A study covering nearly two decades of Costco store openings found the warehouse retailer lifts property values in high-income and high-density areas while doing little for homes in less affluent markets, raising questions about who really benefits from the so-called "Costco effect."
Researcher Silas Kwok at the Vancouver School of Economics examined every Costco opening across the United States from 2002 to 2020 and measured what happened to residential property values within a five-mile radius. The headline finding, reported by the New York Post, cuts against the popular assumption that any new Costco automatically means a windfall for nearby homeowners: on average, openings caused no significant change in property values at all.
The gains showed up only in specific slices of the market. In counties with above-average population density, property values within five miles rose 7.9 percent within two and a half years of a store opening. In counties with above-average household income, the bump was 5.2 percent over the same period. Everywhere else, the needle barely moved.
The study's split results map neatly onto a familiar economic divide. A Costco opening in a dense, affluent area like Brooklyn stands to push nearby home prices higher. A new store in a lower-density, lower-income market like Birmingham, Alabama, does not deliver the same lift. The data suggests the retailer rewards neighborhoods that are already doing well, and offers little to communities that could use the boost most.
Selma Hepp, chief economist at Cotality, a real estate analytics firm, said the research confirms that the Costco effect is far from universal:
"Home values only increased in areas that were already high-density or high-income. That suggests the Costco effect is not universal but is highly dependent on the pre-existing economic and demographic characteristics of a neighborhood."
Hepp went further, arguing that Costco's own site-selection strategy may explain much of the pattern. The company picks locations with economic profiles that are already trending upward, which makes it difficult to separate the store's impact from growth that was already underway.
"Costco strategically targets areas with specific economic profiles that may already be on an upward trajectory."
That observation raises a question the study itself does not fully answer: how much of the measured property-value increase is caused by Costco, and how much reflects the company's skill at planting its flag in neighborhoods already headed up? YouGov data cited in the report notes that wealthier Americans tend to prefer Costco, which could mean the retailer is simply following money that was already there.
Costco has expanded well beyond bulk groceries in recent years. The company now partners with DoorDash and Uber Eats for nationwide delivery, broadening its reach beyond the warehouse walls, though whether that kind of convenience translates into property-value gains remains untested.
Even in markets where Costco lifts values, proximity is a double-edged proposition. Andy Kravchenko, founder and CEO of Sterling Home Offer, said his company prices in real downsides when evaluating homes that sit right against a big-box site:
"When we evaluate a house that backs up to or faces a big-box site, we have to price in what the next buyer will feel: delivery trucks before sunrise, parking lot lights at night, weekend traffic, and a backyard view of a loading dock."
His advice was blunt: "The sweet spot is being minutes away, not next door."
Kravchenko recommended that buyers considering a home near a Costco do their homework at the worst possible times, 6 a.m. on a delivery day and Saturday at noon. Stand in the backyard and listen. Then check the county parcel map for undeveloped commercial land nearby, he said, because "today's green buffer can become tomorrow's expansion."
Hepp offered a structural explanation for why extreme proximity does not command a premium. Costco operates as a destination store, not a daily-visit amenity. Its members already plan to drive fifteen or twenty minutes for a bulk-shopping trip, so living one minute away instead of ten adds little practical value.
"That convenience premium does not get capitalized into the home's price the way it would for a daily-visit amenity like a grocery store or a coffee shop."
In other words, Costco is not a corner bodega. Its membership model and warehouse format mean customers visit less often, buy more per trip, and care less about shaving a few minutes off the drive. That distinction matters for homeowners who assume any retail anchor automatically lifts their property.
The retailer's appeal does extend beyond groceries. Costco warehouses typically house an optometrist, a tire center, the company even offers free tire air at select locations without requiring a membership, and a food court that has become a cultural institution of its own.
One community is wagering real money on the premise that Costco can anchor broader growth. In August, real estate developer Advenir Azora acquired 18 acres in Franklin, Wisconsin, a suburb of Milwaukee, near a future Costco site. The price tag: more than $51 million. The plan calls for a 166-unit build-to-rent residential neighborhood.
Franklin Mayor John Nelson has said the incoming Costco will bring a "spark" to the area and potentially attract other large tenants. That is exactly the kind of optimism the Kwok study invites scrutiny of. Franklin is a suburb, not a dense urban core. Whether it qualifies as the type of high-density, high-income market where the research found meaningful property-value gains is an open question.
A $51 million bet on 166 rental homes suggests Advenir Azora believes the answer is yes. But the study's central finding, no significant average effect, should give local taxpayers reason to ask hard questions about what a Costco actually delivers versus what boosters promise.
Costco's brand power is real. The retailer inspires a loyalty that borders on devotion, its gold bars have surged 125 percent in price and still sell so fast the company caps purchases. Its food court churros generate national headlines when they disappear and reappear. That cultural footprint is undeniable.
Christina Rordam, a real estate agent in the Orlando area, made the case for Costco as a practical draw for homebuyers. A single membership covers gas, groceries, holiday decorations, an optometrist visit, and new tires, all in one trip.
"Busy families can save hours every month, not to mention cheap gas these days is worth its weight in gold."
But Rordam also urged buyers to think honestly about whether a Costco membership fits their household. Smaller households may not need fifty-packs of noodles or gallon jugs of ketchup. "Consider how much time shopping there would or would not save you," she said.
That is sensible advice in a housing market where buyers routinely overpay for proximity to amenities they use less than they imagine. The Kwok study puts numbers behind the intuition: Costco helps some neighborhoods, does nothing for others, and the difference tracks closely with wealth and density.
For homeowners in affluent, populated areas, a nearby Costco may indeed add value, nearly 8 percent in the densest counties, according to the research. For everyone else, the "Costco effect" is more marketing than math.
Americans deserve straight answers about what drives their home values. A warehouse store that sells rotisserie chickens and bulk paper towels can be a fine neighbor, but it is not a substitute for the fundamentals that actually build wealth: strong local economies, sound fiscal policy, and communities where people want to live regardless of which retailer sits down the road.