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It pays to live near a Starbucks

Nicole Goodkind
Nicole Goodkind

It's difficult to predict the next big neighborhood when looking to buy a home. Finding the right area where houses are still affordable but prices are quickly appreciating is an art that takes an exorbitant amount of time-- something most home buyers don't have.

Thankfully, however, there's a simple solution: rely on Starbucks (SBUX). With over 19,000 locations in 60 countries the coffee shop that so many depend on for their daily caffeine fix has also become ubiquitous with a hefty real estate portfolio. Zillow data shows that living near a Starbucks means your home is more likely to appreciate in value. It also appears that Starbucks is predicting and not just following the increase.

In their new book, "Zillow Talk: The New Rules of Real Estate," Zillow CEO Spencer Rascoff and Chief Economist, Stan Humphries discuss why Starbucks means a more quickly appreciating home value.

Zillow analyzed the prices of homes that were within a one-quarter to one-half of a mile ring around a Starbucks location for five years after each particular store opened. They found that homes closest to Starbucks appreciated by 21% while the homes a bit further away grew in price by under 17%.

Through analysis of their data they found that in 1997 a home within 1/4 mile of a Starbucks sold on average for $137,000 while a home not near a Starbucks sold on average for $102,000. Today the average home has gone up 65% in value to $168,000 but homes near Starbucks have gone up 96% to $269,000.

To make sure this wasn't just a generic coffee shop effect, Zillow also analyzed properties that were within a quarter mile of a Dunkin Donuts (DNKN). Homes nearby appreciated 80% over the same period-- a large increase but far cry from Starbucks' 96%.

Starbucks employs a team of 20 analytics and real estate experts who focus solely on finding the next Starbucks location, explains Zillow. The team goes over everything from traffic to other local businesses in a potential neighborhood. They then deploy a regional team to figure out exact store location.

Arthur Rubinfeld, the head of the Starbucks location selection process tells Zillow that while it's an "art and a science," Starbucks strives to "maintain consistency in that science."

If you're looking for a home that will jolt in value, you might want to consider finding a Starbucks.

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