Surprising Investment Tip to Share with Buyers

a grocery store aisle filled with lots of food

Location makes a big difference in how well a home appreciates over time. Homes in new, hip neighborhoods will increase in value more than homes in economically-depressed regions. Even living near a big-box store can potentially influence how much a home will appreciate over the years. While every realtor knows that homes near beaches, parks, and landmarks tend to maintain value better than their neighbors, many would be surprised to learn that the type of superstore—Target or Walmart—also has a measured impact on home value. One store correlates with higher property appreciation, and the other with correlates with the reverse. Can you guess which is which?

Target vs. Wal-Mart

A new report by RealtyTrac measured how homes appreciate compared to their proximity to specific stores. Homes that were closer to Target appreciated by 27% between 2004 and 2015. That is 5% over the national average of 22%. Homes that were closer to Walmart, on the other hand, did worse than the national average. They only increased in value by 16% in the same amount of time. Homeowners near Walmart gained an average of $24,900 on their homes, while neighbors of Target saw an average increase of $65,569. That’s over a $41,000 difference!

Should This Influence a Consumer’s Buying Choice?

So should buyers be mapping out their future home’s distance from Target before they close on a deal? Not necessarily. Homes closer to Target also tended to have higher property tax rates. The national average annual property tax is $4,283. Fittingly, homes near Target averaged above this figure at $7,001, and homes closer to Wal-Mart were below this number at $3,146. This makes sense, because property nearer to Target has a higher average value than homes near Wal-Mart. In general, homes with higher property values are associated with more property tax.

The study did not incorporate controls like the weight of local housing markets relative to value, and it’s unclear if the homes near Target were already in stronger economies than those closer to Wal-Mart. A home’s value may not be appreciating more because it is closer to Target, but rather because Target-area neighborhoods are already trending towards more growth. Regardless of the cause, home buyers and those in the real estate business should be aware of these trends in appreciation when making their next investment.

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