If you have been alive these past few weeks, you are aware that many states were propositioning to legalize Marijuana during the election. Whether it was the voters considering the positive impact a tax on marijuana could have on the economy, or just the stoners having their first legal day in court...Marijuana was legalized in four states: California, Massachusetts, Nevada and Maine. Adding to the four states where marijuana is currently legal for recreational use, cultivation, and sale - Colorado, Alaska, Washington and Oregon - creating a total of eight states. We all know how this legalization will affect the Willie Nelson's of the world....but, how will it affect your property's value? If you are lucky enough to live in one of, which I like to call, "the green eight", then, you will be excited to know that the legalization of marijuana could give your local home prices an all-time new high. And, here's how:
The Basic Law of Supply and Demand
Let me start by educating you on the basic elements of value when it comes to real estate. There are four elements that help appraisers and the such determine what your property is worth in today's market. They are demand, utility, scarcity and transferability. Today, I am going to focus on the "demand" element of this equation.
Let me take a moment to thank my ECON 101 professor for the hours he spent trying to teach us supply and demand. Thank you Professor Randy Goodwin.
OK, so, what exactly is this demand element all about? Well, basically, when all of the smoke clears...those cannibus enthusiasts are going to be packing up their belongings and making a beeline straight for one of the green eight. That, my friends, will create a whole bunch of potential homebuyers in those markets. This, in turn, produces the "demand."
Now, for the supply. Let's just say that the amount of houses that are currently on the market will in no way be enough to satisfy this homebuyer frenzy. Basically the number of houses on the market, the "supply" will be way less than the number of buyers. Creating a high demand for homes and buyers willing to pay premium prices. So, you know that house right next to the sewer plant that has been on the market since the beginning of time? Well, with a high demand and a low supply, that house could have multiple offers and sell for way more than it's worth in no time at all.
You don't believe me? Well, let's look at the facts. Let's take Colorado for example. The law was passed to legalize marijuana in 2012, and retail began in 2014. According to statistics, home prices tend to be higher in the 60 or so cities and towns where marijuana is legal, compared to the more than 200 where it is not. The mediuan sold price of homes in the second quarter of 2016, was $302,500, according to the realtor.com analysis. That is a whooping 13% highter than the in the cities where marijuana is legal, where the median sold price is $267,200.
So, in conclusion, I strongly believe that the new legislation passed to legalize marijuana use and cultivation around the country will lead to a potential huge increase in property values. If you live in one of the "green eight" states, and are considering selling your home, be prepared to witness an increase in property's value.
And, no...I'm not blowing smoke.
If you are interested in finding a "marijuna-friendly" Real Estate Specialist that is open-minded, knows the laws and is an expert in their market, check out www.MoveHereGrowHere.com. You can also request a FREE property valuation of your home in today's market.
Real Estate Specialist
First United Realty