Shoppers love the bulk deals, the store’s Kirkland Signature products, and the cheap hot dogs—which is why any given Costco parking lot is likely to look like a zoo whenever you visit, especially in this economy.
asserted
you → love → economy
A Costco run can be good for your wallet, if you like buying honey by the bucket or gumballs by the hundreds.
But the benefits may go beyond that: According to research from the Vancouver School of Economics, Costco openings can have an impact on nearby property values, especially in already densely populated areas.
uncertain
openings → like → areas
That’s some great potential upside for homeowners and potential buyers.
asserted
That → ’ → homeowners
Just keep in mind that living close to any high-traffic amenity comes with its own trade-offs, such as more cars, more noise, and more foot traffic on the weekends.
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living → keep → weekends
What Costco means for home values
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means → mean → values
In the abstract, living within a short driving distance of Costco is a good thing.
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living → live → Costco
But can you put a number on it?
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you → put → it
Silas Kwok at the Vancouver School of Economics conducted research on this question.
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Kwok → conduct → question
It turns out that the overall impact of living near a Costco is negligible.
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impact → turn → Costco
In looking at Costco openings from 2002 to 2020 across the US, the research showed that the openings “caused no significant changes in property values on average.”
That said, there were certain parts of the country where Kwok finds Costco did drive values—namely, in high-density and high-income areas.
“Costco openings caused a 7.9% increase in property values within five miles in counties with above-average population density, and a 5.2% increase within five miles in counties with above-average household income 2.5 years following store openings,” writes Kwok.
asserted
Kwok → look → openings
The research suggests the first is more likely to see a bump in nearby property values than the second.
uncertain
first → suggest → second
One is that wealthier Americans tend to prefer Costco, according to YouGov, and may be willing to pay for easy access to it on a regular basis.
uncertain
Americans → tend → basis
Another is that Costco simply brings more value to people’s lives than the typical big-box store.
asserted
Costco → bring → store
“A Costco nearby equals convenience and savings in the minds of many consumers.
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Costco → equal → consumers
A household can join a Costco and go get gas for their car, groceries for their home, and holiday decorations all in one trip.
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household → join → trip
Not to mention there is likely an optometrist and even a section to get new tires,” says Christina Rordam, a real estate agent in the Orlando, FL, area.
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Rordam → mention → area
“Busy families can save hours every month, not to mention cheap gas these days is worth its weight in gold.
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gas → save → gold
Does the value come first, or the Costco?
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value → come → ?
Yet another view of the data is that Costco doesn’t necessarily create value—it confirms what already existed.
asserted
what → create → value
“Home values only increased in areas that were already high-density or high-income.
asserted
that → increase → areas
That suggests the Costco effect is not universal but is highly dependent on the pre-existing economic and demographic characteristics of a neighborhood,” says Selma Hepp, chief economist at Cotality.
uncertain
Hepp → suggest → Cotality
“Costco strategically targets areas with specific economic profiles that may already be on an upward trajectory.”
uncertain
that → target → trajectory
Hepp also contends that some of what makes Costco unique is also what makes living near it minimally valuable.
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living → contend → it
“Costco functions as a destination store.
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Costco → function → store
Its business model is built on a membership base willing to travel, often by car, for less frequent bulk-shopping trips.
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model → build → trips
When you are already planning to drive 15 or 20 minutes, the value of living one minute away is minimal,” she says.
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she → plan → ?
“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.”
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asserted
Report → capitalize → news
It’s true that a new Costco may simply be part of a larger economic upswing in a given area.
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Costco → ’ → area
For example, in August, Advenir Azora acquired 18 acres in Franklin, WI—a suburb of Milwaukee—to build a 166 build-to-rent residential neighborhood, spending over $51 million.
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Azora → acquire → million
It’s near a future Costco.
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It → ’ → Costco
The mayor of Franklin, John Nelson, says that the Costco will bring a “spark” to the area and potentially attract other large tenants to the area.
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Costco → say → area
That spark may be enticing to homebuyers seeking property in an area that will soon see rising prices, and want the Costco as a vote of confidence in the neighborhood’s economic future.
uncertain
that → seek → future
And these days, a quick drive to Costco’s gas station is a true benefit considering the current price of gasoline.
asserted
drive → consider → gasoline
Anyone who has ever visited one of its stores on a weekend knows just how busy the parking lot and the surrounding areas can get.
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lot → visit → weekend
And that’s not even the full picture.
asserted
that → ’ → ?
“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,” says Andy Kravchenko, founder and CEO of Sterling Home Offer.
asserted
Kravchenko → evaluate → Offer
If a Costco moves in nearby, be prepared for the potential for noise, light pollution, and loss of neighborhood feel.
asserted
Costco → move → feel
These can be real downsides to living, and buying, nearby.
asserted
These → live → ?
How close should you live to a Costco?
asserted
you → live → Costco
The clearest takeaway from Kwok’s research is that living near a Costco is more of a boon in high-density, high-income areas than elsewhere.
asserted
living → live → areas
…and 5 more, not listed.
The Aporia
