An interesting article in Atlanta Agent Magazine caught my attention recently. Apparently, Starbucks is a strong indicator that home prices will rise in any given neighborhood. On a very basic level, that makes perfect sense, but I dived into the article for more info. Because, well, I like this type of market data and this was a bold claim!
Turns out, the headline was possibly meant to grab attention (and it worked!) and the research was a little more general (like not Starbucks, specifically, but a new coffee shop opening). But, it did get me thinking about what does drive home prices? Particularly in our intown Atlanta neighborhoods, what factors make a neighborhood go from “up-and-coming” to “I can’t afford to buy there anymore”, seemingly overnight? People ask this all the time — “What’s going to be the next HOT neighborhood?”
Some factors are obvious. For example, homes in neighborhoods along the Atlanta Beltline (or, in some neighborhoods, the promise of the Beltline someday) have increased swiftly since the market recovery. Most notable, of course, is Old Fourth Ward, which was the trifecta of the Beltline, Ponce City Market, and Historic Fourth Ward Park. The dramatic increase in property values along the Southwest Beltline corridor are another example.
Neighborhoods with improving schools increase quickly — young families who can’t afford intown neighborhoods with great schools often flock to communities with improving schools, on the promise that the schools will be better when their kids are school-aged. The Drew Charter school is a great example of this and was a huge contributing factor to price increases in East Lake and surrounding communities. Maynard Jackson High School in Grant Park is another example (although one could argue that the Beltline and development along the Memorial Corridor are also factors).
We also know that commercial development in an area (more restaurants, shops, groceries, bars, coffee shops) definitely spur home prices. We’ve seen this in recent years in neighborhoods like Edgewood, where prices soared after the controversial Edgewood Retail District was approved (which, by the way, had 3 Starbucks when it opened). We’re seeing it now on the Southwest-side, with commercial developments like the popular Monday Night Brewing’s Garage (which anchors the development with several other breweries, eateries and shops), located in historic West End. It’s staggering to think about the pace of commercial development in recent years on the Westside — there are simply too many to mention, and what used to be largely industrial and low income is now hip, trendy and pricey!
But, this brings us back to the original question. Does a Starbucks (or new coffee shop) drive prices? Or, does Starbucks look at market data and place their stores in neighborhoods that have these other factors and are experiencing home price increases? For that matter is beer as much a driver? I mean, breweries are popping up all over the place — case in point, Monday Night Brewing’s Garage in West End could be considered as much an indicator as Starbucks might be (someone should do research on this).
While the data presented is interesting and certainly not without merit, anecdotally, as a real estate agent for more than 15 years, I think that most buyers don’t choose a neighborhood (and are willing to pay top dollar) for a neighborhood with a Starbucks, per se. They generally want stuff to walk to (restaurants, shops). They want to hang out (coffee shops, bars, breweries, restaurants, parks). Families want good schools. They want a convenient grocery store (bonus points for a Target….with a Starbucks, possibly). Some want a busy, urban, high-density vibe. Others want a more quiet neighborhood feel. In Atlanta, at least, they want to be near the Beltline, for sure! I believe that a combination of these factors create a community….and when that sense of community starts to develop in a neighborhood, that’s when prices start going up.
As Atlanta continues to grow, which will bring with it more people and traffic, it will be come increasingly important for neighborhoods to have amenities nearby. Because, no one wants to drive in Atlanta traffic to get their morning cup!
If you’re curious about what factors might be affecting your home’s value, give me a call or shoot me an email. firstname.lastname@example.org. 404-729-1133. Let’s see what’s happening in your neck of the woods!