The Organic Grocery Effect: When Grocery Stores Plant, Home Values Grow

By Nick Krautter | Articles

The Organic Grocery Effect: When Grocery Stores Plant, Home Values Grow

July 14, 2017

Is a Whole Foods, New Seasons, or Trader Joe’s store going in down the street from you? Look forward to an increase in the value of your home.

Zillow details a few takeaways from their 2016 research into the relationship between organic grocers and home prices:

  • Between 1997 and 2014, homes near a Trader Joe’s or Whole Foods appreciated an average of 148 percent and 140 percent, respectively. The typical U.S. home appreciated by 71 percent over the same period.
  • Homes located near a Trader Joe’s or Whole Foods had a median value of $406,600 and $376,200, respectively, at the end of 2014, while the median U.S. home was worth less than $180,000.
  • Neither Whole Foods nor Trader Joe’s appears to be 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.

The effect is variably called the Whole Foods Effect, the Wal-Mart Effect, and the Starbucks Effect; however, we’re in Portland, so we’ll call it the Organic Grocery Effect. Whatever you want to call it, Devon Thorsby of US News explains how it works:

When (insert popular retailer here) moves into or near your neighborhood, you can expect to see your home’s property value increase at a higher rate than usual because people want easy access to their favorite place to shop or stop for coffee…

Any major retailer considers several factors before choosing a new location – not only the right size space, but also the cost to rent or build in the area, whether there is an abundance of existing clientele and the potential to reach a wider customer base…

And when a retailer decides to open a new location in an area undergoing widespread changes, it becomes an investment for future customers years down the road. In 2013, Whole Foods opened a location in downtown Detroit, the first national grocery store chain to open in the city in more than a decade. In the same ZIP code as the Detroit Whole Foods, median home sales went from $19,000 in 2009 to $80,000 in 2015, according to a report by the Detroit Free Press.

The same analysis found the median home price citywide had quadrupled in that time period, as American and international investors bought up commercial property, more local businesses opened up and other businesses relocated or expanded operations within Detroit’s city limits. Clearly, more is going on in the city than the opening of a Whole Foods to bring about the change in property values, but a Whole Foods opening could be considered a noted shift in more widely recognized brands operating in the city.

However, don’t rush to sell your house the moment you see the construction sign go up – research shows that the Effect is not immediate, and Zillow’s data backs that up:

The Organic Grocery Effect on home values

Whether the construction is underway for a new grocery store in your neighborhood – or if you want to trade in your current home for one closer to your market of choice – the experienced professionals of the SellPDX team are here to help.

About the Author

Nick Krautter is the author of The Golden Handoff: How to Buy and Sell a Real Estate Agent’s Business which debuted number one on Amazon for mergers and acquisitions. His goal is to teach real estate agents how to grow their business and to help them later retire and benefit from their years of hard work. For the last decade Nick has been a Realtor in Portland, Oregon, where he leads a team and frequently serves as a real estate expert for the media.