The Starbucks Effect

Follow Starbucks for Neighborhoods with Rising Home Values!

Looking for the next up-and-coming neighborhood?  Look for a new Starbucks coffee shop.   Seriously!    A new book, Zillow Talk: The New Rules of Real Estate, by two Zillow executives, says that the opening of a Starbucks store is a remarkably accurate predictor of rising home prices in the area.  “Starbucks equates with venti-sized home value appreciation.  Moreover, Starbucks seems to be fueling – not following – these higher home values,” according to Spencer Rascoff (Zillow’s CEO), and Stan Humphries (Zillow’s Chief Economist).

Rascoff and Humphries looked at the database of Starbucks locations and nearby Zillow housing data, comparing homes within a quarter mile of a Starbucks franchise to homes further away over a period of 5 years after the store opened.  They found homes closest to Starbucks appreciated 21 percent over 5 years, while homes slightly farther away appreciated 17 percent.

According to Rascoff and Humphries Starbucks has a team of 20 analytical experts who examine maps and geographical information systems data to assess an area’s traffic patterns and business before they decide to move in.  Ultimately, whether Starbucks itself raises nearby home prices or its analytics team gets the credit for spotting up-and-coming neighborhoods is beside the point.  If you’re scouting Santa Barbara neighborhoods likely to gain in value, relax and have a cup of coffee – at Starbucks!

Starbucks has 12 locations here in Santa Barbara!