Canada’s two main grocery stores are No Frills and Loblaws; one is considered thrifty, while the other has been deemed premium. And their prices obviously reflect that. But how do they relate to housing prices?
A recent study by theredpin.com discovered some interesting findings. The company studied two years of Toronto housing data, including 9,000 condo sales, and discovered just how much a house is impacted by the type of grocery store within walking distance.
The study found that there are around 134% more condos within walking distance of a Loblaws than a No Frills.
Prices are also higher for homes around Loblaws.
The average price for a condo around Loblaws is $472,657 compared to $415,684 for those around No Frills stores. That’s a 12% difference.
The average price for a detached property around a No Frills is $955,953 – 37% cheaper than the average around a Loblaws ($1,526,006).
What does this mean for investors?
It seems better deals can be had on homes around No Frills; cheaper homes will mean lower mortgage and, perhaps, a higher cap rate and better yield.
Couple that with the fact that many renters would likely prefer the price-conscious offerings at No Frills as opposed to the premiums charged by its swankier counterpart.
However, investors looking for appreciation may be more enticed to purchase a unit near a Loblaws. The study found that homes within 10 minutes’ walking distance to a Loblaws increases 4.8% between 2014 and 2015. The value on homes within the vicinity of a No Frills remained “relatively stagnant.”
The findings should be taken with a grain of salt. It could be a “chicken or the egg” situation; both outlets are owned by the same company and market research based on local incomes could determine which grocery stores are best suited for certain areas.
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Struggling to decide on your next investment property? Investors may want to look no further than which grocery stores are in the vicinity.