Real estate prices and grocery stores

Struggling to decide on your next investment property? Investors may want to look no further than which grocery stores are in the vicinity.

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.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Valcourt, Murray, Dufferin, Cardigan, Hungerford

COMMENTS

  • by David 2016-01-13 11:36:49 AM

    The grocery stores have done the research long before redpin. Higher end stores target neighbourhoods with higher incomes & higher house prices.

  • by Mike H. 2016-01-13 12:56:29 PM

    Wow, that is some incredible groundbreaking data. I'll have to tell my real estate investment clients to act quickly on this great discovery. Maybe next time tell us what the research shows about the income level of people that own golf course homes or the crime rate of condos located within walking distance of the Jane/Finch corridor.

  • by Hans 2016-01-15 8:16:00 AM

    Good article , another evaluation tool for a quick reference when checking out a potential investment purchase.

Get help choosing the best mortgage rate

Just fill in a few details, and we'll arrange for a Mortgage adviser to help you find the best mortgage for your needs

  • How soon do you want a mortgage?
  • Name
  • Where do you live?
  • Phone number
  • E-mail address

Poll

Would you vote for real estate board amalgamation