Warning: quiz may cause wanderlust.
Correction appended, March 11
The following home values are based on current real estate listings, as well as completed 2014 sale prices.
Correction: The original version of this story, based on information provided by real estate agencies, incorrectly identified the homes listed by Christie’s International Real Estate as being sold in 2014. Those homes are still on the market.
New research finds that a Starbucks opening in the neighborhood helps local property values.
When searching for a new home, buyers usually consider the usual suspects: square footage, number of bedrooms, amount of sunlight.
Vanessa Pappas had another factor in mind as well: coffee shop proximity.
When Pappas and partner C.C. Hirsch recently closed on a three-bedroom property in Windsor Terrace, Brooklyn, it didn’t hurt that her favorite macchiato place was only a half-block away.
“Coffee is important,” says Pappas, 36, global head of audience development for YouTube. “It’s our daily ritual, and we always go to see our friends who work there. It makes us feel like part of the neighborhood.”
It turns out that easy access to quality java has broader implications. Call it the Starbucks Effect: Proximity to a local coffee shop has a very real, and positive, effect on home values, new data shows.
“We looked for certain markers for where homes appreciated faster than others,” says Stan Humphries, chief economist at real estate marketplace Zillow and co-author (with chief executive Spencer Rascoff) of the book The New Rules of Real Estate.
“Coffee houses emerged early on as a big predictor of future home value. Within a quarter mile, close enough to smell the coffee brewing, that ring appreciates faster than rings further out,” Humphries says.
How much faster? Over 17 years tabulated by Zillow, leading up to 2014, homes adjacent to the local Starbucks almost doubled in value, up by 96%. Those further out appreciated by 65% over the same period.
And apparently not all coffee shops are created equal. Zillow researchers compared homes near Starbucks locations to those near Dunkin Donuts.
Dunkin Donuts-adjacent properties also outperformed the wider market, rising 80% over 17 years, but they lagged those in the shadow of Starbucks.
Of course, there is a chicken-or-egg question here: Are coffee shops causing a boost in home values, or are the popular chains merely locating in promising neighborhoods that are already on the upswing?
Humphries’ discovery: Within the first few years of opening, Starbucks locations are actively helping local home values. After that, the outperformance of the broader market tends to diminish.
Whole Foods Effect
The coffee shop is hardly the only symbol of neighborhood gentrification. Researchers have found other amenities can have an even more powerful effect on home values.
Nearby specialty grocers, for instance, can lead to a 17.5% home-price premium, according to Portland, Oregon-based real estate consultancy Johnson Economics. That compares to a more modest 4.5% for coffee shops.
In that sense the Starbucks Effect might be more accurately be termed the Whole Foods Effect, according to the firm’s principal, Jerry Johnson, referring to the natural food supermarket chain.
Also significantly affecting nearby home prices, according to the Johnson Economics study: cinemas, wine shops, and garden stores.
Given Starbucks’ massive resources, it is perhaps not surprising that the Seattle-based chain is adept at picking out promising spots. After all, the company employs entire teams of professionals devoted to pinpointing optimal locations.
“Where we choose to locate our stores is as important as how we design them,” says Michael Malanga, Starbucks’ senior vice president of store development.
For potential homebuyers, it’s like heading into an exam with the answer key. Assuming that significant market research has gone into every store opening, buyers can piggyback on those positive conclusions.
“There are substantial resources spent by Starbucks headquarters to figure this stuff out and find where the best locations are going to be,” says Zillow’s Humphries. “So for homebuyers, you can essentially draft off the work that Starbucks has already done for you.”
As for YouTube’s Pappas, she’s not a fan of Starbucks. She prefers her local Brooklyn spot—Krupa Grocery. But she isn’t surprised that coffee shops turn out to be a reliable predictor of home-price appreciation.
“Especially in New York City, you want to be able to walk to everything,” says Pappas. “Having a coffee shop within eyesight is a big plus.”
The list considered income, health, labor, and environmental indicators to rank Utah at the top
The U.S. elderly population is growing rapidly. The number of Americans 65 and older grew from 35 million in 2000 to 41.4 million in 2011 and to an estimated 44.7 million in 2013. This trend is expected to continue as members of the baby boomer generation reach retirement age.
While it can be difficult to grow old in some U.S. states, life for seniors is often far worse in many other countries. Still, the United States will face increasingly large challenges. In the coming years, state officials, families, and individuals will need to pay more attention to the needs of the elderly — to improve medical care, access to services, infrastructure, or other amenities increasingly necessary late in life.
HelpAge International evaluates each year the social and economic well-being of elderly country residents in its Global AgeWatch Index. Last year, the United States was among the better places to grow old in the world, at eighth place. However, domestically, each state offers a very different quality of life for its older residents. Based on an independent analysis by 24/7 Wall St., which incorporated a range of income, health, labor, and environmental indicators, Utah is the best state in which to grow old, while Mississippi is the worst.
To be considered among the best states to grow old, senior citizens in the states had to have relatively strong income security, as measured by several indicators. While the national median income among families with a head of household 65 and older was $37,847 in 2013, comparable incomes in eight of the best states to grow old, for example, exceeded $40,000 in 2013. A typical elderly household in Hawaii led the nation in 2013 with a median income of $55,650.
Retirees often have fixed income, as they begin to tap into their savings and collect social security. Kate Bunting, CEO of AgeWatch USA, explained that, “It is really important for older people to have reliable access to a guaranteed income.” More than 90% of Americans 65 and older in the vast majority of all states received social security income in 2013. The average monthly social security benefit of $1,294, however, was likely not enough for many seniors.
As a result, many older Americans relied on non-social security income, such as withdrawals from 401Ks and savings as a supplement. In 2013, 47.9% of Americans 65 and older had such supplemental retirement incomes. More than 50% of older residents in four of the best states to grow old had such incomes. At stake, according to Bunting, is the elderly’s “ability to eat nutritious foods, which impacts their health, and their ability to access other critical services.”
With lower, and often fixed, incomes, elderly Americans are vulnerable financially. In addition, age often brings a host of health problems, causing greater reliance on medical and accessibility services. To determine how the states fare when it comes to health care, we examined health services and outcomes. In the best states, life expectancy was relatively high. In eight of the 10 states, it was at least 80 years.
A good education, which can lead to employment opportunities and higher incomes, is also an indication of well-being. While less than one-quarter of Americans 65 and older had at least a bachelor’s degree as of 2013, at least 28% of seniors in seven of the best states had attained such a level of education. More than 34% of Colorado’s elderly population were college-educated as of 2013, the highest rate nationwide.
As older people tend to be more vulnerable to criminals, the best states to grow old also needed to be relatively safe. In all of the 10 states, the violent crime in 2013 was less than 300 incidents per 100,000 people, all among the lower rates reviewed.
In addition, policies often shape the quality of life for a state’s elderly population. Smart Growth America rated state-level infrastructure policies and their effectiveness in serving all residents, including the elderly. While many states had not passed any such policies, a majority of the best states to grow old had done so in recent years. Bunting suggested that as the aging population grows, it will become increasingly “important that you have the right kinds of policies in place that help support a quality old age.” Adapting to these demographic patterns through age-friendly policy, Bunting continued, is “important and worthwhile to do, no matter what age you are.”
These are the best states to grow old.
> Median household income (65+): $40,020 (15th highest)
> Pct. with a disability (65+): 34.1% (10th lowest)
> Pct. with a bachelor’s degree or higher (65+): 29.2% (7th highest)
> Violent crime rate: 404.0 per 100,000 residents (16th highest)
Based on income, health, labor, and environmental indicators, Massachusetts is the 10th best state to grow old. In particular, Massachusetts’ elderly population has the benefit of an exceptionally strong health care system. In a state where the vast majority of residents were insured in 2013, less than 0.5% of elderly residents aged 65 and over were not, among the lowest rate in the country. Older Massachusetts residents are also relatively well educated. Nearly 30% had at least a bachelor’s degree as of 2013, one of the higher rates. Also, as in a majority of the best states to grow old, Massachusetts’ policies are rated favorably for considering the needs of seniors and other groups that require more services. In particular, state officials introduced a directive that would require all public transportation land use plans to include features necessary to offer greater access for people of all capabilities.
> Median household income (65+): $42,287 (12th highest)
> Pct. with a disability (65+): 37.4% (17th highest)
> Pct. with a bachelor’s degree or higher (65+): 29.8% (5th highest)
> Violent crime rate: 277.9 per 100,000 residents (21st lowest)
Less than 48% of America’s population 65 and older had some form of retirement income, excluding social security benefits. In Washington, nearly 53% of elderly residents had retirement incomes to supplement their social security benefits, one of the highest proportions among all states. In addition to relatively strong income security, seniors living in Washington rated their accessibility to services an 8.9 out of 10, better than how seniors rated their access in all other states. Older Washington residents were also well-educated compared to their peers in other states. Nearly 30% of people 65 and older in Washington had at least a bachelor’s degree as of 2013, one of the highest rates in the country.
> Median household income (65+): $44,240 (7th highest)
> Pct. with a disability (65+): 32.1% (2nd lowest)
> Pct. with a bachelor’s degree or higher (65+): 28.3% (11th highest)
> Violent crime rate: 254.5 per 100,000 residents (15th lowest)
Connecticut residents were expected to live nearly 81 years in 2011, the third highest life expectancy in the country. Just 32.1% of older Connecticut residents had a disability as of 2013, nearly the lowest rate. Physical health among older residents likely contributed to longer lives. According to a recent OECD study, Connecticut residents rated their general health a 7.8 out of 10. Also, the median household income among Connecticut elderly residents was more than $44,000, well above the national median of $37,847 in that age group. While the relationship between income and health is hotly debated by experts, high incomes likely allow older residents greater access to services.
For the rest of the list, please go to 24/7WallStreet.com.
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Not so surprisingly, the cities with the largest homes are on the whole more sparsely populated than major urban cities in the U.S.
American families tend to spend about a third of their annual income on housing. Yet, depending on their location and the level of the family’s income, home sizes can vary widely. Based on data from property listings website Realtor.com, the largest homes in the U.S. are located in the Provo-Orem, Utah metropolitan statistical area, with a median home containing nearly 2,000 square feet.
Areas with the largest median home sizes also had among the nation’s higher estimated median home prices. Homes in seven of the 10 urban areas had median prices of more than $200,000 as of November 2014. A typical home in Boulder, Colorado cost $380,000, the 14th highest estimated median home price among all large metro areas.
While it is not particularly surprising that larger homes cost more, in many spacious homes were also pricier by square foot. In seven of the 10 cities the median price per square foot of property was in the top half of all metro areas reviewed, at over $105.
Relatively high incomes are required to afford these larger homes. All of the areas with the largest homes had median household incomes well above the national figure of $52,250 in 2013. Residents of Boulder were particularly wealthy, with a median household income of more than $71,000 last year.
While large urban areas tend to be relatively densely populated, the areas with the largest homes are on the whole more sparsely populated. The population density was well below the average across all metro areas of 6,321 people per square mile in all of these areas. Raleigh, North Carolina had just over 1,850 residents per square mile, one of the lower densities nationwide. By contrast, the areas surrounding Los Angeles, San Francisco, and New York City all had well over 10,000 people per square mile.
To identify the cities with the largest houses, 24/7 Wall St. reviewed median home square footage in the 200 largest core-based statistical area (CBSA) from Realtor.com. CBSAs are larger than most other geographies organized by the Census Bureau, and they often include several metropolitan areas. Median household income and educational attainment rates came from the Census Bureau’s American Community Survey. Figures on population density are from the 2010 Census. Metropolitan area names and boundaries may have changed slightly since the data was collected. Unemployment rates came from the Bureau of Labor Statistics and are for October 2014.
These are the cities with the largest homes.
10. Dallas-Fort Worth-Arlington, Texas
> Median square feet: 1,828
> Median estimated price: $150,000 (88th lowest)
> Median household income: $57,398 (62nd highest)
> Unemployment rate: 4.8%
The living space of a typical house in the Dallas-Fort Worth area was 1,828 square feet, the 10th largest median home size in the nation. Most metro areas with the most spacious homes are relatively sparsely populated — perhaps freeing space for larger construction projects. Less 4,000 people lived in a square mile in Dallas in 2010, among the lower population densities. By contrast, the average metro area had 6,321 people per square mile. High incomes also likely explain the area’s large homes. A typical area household earned $57,398 last year, versus the national median household income of $52,250. This figure was also third highest among the 25 metro areas in Texas.
9. Austin-Round Rock, Texas
> Median square feet: 1,837
> Median estimated price: $207,000 (57th highest)
> Median household income: $61,750 (32nd highest)
> Unemployment rate: 4.0%
As in several other areas in Texas, Austin area residents seem to prefer larger homes compared to most Americans. A typical house in the region contained 1,837 square feet of living space. The median price of $207,000, however, was on the high end. The area is home to some of the state’s wealthiest and most well-educated residents. A typical household brought in $61,750 last year, the second-highest figure in for a metro area the state. Also, 41.5% of adults had attained at least a bachelor’s degree as of last year, one of the highest rates nationwide and the highest rate in Texas. The unemployment rate was also well below the national unemployment rate, at just 4.0%.
8. Fort Collins, CO
> Median square feet: 1,851
> Median estimated price: $272,000 (29th highest)
> Median household income: $59,052 (50th highest)
> Unemployment rate: 3.0%
The large homes in Fort Collins reflect the area’s prosperity. Just 3.0% of the area’s workforce was unemployed in October, far below the national rate. Area residents were also well-educated, with 43.3% having attained at least a bachelor’s degree as of 2013. The strong economy and well-educated populace helped raise incomes in the area, which in turn may have afforded residents the luxury of larger homes. A median home was quite spacious, with more than 1,850 square feet. Fort Collins’s was relatively sparsely populated, at just 2,712 residents per square mile in 2010. By comparison the average metro area had 6,321 people per square mile.
7. Greeley, CO
> Median square feet: 1,854
> Median estimated price: $224,000 (44th highest)
> Median household income: $58,611 (54th highest)
> Unemployment rate: 3.6%
Greeley had just 2,212 residents per square mile in 2010, one of the lower densities reviewed. Being a less crowded community may have helped encourage residents to build larger homes. Area homes were not only large, but also relatively expensive. The median home price in Greeley as of this past November was $224,000, among the higher values for a large metro area. Greeley’s home prices have increased at a faster rate than homes across the nation over the last five years. Residents were also relatively wealthy in 2013, with a household median income of $58,611.
For the rest of the list, please go to 24/7WallStreet.com.
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More than 7 million homeowners who suffered a foreclosure or short sale during the housing crisis are poised to become buyers again.
Over the next eight years, nearly 7.3 million Americans who lost their homes in the housing crash will become creditworthy enough to buy again, according to a new analysis.
RealtyTrac, a real estate information company and online marketplace for foreclosed properties, estimates that these “boomerang buyers”—those who suffered a foreclosure or short sale between 2007 and 2014—are rapidly approaching, or already past, the seven-year window “conservatively” needed to repair their credit.
This year, the firm expects, more than 550,000 of these buyers could be in a position to get back into the market. The number of newly creditworthy individuals will then top 1 million between 2016 and 2019 and gradually decline to about 455,000 in 2022.
RealtyTrac notes that the return of these former homeowners could have a strong effect on housing markets with a particular appeal to the boomerang demographic: areas with “a high percentage of housing units lost to foreclosure but where current home prices are still affordable for median income earners” and a healthy population of Gen Xers and Baby Boomers, “the two generations most likely to be boomerang buyers.”
Based on those criteria, the analysis targets metro areas surrounding Phoenix (with an estimated 348,329 potential boomerang buyers), Miami (322,141), and Detroit (304,501) as the most likely to see an uptick in return buyers.
Chris Pollinger, senior vice president of sales at First Team Real Estate, told RealtyTrac that previously foreclosed Americans shouldn’t rule out another try at homeownership. “The housing crisis certainly hit home the fact that homeownership is not for everyone, but those burned during the crisis should not immediately throw the baby out with the bathwater when it comes to their second chance,” Pollinger said.
Here are the top 10 areas that could see a boom in boomerang buyers:
A tight inventory of houses for sale has been stymying buyers who want to trade up. That could change soon.
Joe and Debbie Valerio, a couple in their 60s, put their Westport, Conn., home of more than 20 years on the market because it was getting too big for them.
When they found a nearby condo they loved, they pounced. That set off a chain reaction allowing Peter and Leah Baiocco, a couple in their 30s, the ability to trade up.
The Baioccos lived a few miles away, contemplating a future move to a bigger home once kids came along. With favorable economic conditions, they jumped at the chance to buy the Valerios’ $2.7 million house last April. After renting it out for nearly a year, the Baioccos’ starter house in Fairfield, Conn. is on the market for $739,000.
This seemingly simple sequence of events is still relatively rare in the U.S. housing recovery. Despite an improving economy and rock-bottom rates, inventory of available homes is inconsistent. Anything more than a trickle of listings sends prices down, causing sellers to pull their homes off the market.
Then prices go up again because competition gets fierce, and sellers re-emerge. As a result, a bustle of trade-up activity is expected for this spring’s selling season, before conditions change again.
“I think a lot of people have made a lot of money in the stock market the last few years. People who want to enjoy a luxury home, now is the time. Everyone has more cash available to them,” says Ken Barber, a real estate agent in Wellesley, Mass.
Other positive signs: new single-family housing starts are at a high since 2008, according to the Commerce Department’s latest report.
Also, fewer homeowners are renting out their homes to delay selling them, down to 35% in 2014 from 39% in 2013, according to Redfin, a real-estate brokerage.
And more consumers have positive equity. Last spring, 19% of homeowners in Redfin markets (such as Atlanta and Philadelphia) had low or negative equity. That was down to 11% in November. Nela Richardson, Redfin’s chief economist, expects it to hit 8% by March 2015.
Even better for buyers, interest rates are near-historic lows below 4%. “The question of staying versus leaving is shifting. For people who were afraid to leave their mortgage because they thought it was the best they’re ever going to get, now there is another good mortgage around the corner,” Richardson says.
Those trading up in 2015 should hit a sweet spot of selling near the top but not buying at the top, says Margaret Wilcox, an agent from agent in Glastonbury, Conn., for William Raveis.
Wilcox says a client couple recently traded up from a $500,000 house to a $1 million home. They did not get quite the price they wanted for the sale of their old home, but they got a discount of nearly $300,000 on their new purchase, Wilcox says.
There are a few red flags for buyers and sellers. Seller confidence is still low, with just 35% of sellers thinking now was a good time to sell, versus 48% the previous year, according to Redfin.
Keith Jurow, a housing market analyst who writes the Capital Preservation Real Estate Report, is something of a doomsayer and thinks talk of a housing recovery “is phony and only an illusion,” he says.
Given the number of mortgages originated between 2004 and 2010, he feels that too many of the people who would like to trade up still have little or no equity in their homes and are not prepared to do a sale below their purchase price.
“Unless you bring more cash to the table, you can’t trade up,” Jurow says.
Also, foreboding makes some people want to act now. They do not want to be the family that missed their chance, adds Bob Walters, chief economist for Quicken Loans. “People won’t delay forever,” he says.
The Valerios and the Baioccos have only happy thoughts about their real estate choices. They love their new homes.
“In our mind, it’s the house we’re going to be in forever,” says Peter Baiocco.