Your House is High on Marijuana
The resounding effect the Cannabis industry is having on the Colorado housing market
By Barry Overton
There is no doubt that the legalization of marijuana has made a major impact on economic development and growth in the Colorado market. The largest development has been in the housing market itself. Medical marijuana was legalized in 2000, but in 2014 the first recreational dispensaries opened. During that time, home prices increase 58 percent, going from $248,000 in 2014 to $391,000 currently statewide. Colorado has been on the top of the list as one of the fastest growing states in the nation due to the boom in the cannabis Industry. Look at the cities that have legalized dispensaries versus those that banned the sale of marijuana. The difference that cannabis is having on the housing community in those areas is evident.
Home prices are actually higher in 60 Colorado cities where marijuana is legal as opposed to those that are not. In addition to that, homes in legal marijuana cities not only have more value, but they are appreciating at a faster pace than homes in non-legal marijuana cities. The values are increasing at about 12 percent year-over-year in legal areas versus only 9 percent in non-legal areas – making a 3 percent difference per year. Hypothetically speaking, should you take those figures over a 10 year period would be a 30 percent difference and about $75,000 difference in appreciation value of a legalized marijuana home versus a home in a non-legalized area. Research has also determined that home values within 0.1 mile of a marijuana dispensary have increased more than 8 percent more than homes just slightly further away.
So, while home prices are better in cities where marijuana has been legalized, it is also even better when a marijuana dispensary is within walking distance from the home. So what would we say is the biggest attribute to this increasing home value? It really comes down to a term that we’re all familiar with – supply and demand. In Colorado alone, the legalization of marijuana has created more than 44,000 jobs. All those employees need a place to live and being in close proximity to their job is always a benefit. These are jobs are full-time, include medical and retirement packages and are typically high paying, which gives the employee the ability to afford higher priced homes.
Two things I want to make clear are in order to afford a home now in Colorado does not require that you are in the cannabis industry. And number two, it does not require that you have a lucrative paying job. The most important thing that you can do now is embrace the fact that you live in a state where home prices are growing significantly and at a very fast rate, and then, find a way to become a homeowner at a price point that is comfortable for you. Many people, when purchasing their first home look at it as “the forever home.”
I’m asking you to change that mindset and look at it more as “the get in where I fit in home,” suggesting if you can only afford 175,000 to a $200,000 one bedroom condo, then buy it. Even if a one bedroom condo does not fit your current personal needs, you could rent that property out and continue to possibly rent a home or apartment for your living needs. But the fact of the matter is you now own real estate that you are also renting out yourself. You have acquired a piece of real property that is growing in value, at a faster rate than most other properties around the country. Many people are taking advantage of this opportunity while there are several one bedroom and two bedroom units available anywhere from the $175,000 to 225,000 price ranges.
Feel free to reach out to me or your real estate professional to get more information on how to get in to the real estate market at a ground level. You too can benefit from the growth that the cannabis industry has created in our market.
Editor’s note: Barry Overton is a licensed Real Estate Agent with New Era Group at Your Castle Real Estate. He has been an agent since 2001, and started investing in real estate in 1996. For more information, email firstname.lastname@example.org.