BOULDER – It wasn’t very long ago that we only had the technology sector to thank for Colorado’s population boom. While those innovative tech-based businesses are still driving growth in our area, the marijuana industry has stolen the spotlight as of late. The media is absolutely buzzing about the ties between real estate market trends and the legalization of marijuana. It’s an expanding point of interest as more states begin to roll out new and updated policies surrounding the growth, sale and use of marijuana.
When marijuana was legalized in our state in 2012, it was an extremely hot topic. There were countless debates surrounding the effect of marijuana on our health, our lifestyles, crime levels, and the upbringing of our children. The general topic of economy was even discussed, but the idea that our housing market would be so profoundly affected wasn’t something that most of us considered. We didn’t anticipate the “green rush” to infiltrate home prices and residential inventory, but that is exactly what happened.
Other cities are beginning to follow in our footsteps. The Seattle market is presently gearing up for a similar boom, and what they are experiencing serves to reinforce the lessons we have already learned here. The beginning of marijuana-related real estate growth begins in commercial real estate. That is, once legalization is approved, we see zoning and other housing regulations change. As commercial spaces open to marijuana growers and retailers, the dynamics in surrounding neighborhoods begin to change, as well. That’s when the impact on the residential market becomes truly noticeable.
As further proof of this, three of Zillow’s Top Ten Hottest Housing Markets for 2016 are currently being influenced by the marijuana industry:
• #1: Denver, Colorado
• #2: Seattle, Washington
• #10: Portland, Oregon
It is to be expected that these larger cities would lead the way in marijuana-related housing market fluctuations. However, similar dynamics can be seen on smaller scale in other areas of the states that are making moves toward the legalization and normalization of marijuana consumption.
Another marijuana-friendly area that was not included on that top ten list was Washington, D.C. While it may not be considered one of the hottest markets, it is certainly one of the most expensive. What’s even more interesting is that, unlike other cities that we’ve mentioned here, landlords in our nation’s capital are embracing changes in marijuana legislation and using them as a chance to compete. One condo complex is even offering a marijuana grow closet as an included amenity with each of its units.
The marijuana culture that can be found in various places around the United States has very far-reaching consequences, and we are only just beginning to see how our economy is impacted by this newly-regulated form of domestic commerce. Whether you welcome these changes or refuse to roll with them, the fact remains that residential real estate will continue to feel the results of this butterfly effect for many years to come.
Michaela Phillips is the Vice President of Mortgage Lending at Guaranteed Rate, Inc., the 8th largest retail mortgage company in the country. Since entering the mortgage industry in 1994, she’s consistently been a top producer. Being a VP at Guaranteed Rate offers many advantages to her and her clients including unparalleled customer service, efficiency, and most importantly competitive rates.
By Michaela Phillips, Guaranteed Rate, Inc.