In Zillow Talk, a new book that’s being described as the Freakonomics of the real-estate market, the real-estate database company’s CEO Spencer Rascoff and chief economist Stan Humphries spend a whole chapter talking about something they call the “Starbucks Effect.” Their rule is that living close to one “equates with venti-sized home-value appreciation.” They crunch the numbers and say that houses near Starbucks appreciated 96 percent between 1997 and 2014, while less Frappuccino-adjacent homes only went up 65 percent, a pretty sizable gap.
Quartz excerpts the chapter, and the authors start by noting complicating factors like causality and home location. But they ultimately decide that “Starbucks itself is driving the increase in home values.” In fact, the closer you are, the better the payday: Five years after a Starbucks opens, homes that Rascoff and Humphries studied within a quarter-mile had appreciated 21 percent on average, while homes a half- to quarter-mile away had only climbed 17 percent. For the sake of completeness, they also investigated a “Dunkin’ Donuts Effect” of sorts, but it came to less than half the appreciation homeowners near Starbucks see (a 15 percent increase over the average home’s versus 31 percent for Starbucks).
As for reasons why, the authors say maybe it’s that Starbucks is seen as a proxy for gentrification, or maybe it just simplifies the morning routine, but whatever the case, people are paying a premium to live near one. And imagine the resale bonanza if you’re on one of those blocks that has a Starbucks across the street from a Starbucks …