• Sang Han

Chapter 4. The Starbucks Effect - How Lattes Perk Up Home Prices (Zillow Talk #4.)

Updated: Dec 19, 2021

Today, I would like to introduce an interesting subject about the relationship between Starbucks and house prices.

The Frappuccino effects

According to Zillow’s big data analysis, the houses around a Starbucks store have the following characteristics.

1. the average fair market price of those houses is higher than other houses in the same area (it can be the same subdivision, same school district, etc).

2. the prices of those houses increase at a much faster rate than other houses in the same area. In other words, the price increase rate of those properties is higher.

3. The prices of those houses recover much faster after a recession.

So, the bottom line is that the houses near a Starbucks are better investments than houses in the same local area.

Then, how about the houses near a Dunkin’ store?

As you can see in the following graph, the houses around a Dunkin have similar effects to those near a Starbucks. However, the price increase rate or price recovery rate is not as fast as those around a Starbucks.

The table below is a numerical representation of the graph above.

As you see, the house price changes of the following three groups from 1997 to 2013 (when the house price rises by almost 10% every year) look like below.

- Market Average: Increase 65% higher

- Houses near a Starbucks: Increase 96%

- Houses near a Dunkin’: Increase 80%

Where is the next Starbucks location?

If you read this blog up to this point, you might think "If I know how Starbucks chooses the next store location, and buy a house there before Starbucks opens its store, I could make a huge profit from it."

Unfortunately, however, Starbucks' location selection is based on several regional data analyses done by more than 20 real estate experts. That means there is no one specific method to choose its store locations. Therefore, it is really hard to forecast where the next Starbucks location is.

Personally, this is an impressive chapter, so I hope that those who read it will also enjoy reading it. Please feel free to contact me if you need real estate assistance.

Have a nice day.

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