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Last updated: May 6, 2021 • Real Estate Investing

Could Hipster Food Markets Herald Gentrification Trends Instead of the Other Way Around?

It’s all about location, location, location… but which came first, the Trader Joes / Whole Foods, or the gentrification?

According to recent analysis of home sale and pricing trends, even depressed real estate property in the vicinity of a Trader Joes or a Whole Foods store could be a great prospect as an investment. It seems that these harbingers of gentrification and hipster culture are now reliable gauges for rising house values, and can be used to help seek out real estate properties that may then rise sharply in value as the entire neighborhood appreciates.

Between 1997 and 2014, homes within a mile of either type of store location were consistently appraised for more than the U.S. median home price – up to more than twice the national median home value price! Real estate in Atlanta, Georgia, was significantly affected by this trend.

These kinds of trendy health conscious food outlets have become a signal to the home buying public that the neighborhood is improving, which in turn allows the stores themselves to provide an upward trend to home value.

Neighborhoods that may have been flagging compared to adjacent communities receive a massive boost once a Trader Joes or a Whole Foods opens, and quickly become highly desirable to buyers who see riding a bike or walking and eating healthily as part of their “new urban” lifestyle.

There is some dispute as to whether Trader Joe’s and Whole Foods are simply excellent at choosing areas where homes are already destined to appreciate faster – or if the brand names themselves are driving up median home costs in the neighborhoods they target.

The “grocery store phenomenon” was first posited by  Humphries and Zillow Group CEO Spencer Rascoff, who instantly became a New York Times best seller after the hardcover release of his book subtitled “Rewriting the Rules of Real Estate” in January 2015. The paperback version which just hit store shelves includes a complete bonus chapter about this trend.

More information about real estate property in areas with Trader Joes and Whole Foods stores:

  • The median home within a mile of a future Whole Foods store generally appreciates at a slower pace than other homes in the same city in advance of the store opening – until the opening date is announced (usually a few months before the actual opening) Then the home appreciates more rapidly than other area homes.
  • Homes near future Trader Joe’s locations don’t show as much lag as those near future Whole Foods stores, but the boost is even bigger after a store opening is announced – there is a massive 10 point difference in appreciation compared to other homes in the city right before opening.   

What does this mean? It means if you know of a real estate property for sale in an area where a future Trader Joes or Whole Foods is rumored to be built, snap it up as far in advance as possible. You could end up flipping the property for a tidy sum once the store opens, thanks to the uncanny connection between both brands and appreciating home prices. Ask your real estate agent about neighborhoods they know about!



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