5 Weird Things That Can Boost the Value of Your Home
Realtors are quick to tout their favorite mantra of “location location location”, but what exactly does it mean? Is location really worth repeating three times when it comes to real estate? Yes. In most cases, the location of a home is the primary factor in determining its value. The reason is simple. While you can landscape, tear down walls, and upgrade bathrooms to increase the value of your home, you can’t normally move it to a different location.
Good schools. Safe neighborhoods. Peace and quiet. These are some of the most common characteristics found in desirable housing locations. Since more demand amid supply constraints typically results in higher prices, it’s not unusual for homebuyers to pay more to live in these types of areas. However, there are also less-known characteristics that may indicate your home is located in a highly sought-after neighborhood. Let’s take a closer look at five strange things that could mean higher home prices for your neck of the woods.
Every homebuyer and agent seems to find great appeal in the ability to sit on a deck and enjoy a morning cup of coffee. In fact, merely having the nation’s most famous coffee shop nearby could help signal an up-and-coming housing market, as Starbucks has a proven taste for good locations. According to Quartz and data from real estate database company Zillow, properties near Starbucks appreciate significantly faster than the broad market.
Homes located within a quarter mile of a Starbucks experienced home appreciation of 96% between 1997 and 2014, reaching an average worth of $269,000. In comparison, the average American home only appreciated 65% to $168,000, during the same period. Dunkin’ Donuts had a similar effect, but still couldn’t match the performance of Starbucks’ neighborhoods, especially in the wake of the housing collapse. Homes near Dunkin’ Donuts have appreciated 80% since 1997.
Quartz also sought to determine if Starbucks just happened to open shop in great locations where home prices were destined to rise anyways, or if proximity to Starbucks itself made a difference. “Lo and behold, the adjacent homes beat out the nearby homes. Those houses closest to Starbucks appreciated a little more than 21% over five years, while the houses slightly farther away only appreciated just less than 17%. So, yes, some of the difference is related to the location itself, but there’s still a healthy difference attributable to the arrival of a Starbucks.”
A budding marijuana industry is transforming local economies. Thanks to voters in a handful of states, recreational marijuana is attracting tourists, entrepreneurs, and anyone looking for employment in a rapidly growing industry. As The Cheat Sheet has previously discussed, marijuana-related jobs include edible creators, concentrates processors, glass merchants, couriers, security personnel, consultants, and more.
Naturally, an influx of residents and money bodes well for housing markets. Colorado, one of the first states to vote yes on recreational marijuana, is seeing strong demand for housing, particularly in Denver. Home values in the city surged 11.3% year-over-year in July, according to Zillow. Meanwhile, Trulia finds Denver to be one of the fastest moving markets in America. Only 48% of listed homes are still for sale after two months on the market.
Correlation doesn’t always equal causation. Denver has long been considered an attractive place to live, even before marijuana appeared on the ballot. However, realtors tend to agree that marijuana is helping to lift home values. “The pot industry is creating jobs we didn’t have before,” said Kelly Moye, a Re/Max real estate agent who has worked in the Denver area for 24 years, to CNN Money. “It’s brand new, it adds a whole new factor to the area; you have real estate needs, housing needs, job needs.”
3. Trader Joe’s
Every household needs food — some of which comes at a premium in the real estate market. Homeowners near a Trader Joe’s have seen an average 40% increase in home value since they purchased, according to an analysis from RealtyTrac. This is reminiscent of the Starbucks effect, except the difference with a competitor is much less pronounced. Homeowners near a Whole Foods witnessed an average 34% increase in home value, equal to the national average.
Interestingly, neighborhoods with a Trader Joe’s have an average value of $592,339, compared to $561,840 for neighborhoods with a Whole Foods. However, you should also be prepared for higher property taxes. Homeowners near a Trader Joe’s pay an average of $8,536 in property taxes each year, 59% more than the $5,382 average for homeowners near a Whole Foods.
RealtyTrac looked at home values and property taxes for 1.7 million homes, condos, and co-ops in 188 ZIP codes with at least one Whole Foods store (and no Trader Joe’s stores), and 2.3 million homes, condos, and co-ops in 242 zip codes with at least one Trader Joe’s store (and no Whole Foods stores).
You normally wouldn’t expect sexual orientation to affect the housing market, but research suggests otherwise. With the help of the 2010 Census, Trulia calculated the share of households that are same-sex male couples and same-sex female couples in every ZIP code in America. The company then focused on the top 10 ZIP codes with the highest concentrations of same-sex couples. As it turns out, most of the gayest neighborhoods are more expensive than other neighborhoods in the same metro area, and have seen stronger appreciation over the past three years.
In June 2015, homes in all gay men neighborhoods cost an average $238 per square foot, up from $188 per square foot in June 2012. The average cost for homes in all gay women neighborhoods increased from $133 to $157 over the same period. Though several ‘gayborhoods’ (as Trulia has dubbed them) are located in expensive metros which help increase home values, almost all of the gayborhoods in the study are more expensive than their metros as a whole.
Trulia explains, “For example, homes in the Castro neighborhood of San Francisco cost $948 per square foot – which is 34% more expensive than the San Francisco metro area ($705 per square foot), while places like West Hollywood, Calif. and Provincetown, Mass. are 123% and 119% more expensive, respectively. The only gayborhood that isn’t more expensive than its respective metro is Guerneville, north of San Francisco, CA, which is only 2% cheaper per square foot than its metro area.”
5. Military bases
Nothing says safe neighborhood like a Black Hawk flying overhead. Or perhaps the more reasonable explanation for a premium on homes near military bases is the reduction in commute times for members of the armed forces wanting to live off base. Zillow finds homes near military bases are valued an average 34.8% more than the median home in America.
Homes near Army bases go for $50,000 above the median, while homes near Navy, Coast Guard, and Marine bases are valued at $90,000 or more than the national median. Granted, these bases are more commonly found near the coast, which typically demands a premium. The average home near a military base, regardless the of the branch, was valued at $240,553 in March.
On the downside, homes near bases also fell slightly harder during the housing collapse. “When the housing market reached bottom in the wake of the Great Recession, U.S. home values on average had fallen by 22.4%. But homes near bases of every branch of the military fared worse. On average, homes near military bases lost 26.9% of their pre-recession value,” explains Zillow. “This is especially concerning, given the frequency at which military personnel must uproot and move. When home values fall drastically, many homeowners can simply wait out the fall and sell if and when values rebound. Members of the military don’t necessarily have this luxury.”
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