These Businesses' Arrival in a Community May Bring Richer, Younger, Whiter Residents

A new Starbucks location opening in a community is a strong predictor of subsequent home price appreciation in that area, and lays the groundwork for gentrification, according to new analysis.

The authors of the new working paper, Harvard economist Edward Glaeser, doctoral candidate Hyunjin Kim, and Michael Luca, conclude that while Starbucks doesn't have power over the housing market, “Starbucks locations [may be] chosen by individuals with very good judgment about where prices are going to increase.” The researchers have previously shown that using Yelp data to supplement government data can be helpful, as Yelp review are more current, and offer new measures for analysis unavailable in other resources, The Washington Post reports.

The researchers began by identifying the business types most associated with a future increase in house prices. They limited their search to business types that were present in 100 New York City ZIP codes -- plus Starbucks, which was close to the line. Laundromats come in on top, but they're a bit of an exception — their numbers are boosted by New York City, a place notorious for both out-of-control gentrification and apartments without washing machines.

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