Aldi’s may not be the specialty grocer some Tri-Cities residents pine for. Still, it has and continues to enhance property values for homes near it, according to this year’s Grocery Store Wars analysis by ATTOM Data Solutions.
The study factored in current average home values, 5-year home price appreciation from 2015 to 2020, current average home equity, home seller profits, and home flipping rates.
But when the focus shifts to investors, Aldi’s jumps to the front of the line with the highest average 5-year home price appreciation and the largest average return on investment for flippers.
Homes near a Trader Joe’s had an average value of $644,558, according to the analysis. Homes near the specialty grocer also had an average home equity of $225,055 during the past five years.
From the investor focus, the study found house flippers located near an Aldi’s averaged a 58% return on investment (ROI). That’s 20% better than the average for homes located near a Trader Joe’s or Whole Foods.
According to the analysis, Sullivan Co. homes near an Aldi’s fared better on most of the data than those in Greene or Washington counties.
Avg. home value – $136,893
Avg % equity – 26%
Avg. equity – $35,333
Jan-Sept median Sales price – $130,500
1-year home price appreciation – 11%
5-year home price appreciation – 31%
Q3 home seller profit – $50,150
Q3 home seller ROI – 55.8%
2019 gross flipping ROI – 118%
Avg. home value – $121,187
Avg % equity – 16%
Avg equity – $19,188
Jan-Sept median Sales price – $120,000
1-year home price appreciation – 9%
5-year home price appreciation – 33%
Q3 home seller profit – $22,500
Q3 home seller ROI – 22.5%
2019 gross flipping ROI – 112%
Avg. home value – $174,355
Avg % equity – 23%
Avg equity – $39,390
Jan-Sept median Sales price – $165,000
1-year home price appreciation – 10%
5-year home price appreciation – 28%
Q3 home seller profit – $52,600
Q3 home seller ROI – 41.3%
2019 gross flipping ROI – 31%
For some, this study probably begs the question: Why isn’t there a Trader Joe’s in the Tri-Cities.
It’s the same reason efforts to attract a Costco have failed. None of the local cities have an economy that meets the minimum profile corporate decision markers require for new sites.
The Tri-Cities is in the process of restructuring for a new retail norm that will likely pick up after the Christmas season. Some of that can be seen in the announcement that Kingsport’s Dick’s Sporting Goods will close after Christmas. Like Best Buy, it’s leaving the Pavilion even though the store is reportedly profitable. It’s leaving because retailers with multiple outlets located close together, and a lot of competition, are being consolidated for better profitability.
Aldi’s in the area’s major cities were not recruited. The firm saw the local economies fit a niche that other grocers were not filling. And that’s where Aldi’s does business. It’s a lot like the decision made by D.R. Horton – the nation’s largest homebuilder – to begin building homes in the Tri-Cities. The local economies fit the model where Horton could employ its size, supply chain efficiencies, and business model to meet that need more efficiently and with more profit than existing local builders.
Categories: REAL ESTATE