Marijuana Increases Home Values
Marijuana Increases Home Values, Recreational marijuana legalization is a hot-button topic, and the debate is now entering the real estate industry. With more states legalizing recreational use, every home buyer needs to know how housing markets are affected by this cultural shift. Opponents of legalization stress increases in crime that lead to lower property values, while supporters highlight the potential economic benefits. We decided doing a deep dive into the available MLS data and combining it with dispensary license data was the only way to settle the debate.
Three pivotal questions guided our research:
- How are home values impacted by legalizing recreational and medicinal marijuana on a city level?
- How does marijuana legalization impact crime rates, and how do changes in crime impact home values?
- How do retail dispensaries impact local home values?
Digging into Zillow’s historical home price index we can shed some light on these questions (more information on our methodology can be found here).
- Cities that allow retail dispensaries saw home values increase $22,888 more than cities where marijuana is illegal from 2014 to 2019 (controlling for population and initial home values)
- CATO research supports our findings, suggesting homes close in proximity to marijuana retail dispensaries increase in value
- For cities where only medicinal marijuana is legal, home values increased at a comparable rate to cities where marijuana is illegal; a statistically significant increase in home values could not be attributed to medicinal marijuana legalization
- States that legalize recreational cannabis see an immediate bump in home values following legalization, even without retail dispensaries opening up. From 2017 to 2019, cities where recreational marijuana is legal saw home values increase $6,337 more than cities where marijuana is illegal (controlling for population, initial home values, and GDP).