Tim Cunningham
Lyci Hillman
UP 504
Assignment 6
Are
the Realtors Right?
Starbucks Locations as an Indicator of Economic
Growth
| Context: | Many real estate agents will often cite the opening of a Starbucks store as an indicator of a neighborhood that is "on the rise." We will research whether or not there is some truth to this theory by analyzing median home value and median income in census tracts where Starbucks stores have opened. Starbucks openings will be examined as a proxy variable that indicates increasing development in a community. |
| Research Question: | Does a Starbucks store opening act as an indicator of increasing median home value and median income of the area in which it is located? |
| Hypothesis: | Where Starbucks stores open, the median home values and median incomes will increase at a higher rate than the average increase in the greater metropolitan region. These rates will also be greater than the rates of change in the same tracts previous to the store opening. |
| Units of Analysis: | Census tracts and cities. |
| Data required: | Addresses and opening dates of Starbucks stores
in metropolitan regions from 2000 to 2007. We plan on utilizing starbuckseverywhere.net
data, and comparing that with Starbucks corporate data for store openings. Median home values and median incomes for selected cities and their census tracts. This data can be found on the census website. |
| Methodology: |
First, we will generate a data set of selected
Starbucks openings in three major cities in the last 7 years. Then, we will get
property values and median incomes for the census tracts where the Starbucks opened,
and the averages for the city as a whole for the same time period. We will determine
the rate of property value growth and rate of change in income for the 3 years
prior to the Starbucks opening for each tract, and for the city. Then we will
determine both the rate of change in property value and income for the tract after
the Starbucks opening. We will compare pre and post Starbucks values for the tracts
to both the pre and post values for the tracts and the city. We will run difference
of means tests on the rates of change to determine if the pre and post Starbucks
changes are significant. |
| Anticipated results: | We
anticipate that tracts with Starbucks locations will show a faster increase in
property values and income after the opening than before opening, and will increase
at a greater rate than the city average as well. To clarify, assume that property
rates in the Starbucks tract were increasing at an average of 5% a year for the
3 years prior to opening, as was the city. After the opening of the Starbucks,
we anticipate that the Starbucks tract will be increasing at 7 or 8% per year,
while the city will only appreciate at 6%. |