Amenities, ROI on housing, and social class

A recent piece linking amenities to higher return on investment for housing left unnamed a key factor: social class.

It turns out that if Trader Joe’s is nearby, your house might be worth more than if it were close to other grocery chains. The average return on investment, or ROI, for Trader Joe’s-adjacent homes is 51 percent, 10 percentage points more than the runner-up, Whole Foods (41 percent), and almost 20 percentage points more than Aldi (34 percent)…

“When we overlay points of interest (like transit, shopping, and amenities) on top of prices, we see trends in the distance to these features,” Marshall says. “In urban areas, ClearAVM has found that access to public transit has a large correlation with higher property prices. We have found the same with access to restaurants, coffee shops and groceries in urban and suburban areas.”…

Some of the positive location amenities that can impact home values and equity include high-ranking schools, hospitals, shopping centers, green spaces and being near the waterfront (think oceans and lakes), as well as access to highways and main thoroughfares.

Negative location markers include things like high-traffic and high-noise areas, crowded commercial properties, high-tension power lines or other utility easements, a poorly maintained home or neighborhood, and not being near the appealing attractions mentioned earlier, Hunt says.

While I don’t doubt these factors do influence housing values, there is a common factor that helps join them all together: the social class of residents. Grocery stores, like many other businesses, figure out where to locate at least in part on looking at the residents who live nearby. Whole Food’s is generally not going to move to a community where residents do not have the resources to pay their prices. Aldi, in contrast, appeals to a different market. Going further, think of the differences in locations between Walmart and Target, McDonald’s and Chipotle, Dollar Stores versus chain drug stores, and more.

A number of the items on the list of “positive location amenities” are also closely connected to social class. High-ranking schools tend to be in wealthier communities. The same is true of shopping centers and higher property values mean only certain kinds of residents can afford homes on the waterfront.

This does not mean that there is not more affordable housing in these areas with positive amenities. There may be. But, I would guess the zip codes connected to the higher-class grocery stores tend to be wealthier and more educated zip codes overall. The habitus of social class extends even to what grocery stores people prefer, the desired appearance of nearby homes, and close amenities that help reinforce their social class, practices, and tastes.

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