A recent episode of Freakonomics Radio podcast sited a 2016 Zillow study that sited that homes near Trader Joe’s tend to appreciate faster than the national average.
So armed with this knowledge does this mean everyone who reads this should run out and buy a home in 20147 (Ashburn) since they just opened a Trader Joes in September of this year? By this logic, if we were going to look for the perfect home location, we would want to be in a zip code with a Trader Joe’s and a Whole Foods, and within .25 miles of a Starbucks. We’d all be millionaires in a couple of years! Oh wait, I just described Pimmit Hills.
So while this is a very fun “fact” and feel free to use it at your companies holiday party. The truth is this is a case of correlation, not causation. Trader Joe’s strategy in store location is finding the cheapest areas in already good locations, or the old investment maxim “the ugliest house on the best block.” So you are more likely to see a Trader Joe’s located in an older strip mall while Whole Foods tends to be in more hipper areas and will anchor planned retail redevelopment projects. Meaning Trader Joe’s will be nearer older homes with less cosmetic updates and as time goes by and those updates happen home values in the area will increase at a faster rate than a more recently constructed home near a Whole Foods that already has been updated.
A new Trader Joe’s entering your neighborhood will not automatically increase your home value, but you can feel more comfortable putting in improvements into your home. And Home Buyers, should not run out and overpay for a home near a Trader Joe’s just because it’s there, but think of it as an indicator that the fundamentals of the surrounding area are fairly solid.