How Coffee Affects Home Values

By Ken Urman, Realtor

Believe it or not, coffee and coffee shops affect home values in nearby neighborhoods. Zillow CEO Spencer Rascoff revealed in his recent book, Zillow Talk: The New Rules of Real Estate," that houses located within a 1/4 to 1/2 mile radius of a Starbucks coffee shop are most likely to appreciate in

value the most and the fastest.

Before you laugh and shrug this off, please keep reading. There is scientific analysis behind the claim.

As you might know, I really enjoy a great cup of coffee. And in keeping with my general desire to support local businesses and companies headquartered in the area, I am a loyal Starbucks customer. You also might have noticed that I bring coffee when I meet with clients. A hot cup of great coffee is a terrific ice breaker.

The folks at Zillow (headquartered locally) have developed a very scientific system to determine where to open each coffee shop. If we are willing to trust their claims, they also have a way to predict the next hot spot neighborhoods. As for Realtors, they would have us believe we need only to follow their lead.

Nichole Goodkind, writing at Yahoo Finance, reports that Zillow analyzed the prices of homes located within a ¼ to ½ mile radius of Starbucks locations for five years after each shop opened. “They found that homes closest to Starbucks appreciated by 21 percent, while homes a bit farther

away grew in price by under 17 percent.” Specifically, according to the article, “they found that in 1997 a home within ¼ mile of a Starbucks sold on average for $137,000, while a home not near a Starbucks sold on average for $102,000. Today, the average home has gone up 65% in value to $168,000 but homes near Starbucks have tone up 96 percent to $269,000.

Zillow also addressed the obvious question, “is this a generic coffee shop effect?” They discovered that homes near a Dunkin Donuts appreciated 80 percent over the five year period, while those near a Starbucks appreciated by 96 percent.

If you are in the market for a house near an existing coffee shop, I would be delighted to share my vast knowledge of all coffee shops in the area and I would enjoy helping you drink (coffee) your way through neighborhoods within a ¼ to ½ mile radius of various coffee shops, including Starbucks, Dunkin Donuts, and other brands. Call me – I’ll bring the coffee!