After this post, I promise to stop continually plugging the work and writing of Aziz Sunderji — at least for a few days. Over the weekend, I wrote about his recent post on happiness in America. Today, his latest post is about what happens to home prices after a particular grocery store opens. And for this, he looked at 32,000 store openings dating back to the mid-1970s and then compared them to ZIP-code-level home price data.
Here's what he found:
After this post, I promise to stop continually plugging the work and writing of Aziz Sunderji — at least for a few days. Over the weekend, I wrote about his recent post on happiness in America. Today, his latest post is about what happens to home prices after a particular grocery store opens. And for this, he looked at 32,000 store openings dating back to the mid-1970s and then compared them to ZIP-code-level home price data.
Here's what he found:
The average Walmart neighbourhood in this study has a median household income of $49,000, a college degree attainment rate of 23%, and a median home price of $144,000. And when a new Walmart opens, home prices have tended to underperform the national average by about 4% in the three years that follow.
On the flip side, the average Trader Joe's neighbourhood has a median household income of $82,000, a college degree attainment rate of 52%, and a median home value of $425,000.
Importantly, though, Trader Joe's isn't just picking neighbourhoods with obviously favourable demographics (retail is a lagging indicator — it generally comes once the demand is already there). It seems to be picking neighbourhoods that, in the words of Aziz, have "room to keep running." In the three years that follow a new Trader Joe's opening, homes in those ZIP codes have tended to outperform the national average by 6%!
One of the fascinating things about this finding is that it seems to perfectly support the company's target market. It has been said that Joe Coulombe (founder of the company) used to describe his target customer as "overeducated and underpaid." In other words, he actively targeted university graduates.
But being underpaid only lasts so long. We know that educational attainment is typically the single best predictor of household income. So, if you target this group, chances are that they'll eventually become fairly paid or maybe even overpaid. And when this happens, I guess it shows up in area home prices.
Cover photo by Karolina Bobek on Unsplash
The average Walmart neighbourhood in this study has a median household income of $49,000, a college degree attainment rate of 23%, and a median home price of $144,000. And when a new Walmart opens, home prices have tended to underperform the national average by about 4% in the three years that follow.
On the flip side, the average Trader Joe's neighbourhood has a median household income of $82,000, a college degree attainment rate of 52%, and a median home value of $425,000.
Importantly, though, Trader Joe's isn't just picking neighbourhoods with obviously favourable demographics (retail is a lagging indicator — it generally comes once the demand is already there). It seems to be picking neighbourhoods that, in the words of Aziz, have "room to keep running." In the three years that follow a new Trader Joe's opening, homes in those ZIP codes have tended to outperform the national average by 6%!
One of the fascinating things about this finding is that it seems to perfectly support the company's target market. It has been said that Joe Coulombe (founder of the company) used to describe his target customer as "overeducated and underpaid." In other words, he actively targeted university graduates.
But being underpaid only lasts so long. We know that educational attainment is typically the single best predictor of household income. So, if you target this group, chances are that they'll eventually become fairly paid or maybe even overpaid. And when this happens, I guess it shows up in area home prices.
Cover photo by Karolina Bobek on Unsplash
Chart from Home Economics
Chart from Home Economics
Howard Chai recently reported in the Globe and Mail on the number of "distressed" commercial real estate transactions that Canada has seen over the last few years:
2023: 119 transactions totalling $767 million
2024: 191 transactions totalling more than $1.5 billion
2025: 252 transactions totalling more than $1.42 billion
These numbers are from Altus Group and they, importantly, only include sales involving a court proceeding. They do not include properties sold at a loss because of financial distress or any other such scenarios. This means that the actual amount of "distress" in the market is certainly greater. We're all just holding on.
The hardest-hit asset class is, not surprisingly, development land. This makes sense because the value of development land is mostly binary right now. Either you can do something productive with it (in which case there's value) or you can't, and it's illiquid. Land is risky. It just doesn't seem that way when the market is hot.
The theme of the article is that the situation is likely to get worse before it gets better. Jeremiah Shamess of Colliers is cited as saying he thinks we will see the "emergence of a bottom" late this year or early into 2027. He must have read my annual predictions post in January, where I argued the same.
These periods of time always suck for everyone involved. But as is always the case in markets, the faster we deal with the pain, the faster we'll get to the other side. Failure is an essential part of capitalism. As many have said: "Capitalism without bankruptcy is like Christianity without hell."
Cover photo by Damian Kravchuk
Howard Chai recently reported in the Globe and Mail on the number of "distressed" commercial real estate transactions that Canada has seen over the last few years:
2023: 119 transactions totalling $767 million
2024: 191 transactions totalling more than $1.5 billion
2025: 252 transactions totalling more than $1.42 billion
These numbers are from Altus Group and they, importantly, only include sales involving a court proceeding. They do not include properties sold at a loss because of financial distress or any other such scenarios. This means that the actual amount of "distress" in the market is certainly greater. We're all just holding on.
The hardest-hit asset class is, not surprisingly, development land. This makes sense because the value of development land is mostly binary right now. Either you can do something productive with it (in which case there's value) or you can't, and it's illiquid. Land is risky. It just doesn't seem that way when the market is hot.
The theme of the article is that the situation is likely to get worse before it gets better. Jeremiah Shamess of Colliers is cited as saying he thinks we will see the "emergence of a bottom" late this year or early into 2027. He must have read my annual predictions post in January, where I argued the same.
These periods of time always suck for everyone involved. But as is always the case in markets, the faster we deal with the pain, the faster we'll get to the other side. Failure is an essential part of capitalism. As many have said: "Capitalism without bankruptcy is like Christianity without hell."
Cover photo by Damian Kravchuk
I saw Paul Graham write this week that "Cities inhale and exhale each generation. People move to cities in their 20s in search of colleagues and mates, move back out to raise their kids, and then when their kids are in their 20s, they return."
I don't like it being presented in such a single-minded way, but there is, of course, a lot of truth to this remark, particularly for North American cities. It's basically the "dumbbell" housing demand profile that we in the industry often talk about.
Whether you believe this is an innate housing preference, a deeply-rooted cultural bias, a fundamental truth about the optimal way to raise children, or the result of poor land-use decisions, it is a common housing outcome and, in some cities, the de facto housing outcome. But again, it is not universally the case.
This is a semi-regular topic on this blog, but I've been thinking about it more now that Bianca and I are about to graduate to being urban parents. In fact, now that it has become known, we've started getting some questions: "So, do you think you will move to a house?" (We live in an apartment condominium.) And sometimes it's not even a question; it's a flat-out assumption: "Once you move to a house..."
I wasn't aware that this was a prerequisite. Little do they know that I spend my free time fantasizing about apartment renovations in Paris, Tokyo, and Rio de Janeiro.
I'm sure that our thinking will evolve over time, but to a meaningful extent, I would classify us as being typologically agnostic, and instead resolute on a particular kind of urban context. What matters most to us is that we remain in a city where we can walk or bike to things, where a car is not an absolute necessity, and where exciting and cultured things take place from time to time.
I'm not sure what definition of "city" Paul had in mind when he was talking about people leaving it. Did he mean downtowns? Are the inner suburbs within a city an acceptable geography? I don't know, but I can confidently say that leaving the city is the last thing on our minds right now.
Maybe that will change. Or maybe it won't.
Cover photo by
I saw Paul Graham write this week that "Cities inhale and exhale each generation. People move to cities in their 20s in search of colleagues and mates, move back out to raise their kids, and then when their kids are in their 20s, they return."
I don't like it being presented in such a single-minded way, but there is, of course, a lot of truth to this remark, particularly for North American cities. It's basically the "dumbbell" housing demand profile that we in the industry often talk about.
Whether you believe this is an innate housing preference, a deeply-rooted cultural bias, a fundamental truth about the optimal way to raise children, or the result of poor land-use decisions, it is a common housing outcome and, in some cities, the de facto housing outcome. But again, it is not universally the case.
This is a semi-regular topic on this blog, but I've been thinking about it more now that Bianca and I are about to graduate to being urban parents. In fact, now that it has become known, we've started getting some questions: "So, do you think you will move to a house?" (We live in an apartment condominium.) And sometimes it's not even a question; it's a flat-out assumption: "Once you move to a house..."
I wasn't aware that this was a prerequisite. Little do they know that I spend my free time fantasizing about apartment renovations in Paris, Tokyo, and Rio de Janeiro.
I'm sure that our thinking will evolve over time, but to a meaningful extent, I would classify us as being typologically agnostic, and instead resolute on a particular kind of urban context. What matters most to us is that we remain in a city where we can walk or bike to things, where a car is not an absolute necessity, and where exciting and cultured things take place from time to time.
I'm not sure what definition of "city" Paul had in mind when he was talking about people leaving it. Did he mean downtowns? Are the inner suburbs within a city an acceptable geography? I don't know, but I can confidently say that leaving the city is the last thing on our minds right now.
Maybe that will change. Or maybe it won't.
Cover photo by
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Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
