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

Chart from Home Economics

Conventional wisdom suggests that the way to get really good at something is to (1) start as early as possible learning the thing and (2) focus exclusively on the thing. This is relevant information for elite schools, sport academies, and other institutions because it leads to, "let's find the best young talent and then further accelerate their skills through discipline-specific practice."

But recent research has found that this typically isn't the case. By looking at more than 34,000 adult international top performers in different domains ranging from classical music composers to Olympic champions, researchers found the following three major features associated with human development (quoted verbatim from here):

1. Early exceptional performers and later exceptional performers within a domain are rarely the same individuals but are largely discrete populations over time. For example, world top-10 youth chess players and later world top-10 adult chess players are nearly 90% different individuals across time. Top secondary students and later top university students are also nearly 90% different people. Likewise, international-level youth athletes and later international-level adult athletes are nearly 90% different individuals.

2. Most top achievers (Nobel laureates and world-class musicians, athletes, and chess players) demonstrated lower performance than many peers during their early years. Across the highest adult performance levels, peak performance is negatively correlated with early performance.

3. The pattern of predictors that distinguishes among the highest levels of adult performance is different from the pattern of predictors of early performance. Higher early performance in a domain is associated with larger amounts of discipline-specific practice, smaller amounts of multidisciplinary practice, and faster early discipline-specific performance progress. By contrast, across high levels of adult performance, world-class performance in a domain is associated with smaller amounts of discipline-specific practice, larger amounts of early multidisciplinary practice, and more gradual early discipline-specific performance progress. These predictor effects are closely correlated with one another, suggesting a robust pattern.

In other words, it's a long game:

The most successful and highest-performing adults seem to start off as well-rounded kids.

Cover photo by Patrick Tomasso on Unsplash

I'm excited to learn that the University of Pennsylvania Stuart Weitzman School of Design has just launched a new master's program that is intended to fill the gap in education between design and real estate development. It's called the Master of Science in Design with a concentration in Property Development and Design (or MSD-PDD).

From the sounds of it, it's an expansion of the certificate program in real estate development that I did while I was there. Good. It's also something that I've been advocating for at the University of Toronto for over a decade. We need more bilingual city-building professionals who understand both design and real estate development.

My initial comment is that I hope they're really drawing on and leveraging the resources of the Wharton School. That's what will really make this program stand out against many similar programs. When I was there, I remember them having two different real estate finance classes: one for MBAs and one for designers (which had been made deliberately easier).

I thought this was bullshit, so I met with the program coordinator and requested to be admitted to the MBA one. He strongly advised against it and said that it's, you know, really hard. But that only made me want to take it even more. I ended up getting an A.

So my piece of unsolicited advice for this nascent program is: don't baby the designers when it comes to business and finance. Because the market certainly won't.