‘The Starbucks Factor’ – Vancouver RE Prices Explained

“When you are buying your first house, you may want to pay special attention to where the closest Starbucks is located. ‘The Starbucks Factor’ is a remarkably accurate qualitative measure that is great at predicting where the next hot neighbourhood will be. Where Starbucks goes, that’s where real estate values are on their way up… They put massive amounts of money into researching that area to make sure they have a solid location. … The way to get the most out of this factor is to buy in a neighbourhood where there isn’t a Starbucks yet, but where there is likely to be one soon. It’s not exactly easy to figure out, but, if you understand neighbourhood trends and you have a realtor on your side who knows the areas that are appreciating at a faster rate than others, you can find the next up and coming area.”
Andrew la Fluer, Toronto Realtor, self-posted video at youtube, 18 April 2012

This explains EVERYTHING about the Vancouver RE price run-up…
Joking aside, using this strategy may still result in you buying a house that then proceeds to plunge in price, but, at least you’ll have the consolation of knowing you have a large variety of refreshing coffee-based beverages close at hand.
– vreaa

42 responses to “‘The Starbucks Factor’ – Vancouver RE Prices Explained

  1. You paid way too much for your house, now you’ll pay way too much for your coffee. It’s the BPOE way!

  2. Conversely, is the closure of the Kitty-Corner Starbucks the canary in the coal mine for Vancouver?
    http://www.cbc.ca/news/canada/british-columbia/story/2012/05/29/bc-starbucks-robson-street.html

  3. “The way to get the most out of this factor is to buy in a neighbourhood where there isn’t a Starbucks yet” – that removes Vancouver proper, there is one every block. They did just close one down on Robson Street, does that mean the bubble will be most pronounced on that corner?

    • Maybe you have to try a different country. One where Starbucks is being copied and the local business is booming. Not that the folks at Starbucks are really enjoying this but here you go…..a true story about Starbucks in Africa.

      Let the big shots in Seattle grit their teeth….

      “Legend has it that coffee originated in Ethiopia long ago when a goat herder named Kaldi noticed his goats prancing around with glee after eating some strange red berries. Yemen, just across the Red Sea, makes its own claim as the birthplace of coffee. Whatever the case may be, one thing is clear: coffee did not originate in Seattle”.

      And so now the world has Kaldi’s coffee. An African original (er, knock-off).
      http://www.ethiopianrestaurant.com/kaldis_coffee.html
      And I have to tell you the truth. You can barely distinguish between the two joints except Kaldi’s makes better coffee….but that is just a personal point of view.

  4. “They (Starbucks) put massive amounts of money into researching that area to make sure they have a solid location.”

    But he says to buy where there isn’t one there yet! So how do you know there will be a Starbucks? Unless you put massive amounts of money into researching that areas yourself! Or do you just, uhh, I hate to use the word…speculate?

  5. Or for the low-brow crowd, a better-researched piece http://agbeat.com/real-estate-news-events/walmart-stores-and-home-prices-surprising-new-study/

    All I can think of when I see a Starbucks is “bitter”.

  6. I think Starbucks is the new coca-cola. It’s addictive. I can’t drink anything else. If they brew the dark too light, I get grumpy and throw a fit. I need help!!!

  7. pricedoutfornow

    I live steps from a Starbucks in a (rented) condo. It hasn’t increased in value since I moved here two years ago. So much for that theory.

  8. SBUX chart posted at http://socialtrade.com/recent/1817
    note the breakdown today of the bear flag. Nice timing Vreaa.

  9. Vancouver Renter

    Oh no! They just CLOSED a Starbucks on Robson @ Bute! What could that mean for my West End condo??!?!

  10. Starbucks is the perfect analogy for Vancouver’s housing market. In addition to being over-priced, Starbucks coffee is almost universally reviled by people who actually know coffee (a.k.a. “coffee snobs”), while universally beloved by the much larger group of people who know nothing about coffee but think they do.

    Likewise, Vancouver real estate is the poster boy of massively over-valued housing bubbles (and referenced as such by housing experts from around the world), yet it’s purchased by shockingly ignorant people who think they’re all real estate experts but have never heard of the price to rent ratio.

    I’m not a coffee snob myself (I get McDonald’s coffee because it’s cheap), but I do appreciate what the snobs have to say about Starbucks: that it’s so bitter you can’t possibly drink it without the expensive added shots, steamed milk, whipped cream, etc. Kinda like how a “mortgage helper” helps you swallow your bitterly expensive monthly payments, these added ingredients should be called Starbucks coffee “drinkability helpers”.

    • My brother is a “coffee snob”. When he was visiting Vancouver recently, he compared SB espresso coffee to coffee he usually drinks in Vienna (the world capital of fine coffee) and while he did not say that it was better than in Vienna, he still liked it.

  11. Popeye (John Gibas)

    I heard this one years ago 2005-2006. It is not new which means the realtor is lazy to rehash an old idea.

  12. Pretzels...thirsty

    Quite possibly your brother is a fake “coffee snob”

    • Quite possibly, SB is not that bad. It’s more about being fed up with SB at every corner.

      • Agreed. Starbucks is pretty decent but I always try and support the independent stores – there are plenty of them.

  13. Thank God for that drum beat every 5 seconds cause otherwise my attention starts to drift away.

  14. yltnboomerang

    Ha, this guy has taken the old school MBA lecture (that may be true or urban myth) about thinking differently:

    “McDonalds spends immense efforts in assessing what locations are viable for franchisees, Burger King saves the research costs and just builds across the street”.

    I suppose you could extrapolate a few years and Replace McDonalds with Shell and Burger King with Esso and you have the answer to why gas stations “used to be” always located in pairs. Nowadays the service station realizes that it is not just capital cost but remediation cost if they fail to “win” the market share battle so service stations don’t pop up “side by each” anymore.

    Now how to relate this to the Starbucks realtor…dunno, just a random synapse fired for me.

  15. Pingback: Blog Search Vancouver Real Estate For Sale By School Catchments | | Vancouver Realty News BlogVancouver Realty News Blog

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