Better to Buy a Home Near Trader Joe's or Whole Foods?

Does it make sense to buy a home near Trader Joe's?

Trader Joe's store display made of frequent flyers on a dog house
Here's one way to thank Trader Joe's for your appreciating home value. Susie Wyshak

The food industry and home shoppers took note when a report came out saying home values rise more near Trader Joe's compared to homes near Whole Foods.

In August 2015, RealtyTrac issued one of the most avidly shared and analyzed reports for the year. Titled "Better to own near Trader Joe’s or Whole Foods?" the report concluded that it's better to own a home near Trader Joe's stores — better meaning that home values rose more in areas near Trader Joe's stores.

3 key findings in the Trader Joe's vs. Whole Foods report

The RealtyTrac report revealed 3 pieces of location data of interest to home owners and buyers:

  • Homes located near Trader Joe’s stores increased an average of 40 percent since purchase, compared to 34 percent appreciation for homes near Whole Foods.
  • Overall home values were higher near Trader Joe's stores.
  • Property taxes on homes near Trader Joe's stores are higher.

What does it mean that home values rise near Trader Joe's?

Trader Joe's is my favorite "chain" store. I have watched their growth since my childhood in Southern California where the chain started. I planned cross-country road trips around Trader Joe's locations. So I consider myself somewhat of an expert on the topic of TJ's.

And as a life-long natural foods eater, I've watched Whole Foods as they expanded across the country, opening new stores and gobbling up smaller natural foods chains.

Trader Joe's has made inroads into upscale neighborhoods

Location has always been critical to retail success. In the early days of Trader Joe's, the company chose locations in cheaper areas — just close enough to major metropolitan areas that die-hard fans would travel 5-25 miles for a Trader fix. Just far enough away that the stores could thrive and acquire new fans while keeping rent low.

My first Trader Joe's memory was driving with my dad for 10 miles through Los Angeles to this store where he wanted to buy a couple of items. Even as a youth I remember wondering what was so special about this particular market that was worth the effort. Now we know.

Whole Foods has traditionally located near more affluent neighborhoods. They opened a downtown Palo Alto, California store in 1989, in tech central, a town that Trader Joe's moved into only in recent years. Trader Joe's first opened a store on a quiet street in adjacent Menlo Park, which now calls itself home to Facebook. But back when it opened, Menlo Park was (dare I say) affordable to rent and buy a home in.

Only in 2008 did Trader Joe's open in downtown Westwood, only steps from UCLA.

Conclusion: Trader Joe's located in neighborhoods that were undervalued whereas Whole Foods has traditionally located in neighborhoods that were already highly valued so had less room to grow.

Store size matters

All along, the smaller size of Trader Joe's stores (8,000-12,000 sq.

ft.) has made the format work well in the smallest strip malls. More recently Trader Joe's has opened some larger-sized stores and plunked some alongside extremely expensive apartments in Los Angeles and Manhattan — which may explain the higher property tax among homes near Trader Joe's. 

Customer passion matters too

Knowing your home is near a natural grocery store like Whole Foods Market feels good, especially if you have kids and will be shopping a lot for produce and general merchandise.

But the moment a Trader Joe's opens in a neighborhood, you know something special is going on. In the East Bay, where I live, Trader Joe's took over two old Albertson's supermarket locations.

Soon after, the neighborhoods attracted other chain stores and independents. Across from what staff tell me is one of the busiest Trader Joe's stores a See's Candies opened — after all of the See's stores had closed in Oakland. 

It's nice to know there's a Whole Foods. Trader Joe's inspires passion and conversation. It's HOT when a Trader Joe's opens, even as a selling point in Airbnb listings.

A report titled Gap Widens Between Trader Joe's and Whole Foods says it all.

?What will a report like this look like in 10 years?

Whole Foods will have rolled out its 365 by Whole Foods smaller format stores, which experts predict will have convenient, tech-oriented shopping and lots of private label products along with prepared foods. Smaller stores mean Whole Foods will be able to niche itself into up and coming neighborhoods where perhaps home values will have room to keep rising.

New players will have come along. In fact, Thrive Market hopes we'll all be buying our packaged organic foods online through them, for home delivery. 

Today Trader Joe's seems to have no competition. Only time will tell.

Background About the RealtyTrac Analysis

RealtyTrac came to their conclusions based on an analysis of "home values and property taxes for 1.7 million homes, condos and co-ops in 188 zip codes with at least one Whole Foods store (and no Trader Joe’s stores) and 2.3 million homes, condos and co-ops in 242 zip codes with at least one Trader Joe’s store (and no Whole Foods stores)."

Continue Reading...