The Starbucks Effect

We do a lot of residential design at Element 5 Architecture - approximately 75% of our work is designing single-family and multi-family new homes, remodels and additions. So of course we keep up with local real estate trends. I recently read a book written by the founders of Zillow called "Zillow Talk: The New Rules of Real Estate" by Spencer Rascoff and Stan Humphries (Grand Central Publishing). It's a fascinating read and it explains some of the myths and hidden truths about the post-recession real estate market.  

One interesting finding known as The Starbucks Effect states that value of homes within a 1/4 mile of a Starbucks rise faster than those that don't. In fact one area of Boston within a 1/4 mile of Starbucks saw home values increase 171% between 1997-2013. That's the largest increase in the country. 

Austin is no stranger to rapidly increasing home values. However, one area that is increasing the most is East Austin where our office is located and where many of our projects are located. Funny thing is, East Austin (the 78702 zip code) has NO Starbucks at all! There are plenty of local coffee shops and there may be a Starbucks on the horizon (in fact we had a developer in our office recently who was interested in providing space for Starbucks in his East Austin project) but for now home values continue to rise at a rapid pace without one.

Perhaps the fact that Zillow HQ is located in Seattle has influenced the authors' world view. 

Remodeling and Home Design
Austin Architects & Designers