Is the Starbucks Effect Real? No. Not Really.

In the past few weeks, there has been a story floating around the internet regarding the “Starbucks Effect” which was made famous in Spencer Rascoff's new book Zillow Talk. While it’s fun to consider, it is not entirely accurate when you look at the entire context around the concept.

When was the last time you were driving in the country and stopped at a Starbucks? My guess is never because Starbucks only puts their stores in urban locations.

The majority of Starbucks are in urban or suburban areas.  Appreciation and home values are higher in these areas than in rural areas.  This has little to do with Starbucks or any coffee maker and more to do with urban and suburban vs. rural.

Homes appreciate more in areas near Starbucks than Dunkin' but let’s simply take a Look at market demographics.  Dunkin' has a strong hold in small communities and also in more economically depressed areas such as parts of the Rust Belt that have not recovered in home prices yet due to major economic factors less than Dunkin' or Starbucks.  Also Starbucks has a higher profit per store and their ideal customer is a business executive or housewife buying a latte.  Dunkin' serves more of a blue collar crowd buying their entire lunch or breakfast.

This isn’t a matter of which franchise coffee store is best for real estate. It’s a matter of urban areas obviously having higher value than rural areas and a case of simple market demographics.

So can a Starbucks location be a good indicator of future real estate prices? Yes, it can. But you certainly shouldn't base a real estate investment on that alone. 

10 Facts to Know about San Diego Real Estate in 2015

San Diego is amongst the most playful cities in the United States. It is a warm, feel-good place that will make you fall in love with its beaches, food and people. In fact, almost everybody wants to live there. No wonder San Diego is every realtor’s dream destination.

2015 is set to bring in happy days for the real estate market here. The San Diego real estate market had become very conservative during the previous years and as a result of that, the number of homes sales in the city decreased by over 15% in year 2013. However, things have started looking up from 2014 onwards, as house prices have seen much appreciation.

Median housing prices are expected to be higher in 2015 than the current levels, as San Diego would always remain a desirable real estate destination. The reviving economic conditions have helped create new jobs, and thus demand for new properties is increasing.

It is difficult to predict actual rise in prices. However, home prices will definitely continue to rise. Government policy may put additional burden on buyers purchasing power, as announcements like  easing policy of purchasing mortgage securities and changing qualified mortgage rules will increase interest rates. Buyers are definitely not going to get many “Bargain homes” this year.

Researchers estimate that it could take almost four more years until the real estate market in San Diego reaches its pre-recession rates.