BOSTON – Nov. 7, 2018 – Nearly 10 percent of Realtors® reported an increase in property values located near marijuana dispensaries, according to a new report discussing the impact of marijuana legalization on residential and commercial real estate.
The National Association of Realtors (NAR) released the report, “Marijuana and Real Estate: A Budding Issue,” during the recent 2018 Realtors Conference & Expo.
The report surveyed Realtors in states where marijuana is legal. It asked them about their interaction with marijuana and the real estate sector, and a panel of real estate research, policy and marketing experts discussed the results. The report subdivided results by states that legalized marijuana for both medical and recreational use, and ones that allow it for medical use only.
“Members in states where marijuana has been legalized to some extent have been asking us to conduct this kind of research because it is directly affecting their business,” said Jessica Lautz, NAR director of behavioral and demographic trends. “Whether it’s influencing property values, the number of all-cash purchases or demand for various types of commercial properties, it’s clear that this billion-dollar industry is making an impact.”
According to the report, more than three-quarters of members in states where marijuana is legal in some form had not seen a change when asked about the impact nearby dispensaries have on residential values of properties. However, one-tenth of members saw an increase, while 12 to 14 percent reported a decrease in values.
One-fifth of commercial practitioners reported an increase in property value from being near a dispensary, and even more reported an increase (nearly one-quarter) from being near growing land.
Grow houses
Among residential members who had sold a grow house, a majority said that they had no difficulty making the sale (73 percent in prescription-only states, 67 percent in both recreational and prescription states). Nine in 10 of those same respondents said they had no issues surrounding the home’s title when selling the grow house; seven in 10 disclosed that the home was used as a grow house at sale.
However, it is clear that some customers still feel uncomfortable having marijuana businesses in their communities. “While less than 10 percent of members indicated there is an increase in actual crime around dispensaries, 16 to 18 percent indicated that there is an increase in the perception of crime,” said Lautz.
Mortgage challenges
The panel also discussed the legal implications facing property owners when it comes to leasing to marijuana-based businesses. Since banks cannot be FDIC-compliant and take money from marijuana operations, they face Civil Asset Forfeiture, which allows the government to seize property and finances that have been involved in certain criminal activities. In other words, the federal government could potentially seize a property leased as a dispensary or a grow operation.
“Have they done it? No,” says Megan Booth, director of federal housing and commercial policy. “Do we think they are going to do it? No. But they could if they wanted to.”
The 2018 Marijuana and Real Estate survey was sent through email in September 2018 to a random sample of 75,000 NAR members who practice residential real estate and 62,000 NAR members who practice commercial real estate.
© 2018 Florida Realtors®
