Could the absence of a recreational marijuana dispensary network be keeping DC housing prices in check?
Over a year ago, the Economic Inquiry journal released an analysis which showed that home values increased by 6 percent in Colorado following the state's creation of a legal cannabis retail market. A CATO Institute report noted that values for homes within 0.1 miles of recreational dispensaries increased 8.4 percent compared with houses 0.1-0.25 miles away. And a recent study by Clever Real Estate corroborates those findings and examines other legalized markets, the DC housing market in particular, for any indicators of legalization-related home value fluctuations.
"From 2017 to 2019, cities where recreational marijuana is legal saw home values increase $6,337 more than cities where marijuana is illegal," the report concludes. A commonality across states where recreational cannabis was legalized is that, compared to states without legalization, there was also a price surge in the two years immediately afterward, prior to any retail outlets being licensed.
While the Clever study found that there is typically a link between legalization of recreational marijuana and rising home prices, that effect seems to have been restricted to the immediate aftermath of legalization in DC. Because there is little difference in the home price shifts between states which have legalized medical cannabis and which have not legalized cannabis at all, it seems that the lack of a price surge in DC may be due, in part, to there not being a way to legally procure recreational marijuana from a dispensary here.
"The lack of a regulated market has resulted in slower growth for the D.C. area compared to the national average," the study concludes. "If cannabis sales aren’t legal, money won’t flow back into the market, and housing prices won’t respond over the long term. Investors might initially jump at the opportunity, but until a legitimate market is established, true market gains can’t be realized."
This article originally published at https://dc.urbanturf.com/articles/blog/is-lack-of-recreational-cannabis-dispensaries-keeping-dc-home-prices-in-che/15250.
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