Starbucks Effect on Home Prices

I knew this day would come! All those years of buying $5 lattes are going to pay off.

According to a new study from Harvard Business School, having a Starbucks open near a neighborhood could increase nearby home values, potentially by a few thousand dollars. That is just amazing if you ask me.

The study’s authors focused on the gentrification of neighborhoods using Yelp data but discovered the “Starbucks effect” during their research.

Using Yelp data to find the entry of each Starbucks in a ZIP code, researchers found a 0.5% increase in housing prices within a year after a Starbucks opens. 
Harvard economics professor Edward Glaeser believes the home price rises are not due to the actual Starbucks opening but maybe more of an indicator of affluent customers in the area. 
”The presence of a Starbucks is far less important than whether the community has people who consume Starbucks,” Glaeser notes in the paper.

“Consequently, we think that this variable is likely to be a proxy for gentrification itself. … The most natural hypothesis to us is that restaurants respond to exogenous changes in neighborhood composition, not that restaurant availability is driving neighborhood change.”

Overall, according to the paper, gentrification is “strongly associated” with increases in the number of grocery stores, cafes, restaurants, and bars.

Source “After a Starbucks Opens in Town, Housing Prices Tend to rising, Harvard Study Finds,” CNBC (Sept. 4, 2018)