How does living near a marijuana dispensary affect the price of your house?
According to a recent study by Tomo, which compiles real estate data to help buyers by providing relevant information to make more informed purchases, it can actually add value to your home.
“On average, if a dispensary opens in your area, you’re likely to see an additional $4,400 increase in your property value each year,” the results suggest.
The new data adds to a growing body of research that proved the same. Home prices in states with legal recreational cannabis have surged $48,983 higher in the past decade compared to states that don’t, according to a separate last year research by Real Estate Witch, an online publication owned by Clever Real Estate and Leafly.
Even though this is good news to those seeking to sell its property, as the majority of Americans now reside in states where the recreational use of marijuana is legal, those looking to buy one would need deeper pockets.
Why?
According to Redfin, the median U.S. home sale price hit a record high of $387,600. Last month. In the wake of the pandemic, home prices began to rise and peaked in 2022. After that they dropped slightly, only to reach new highs in the months and years to follow.
That said, a recent Gallup poll showed Americans are aware of this growing trend as 21% of those asked consider it’s a good time to buy a house, while 76% are of opposite opinion.
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Tomo’s Study
Will Begeny, an analyst with Tomo, which was founded by former Zillow executives, took a look at the impact of marijuana on residential housing markets by taking into account how homeowners feel about dispensaries moving into the neighborhood.
He analyzed city home sales data from Oregon, Colorado, Washington, Michigan and Illinois to check how home values change once a cannabis dispensary moves in.
Begeny explained that in areas that don’t have a commercial district “and you’re essentially building a commercial district…everything around it increases in value because you have more people around.”
In more mature markets such as Washington and Colorado, and big cities like Chicago, Begeny observed a different trend, writes Cannabis Business Times.
“We’re seeing some of the same trends emerge that basically you have what we’ll call the ‘high-end’ dispensaries, where they become kind of these fashionable parts of a major commercial district,” he continued. “And this is kind of what’s happening in the suburbs right now, is some of these dispensaries are treated like any other high-end shopping environment, and they’re accelerating that pace of growth above and beyond a conventional commercial district.”
In areas of Denver, Colorado, where dispensaries first opened median home prices were 80% lower than in the rest of the city at the time. However, over the past four years, the annual average home prices increased 6.9 percentage points higher compared to other parts of the city.
In Detroit, Michigan, in 2020, a typical home situated near a recreational dispensary for $38,000, compared to $127,000 in the rest of the city. These days, the same type of homes are priced at $70,000, representing an 84% increase, compared to a 31% increase in other parts of the city during the same period.
Dispensaries that launched cannabis sales in Kalamazoo, Michigan were situated in an area with a 43% lower median home price than the rest of the city. However, its 3-year home price increase equaled 8.8 percentage points higher than the rest of the city.
