- The legalization of marijuana in Denver has unexpectedly caused a rise in property prices in the vicinity of cannabis stores.
- However, brokers say that this phenomenon may not be felt in every city.
Given that recreational marijuana sales are increasing throughout the Bay Area, could a newly legal drug cause an unexpected increase in the property market?
Scientists who focused on the impact of legalizations marijuana recreational marijuana prices found a surprising trend: The trade that began selling recreational marijuana had "a very positive impact on neighboring property values."
Marijuana = rising prices of unpopulated
After recreational sales became legal, houses near marijuana recreation stores had seen their recreation increase by more than 8% compared to a little further. It is a small data-based study, but research - the first of its kind - could provide an important insight into the potential impact of legalismace.
"We went into the project and we were not sure what to expect," said James Conklin, a professor of real estate at the University of Georgia, who also wrote a post called "Contact High: External Effects of Marijuana Retail Stores on Home Prices in Summer". "We thought it might have a negative impact. Our analysis of the project showed that no negative effect could be seen - the results show a positive effect.
Conklin and his co-authors found that following the Denver marijuana sales in early 2014, the following values appeared in families close to these stores: homes within 0.1 miles of trade were 8.4% higher than houses lying between 0.1 and 0.25 mil.
They were not new stores - they were medical marijuana pharmacies that had expanded to recreational sales when they became legal.
This study is not the first to suggestthe relationship between rising house prices and legalization of recreational marijuana, but its authors claim that this is the first time it has happened at a highly localized level. A similar report was written by two University of Mississippi professors and FNC Real Estate Information showed that legalization leads to an average housing price increase in Colorado of 6%. This document, entitled "The Effect of Legalizing Retail Marijuana on Home Values: The Evidence from Colorado," compared property gains in municipalities that have taken recreational use and those they did not.
Realtor.com found outthat since the first recreational hemp stores in Colorado in the first half of 2014 the price of the house has increasedin the state from $ 248,000 to $ 298,000 in the first half of 2016. This is partly attributed to the states population, which has increased by almost 2% over this period, researchers say, but also claims that more homeowners have moved here due to a change in law.
Conklin and his co-carThey did not claim to know why recreational marijuana increases the value of homes, but theorized that this may be because legalization has led to a sharp increase in housing demand caused by a marijuana-related job, a lower level of crime, or clustering of other facilities near marijuana. They also pointed out that in other cities marijuana may not have the same impact on property prices.
Rick Smith, President of Real Estate Associationoffices in the district of Santa Clara said,that he was impressed by the Colorado study. Cannabis stores must not be too close to schools, he said, adding: "Usually things that have these types of restrictions do not affect property values."
Oakland real estate broker Kerri Naslund said on Monday that she saw a rise in commercial property values in Oakland, where marijuana growers are close by. However, it does not expect that the value of residential houses would follow this trend.