The “Starbucks Effect" and Your Neighborhood

Have you ever heard of “The Starbucks Effect?” No, it’s not about how many lattes are standing between you and a down payment.

The idea is pretty fascinating: Homes within a quarter-mile of a Starbucks increased in value by 96% between 1997 and 2014, compared with a national average of 60% over the same period.

But here’s the part I find really interesting: It’s not necessarily the coffee shop causing home values to rise.

Starbucks has a real estate team dedicated to identifying locations with the right mix of economic growth, demographics, traffic patterns and future potential. In other words, they’re doing some pretty sophisticated research to spot up-and-coming areas — often before the rest of us recognize them as such.

So when a Starbucks shows up, it may be less of a cause of a neighborhood’s growth and more of a confirmation that something is already happening there.

In fact, some real estate agents, builders and investors have been known to watch for Starbucks building permits and new locations as one more clue about where growth may be headed.

But What Happens When Starbucks Leaves?

That raises an interesting question in reverse.

Starbucks has also closed hundreds of locations in recent years. If a new Starbucks can be one indicator of an area on the rise, does a closure suggest the opposite?

Not necessarily. A single store can close for all kinds of reasons that have little to do with the surrounding housing market — the lease, the building, store performance or simply too many nearby locations.

But multiple closures in the same area? That might be worth paying attention to, especially when considered alongside other changes in local businesses, development, population and home sales.

And that’s really the larger lesson of the Starbucks Effect: Real estate is about much more than the house itself.

When you’re buying, selling or investing, understanding what’s happening around a property — new businesses, development plans, schools, transportation, population trends and changing buyer demand — can be just as important as knowing what’s happening inside its four walls.

That’s where working with a Realtor who knows the local market can make a difference. Ashley Clevenger can help you look beyond the listing and understand the neighborhood, the market and the trends that could affect your real estate decision.

And now, enough real estate talk. What’s your go-to coffee order?

No judgment here. Mine is a grande iced chai latte with almond milk. We’re all just out here making financially questionable coffee decisions together. ☕