Real estate has provided an impressive means for investors to grow their capital, but this is often highly correlated on knowing which markets to invest in and what factors are driving the local economy.
“[H]omes grow more rapidly in value if they are closer to a Trader Joe’s or Whole Foods” according to a recent press release from real estate search engine Zillow.
While it is true that homes near the businesses mentioned above increase in value, it is important to note that this is a case of causation versus correlation. Starbucks, Whole Foods, and Trader Joe’s have done extensive research to know which neighborhoods would make for profitable locations for their stores. Therefore, the increase in home values is due to being in already strong markets to start with, not because the homes are within one mile of those stores.
What This Means For Real Estate Investors
Real estate markets are increasing in value across the country, and localized factors are still one of the best predictors of how to find profitable markets. While the odds are good that homes within close proximity to Whole Foods, Trader Joe’s, and Starbucks will go up in value, it isn’t necessarily the cause of this growth. It is important to do the necessary research to examine the numerous other localized factors such as employment rates, average home prices, schools, and job diversity, which all drive the local economies and produce quality investment markets.