Study Reveals Starbucks Effect On Home Prices

Dated: 09/06/2018

Views: 2767

September 5, 2018

Having a Starbucks open near a neighborhood could increase nearby home values, potentially by a few thousand dollars, a new study from Harvard Business School finds. The study’s authors focused on gentrification of neighborhoods using Yelp data, but discovered the “Starbucks effect” during their research.

A cappucino with the foam showing a smiling creature

Using Yelp data to find the entry of each Starbucks in a ZIP code, researchers found a 0.5 percent increase in housing prices within a year after a Starbucks opens. 

Harvard economics professor Edward Glaeser says he believes the home price rises are not due to the actual Starbucks opening but may be 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, gentrification, according to the paper says, is “strongly associated” with increases in the numbers of grocery stores, cafes, restaurants, and bars.

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

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Britt Morris

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