only in that TJ's has fewer stores and is more selective so that likely it chooses even higher income areas to locate stores than Whole Foods. It's the companies seeking out high value locations, not the stores generating high values.
Or from Zillow about Starbucks ("The 'Starbucks effect': Higher home prices" CNN):
The value of homes within a quarter-mile of a Starbucks rise faster than those that aren't, according to real estate research group Zillow. Between 1997 and 2013, home closer to the coffee shop increased in value by 96%, compared to 65% for all U.S. homes. ...Um, wheres the news here? Higher income areas are marked by higher real estate values for residential properties. Stores that appeal to higher income customers are going to locate in these areas to the best of their ability.
But dig a little deeper and it's kind of a chicken and egg situation -- it's not like Starbucks can take credit for changing a community. The coffee chain is very good at finding locations that are up-and-coming, the authors said. Homes near Dunkin' Donuts also appreciate faster than the nation's housing as a whole, but not as fast as those next to a Starbucks, according to Zillow's analysis.
Similarly, elected officials need to consider store reputation and their customer satisfaction ratings when making decisions about recruiting them to their communities.