Home Beat – The Grass is Always Greener?
How the Legalization of Marijuana Impacts the Housing Market.
In November 2016, Massachusetts voters legalized the statewide use of recreational cannabis. Two years later, the state’s first two recreational pot shops opened their doors in Leicester and Northampton. Now, the dispensaries are budding throughout the commonwealth.
Due to the stigma of marijuana and a market factor called economic obsolescence, it’s possible that this development could negatively affect some property values. Economic obsolescence occurs when outside factors such as the local crime rate, job market, school system and traffic conditions have an adverse impact on real estate prices.
In 2018, North Andover banned the legal cannabis industry in a special town election. At the time, an organization called Massachusetts Innovation Works was planning to transform Osgood Landing, the former home of Western Electric and Lucent Technologies, into one of the largest pot-growing facilities in the world.
North Andover Selectwoman Rosemary Smedile voted for the ban. “It was a very passionate town meeting, with almost an evenly contested split amongst residents,” Smedile recalls. “Personally, I felt that there was too much ambiguity with the conflicting federal statutes.”
In the town vote, 55% of residents voted in favor of the ban. “I think it was for the best,” Smedile says. “We were already being labeled as a pot town, and there was some concern about how the stigma could affect our residents. Now we have Amazon creating a warehouse on that same land, and that vote passed with nearly 100% of our residents approving of it.”
Concerns about legalization extend beyond weed and its recreational use. Massachusetts communities have already experienced the disrupted traffic associated with legal dispensaries. In November 2018, Leicester had to call an emergency meeting to discuss the influx of automobiles brought on by Cultivate, the newly opened dispensary there.
To get a sense of how the marijuana industry might positively affect our area, consider the situation in Colorado. The Centennial State was one of the first out of the gate, passing legislation in 2012. If Colorado is any indication, the impact on the real estate market might be largely positive.
Kelly Moye, a former spokesperson for the Colorado Association of Realtors, spoke with National Mortgage News, a residential mortgage industry newsletter, regarding marijuana’s impact on the Colorado housing market. According to Moye, “The legalization of marijuana has caused an increase in population in the state of Colorado. … People flocked to Colorado to either work in the marijuana industry or to gain access to marijuana itself.”
According to the Colorado Association of Realtors, the median price of a single-family home in Colorado rose from $187,900 in 2011 to $411,200 in July 2019. It’s fair, of course, to question how much of the increase can be attributed to the marijuana laws or to other factors, such as low mortgage rates, the national economic boom, a cultural shift in favor of the adventure lifestyle exemplified by the region, and the rise of marketplace platforms such as Airbnb.
Massachusetts markets that have embraced the cannabis industry seem to have experienced favorable results. A look at the year-to-year comparison (2018-2019) using data from The Multiple Listing Service shows the median sales price in Leicester increased by 7.81%. Northampton saw an increase of 2.07%.
Only time will tell what the long-term impacts of legalization might be on the housing market. The impact on our region, along with the 10 other states that have legalized marijuana for recreational use, will be studied and scrutinized for years to come.