The 'Costco Effect': How Living Near the Warehouse Giant Could Add 7.9% to Your Home's Value

A new Costco could do more than bring bulk groceries and cheap gas to a neighbourhood. In some parts of the US, it may also help push nearby home values higher. Research found that property values within five miles of newly opened Costco warehouses rose by as much as 7.9% in densely populated counties.

But the 'costco effect' is far from universal. A study by Silas Kwok of the Vancouver School of Economics, covering Costco openings from 2002 to 2020, found no significant increase in property values across the overall sample. The gains were concentrated in specific markets, with values rising 7.9% in counties with above-average population density and 5.2% in counties with above-average household income, 2.5 years after a Costco opened.

Where Costco Can Lift Home Values

The difference between the national result and the gains in specific markets is central to the research. In densely populated counties, property values within five miles of a Costco opening increased by 7.9%. In counties with above-average household income, values increased by 5.2% over the same period.

The research therefore points to a localised effect rather than a universal premium for living near Costco. It found no significant change in property values within 20 miles of Costco openings on average.

Why Location Matters

One possible explanation is the type of households Costco attracts. Kwok's research notes that Costco consumers tend to be wealthier than average, which could help explain why property values increased more noticeably in higher-income areas.

Christina Rordam, a real estate agent in the Orlando, Florida area, said Costco can also provide practical convenience for busy households. Its combination of groceries, fuel, and other services allows customers to complete several errands during one visit. That convenience could make nearby neighbourhoods more attractive to buyers who regularly use the warehouse.

Does Costco Create Value?

The research also raises a key question: Does Costco increase property values, or does the company tend to open stores in areas that are already positioned for growth? Selma Hepp, chief economist at Cotality, said the higher property values identified in the research could reflect the economic and demographic characteristics of areas where Costco chooses to open stores.

Kwok's research similarly notes that its controls may not fully capture the disadvantages of neighbourhoods where Costco chooses to locate. A new warehouse may also arrive alongside broader commercial and residential development, making it difficult to separate Costco's impact from wider local growth.

In Franklin, Wisconsin, Advenir Azora is developing a 166-unit build-to-rent neighbourhood on 18 acres near a future Costco. The Milwaukee Business Journal reported that the housing project was valued at about $51 million. The city says the planned 164,000-square-foot Costco is scheduled to open in November 2026. Franklin Mayor John Nelson said the Costco could provide a spark for the area and attract other large tenants.

Living Next Door Has Risks

The potential benefit of being near Costco does not necessarily mean that the closer a home is, the better. Hepp said Costco operates as a destination store, with customers often travelling by car for less frequent bulk-shopping trips. That means living within convenient driving distance could provide the benefits of access without some of the drawbacks of being directly beside a warehouse.

For homes immediately next to a large retail site, buyers may also consider delivery activity, parking-lot lighting, weekend traffic, and views of commercial facilities. These factors can make the exact location of a property important even when the wider neighbourhood benefits from a new Costco.

How Close Is Too Close?

For buyers considering a home near a new Costco, distance alone may not determine whether the property benefits. A home several minutes away could provide easy access to the warehouse without being immediately adjacent to it. Buyers can also visit the neighbourhood at different times, including during busy periods, before making a decision. Checking nearby undeveloped commercial land can also help buyers understand whether future construction could change the area's character.

Kwok's research does not show a universal Costco premium for nearby properties. Instead, the strongest gains were found within five miles in counties with above-average population density or household income, while the average effect across the US was not significant.

For homeowners and buyers, the takeaway is that a new Costco may be associated with higher property values in some markets, but the potential benefit depends on the surrounding community, the property's exact location, and the characteristics that made the area attractive to Costco in the first place.