It seems a Starbucks coffee shop nearby isn't just for all Joe lovers out there to get their warm fuzzies from, it's also good news for both homeowners and real estate hunters alike.
In an interview with Fortune Live host Leigh Gallagher, Zillow CEO Spencer Rascoff said their data shows that the presence of a Starbucks coffee shop in an area significantly increases home values.
Rascoff said that homes situated within a quarter of a mile radius of a Starbucks tend to appreciate in value by 96% between 1997 and 2013. This is higher than the national average of 65% in U.S. homes.
CNN Money reports that Boston is the clear-cut winner from this so-called "Starbucks Effect". Boston homes within the coffee shop vicinity racked up a 171% increase as compared to the other homes outside of the ring.
The Zillow CEO also talked about this real estate trend in the book "Zillow Talk: The new Rules of Real Estate", together with co-author and Zillow Chief Economist, Stan Humphries.
Dunkin Donuts is also making a good account of themselves according to the book. Within the same period of time, it has caused the median U.S. home values to surge by an 80 percent increase.
According to Newsweek, Sarah Gilbert of the DailyFinance calls this the "smartest real estate strategy ever". She attested to the "Starbucks Effect" by saying that her own home has doubled its value when the nearby coffee shop outlet opened for business.
But do we really have to make Starbucks, and other retail chains for that matter, our Holy Grail when it comes to ferreting out for a new property? Pat Shea, president of Lyon Real Estate, offers a different take on the issue.
He told The Sacramento Bee that Zillow is simply making a confusion out of it. He believes that it's just coincidental, and Starbucks simply has the research tools in finding neighbourhoods that are on the rise, and where home values are likely to spike up even without the help of the coffee chain giant.
In the same report, Humphries countered the argument by saying that it was accounted for in the study. Notwithstanding, he said that homes in developed urban areas appreciate in value but not as high as those within the Starbucks' quarter-of-a-mile radius. He offers the case in the Sacramento area wherein Starbucks-induced home value hike of 124% is greater than the average appreciation rate of 115%.
But, whatever you make of this causality dilemma, one thing is for sure, coffee junkies have one more reason to smile about while sipping on their favourite cup of Joe.
