HYDE SQ.—Whole Foods’ planned move to the neighborhood will likely boost residential property values in the area, and may already be having an effect on home-sale prices, experts say.
Even if it is not a direct result of the high-end organic and natural food grocers planned move—first reported in the Gazette in January—there appears to be at least a concurrent upswing in local condo-sale prices.
“I think the same thing that has attracted Whole Foods is what developers and homebuyers are seeing: An area with a unique flare and demography. If anything, with the recent ‘successes’ evidenced by [condo] sales…the prognosticators at Whole Foods have to be patting themselves on the back,” JP Realtor B.J. Ray of Prudential Unlimited told the Gazette in an e-mail.
Jerald Johnson, of the Portland, Ore.-based consulting firm Johnson Reid told the Gazette that specialty grocers, like Whole Foods, tend to boost local real estate values.
According to an analysis conducted by Ray, the per-square-foot and overall price for residential condos in Hyde Square jumped 5 percent in the first three months of 2011. The average Hyde Square condo is selling this year for $403,075 at $310 per-square-foot, up from $382,983 at $294 per-square-foot in 2010.
Price per-square-foot had previously declined 5 percent over 2009 and 2010. And the average cost of a condo so far in 2011 has, for the first time, topped its 2007 high of $397,403.
It is unusual to see a bump like that early in the year, when sales are normally flat, Ray said in an e-mail.
And the bump comes despite including finalized sales left over from last year, when sales were “awful,” he said.
Only one single-family home has been sold so far this year.
In an interview with the Gazette, Ray said that the Whole foods coming in has been good news for people interested in seeing real estate values rise. “Just the announcement has had an impact,” he said. “It is good for people who have bought property, in some cases investing their life savings, in the hope of getting a return on their investment.”
As the Gazette previously reported, local real estate rental ads on Craigslist are already using the potential neighborhood Whole Foods as a selling point. Ray said he does not plan to advertise Hyde Square listings as being near a Whole Foods because, “I am one of those real estate agents who hates to point out the obvious.”
Johnson, a principal at the consulting firm Johnson Reid told the Gazette that a 2007 study conducted by the consultants for the city of Portland found “a strong statistical linkage” between home values and proximity to urban specialty grocers.
That study found that prices for single-family homes were, on average, 17 percent higher when they were within walking distance of an urban specialty grocer.
The Johnson Reid report, “An Assessment of the Marginal Impact of Urban Amenities on Residential Pricing” has been cited by members of a coalition opposed to Whole Foods’ move to the neighborhood as evidence that the new store could displace low and moderate-income residents—a phenomenon sometimes known as “The Whole Foods Effect.”
But Johnson sounded a note of caution about taking the 2007 Portland-specific study “on the road,” to other neighborhoods.
While Whole Foods falls into the category of “specialty grocer” the study also did not look specifically at Whole Foods, he said.
Noting that Whole Foods is known for being a “regional draw,” Johnson said that traffic and parking congestion could offset the store’s potential positive impact on real estate values. He also said the positive effect is strongest in conjunction with “a certain mix of amenities.”
Hi-Lo Market, which occupied the space at 415 Centre St. until February, could also be considered a specialty grocery, because it specialized in Latino foods, and it was a regional draw in its own right. But it was also known for catering to low- and moderate-income shoppers.
Johnson said a shift from a “bargain” to high-end grocer could signal a demographic shift.
The study also found that proximity to bookshops, bike shops, fitness centers, wine bars/shops, cinemas and garden/yard art stores tend to raise home values.
Both Ray and Johnson said there are winners and losers when area property values go up.
“That is the basic problem with gentrification. It is great for property owners, not for renters. Renters tend to get displaced. It depends on what side of the ledger you are on,” Johnson said.
Ray said he is hopeful that a decades-long movement to build and preserve affordable housing for low- and moderate-income residents in JP will help offset the displacement of residents.
“I have to give credit to organizations like the Jamaica Plain Neighborhood Development Corporation and City Life/Vida Urbana for staying strong and enabling a low-income affordable rental movement.”
The JPNDC recently completed the redevelopment of the former Blessed Sacrament Church site in Hyde Square, bringing 48 units of affordable rental and home-ownership units. A two-bedroom condo in the Creighton Commons development at the site goes for around $171,000—about $187 per-square-foot.
Correction: The print and previous web versions of this article previously misstated BJ Ray’s professional affiliation. He works for Prudential Unlimited.