Which Came First: Target or Higher Valuations?

Blomquist: “Even the presence of local retailers can make a difference not only to your quality of life as a homeowner, but also your financial investment.”

IRVINE, CA—A recent RealtyTrac report shows that homes near Target stores tend to have higher valuations than homes near Walmart stores. The report revealed that among homeowners who sold in 2015, those near a Target saw an average 27% increase in home price since they purchased their home, which equates to an average price gain of $65,569, compared to 16% appreciation and an average price gain of $24,900 for homeowners near a Walmart. GlobeSt.com sat down with RealtyTrac’s VP Daren Blomquist to discuss this phenomenon, what causes it and what it means for the real estate markets that house these stores. GlobeSt.com: How do you think proximity to a Target causes home valuations to rise more than proximity to a Walmart does? Blomquist: I would suspect this is a bit of a chicken-or-egg situation. Target is likely doing copious research on the local housing market before they build in a location, and they are likely looking for areas with robust housing markets with good potential for appreciation. The presence of a Target likely also helps improve the appeal of a neighborhood, helping to increase the appreciation. Another factor is that Target had fewer zip codes with stores, which likely means they have been able to be more selective than Walmart in the locations where they build stores. GlobeSt.com: So, how would you describe the cause-and-effect relationship between these two retailers and home valuations? Blomquist: In the case of Walmart, it’s apparent it is not particularly drawn to higher-priced markets or even higher-appreciating markets. Their strategy may not be as heavily reliant on being in areas with homeowners and renters who can afford the higher-priced housing. In both cases, the retailers are targeting certain types of housing markets, but the housing market is also impacted by the presence of the retailer. GlobeSt.com: Can this relationship be seen with other retailers or businesses? Blomquist: Yes, we looked at the relationship between home prices and appreciation and the presence of Trader Joe’s and Whole Foods several months ago. In that case, home-price appreciation was stronger in Trader Joe’s neighborhoods. GlobeSt.com: What else should our readers know about Walmart, Target and home prices? Blomquist: Real estate is all about location, location, location, and even the presence of local retailers can make a difference not only to your quality of life as a homeowner, but also your financial investment .