High isn’t just a word to describe the residents of states with legal recreational marijuana use. Some say that legal marijuana caused the housing markets in these states to be blazing hot with high home values. Using Colorado as an example, during the first quarter marijuana was made legal, home values jumped by 3% already. So, let’s rewind back to 2012 to when it all started: Colorado and Washington became the first two states to allow marijuana use–medicinally and recreationally. The controversial topic swarmed the media as these states quickly raked in the green, and we’re not just talking about the marijuana here.
Fast forward again to present day 2018, 29 US states (over 50%) now have legalized pot medicinally and/or recreationally:
Many experts use Colorado to watch and record the trends of marijuana legalization and its affect on the economy throughout the last 5-6 years. Since Colorado was the first state to start the marijuana legalization trend and experts have had ample time to study and record data, what have they found?
What the facts say…
On the contrary…
While it all seems like American’s marijuana dreams have come true, some say the legalization of marijuana isn’t as dreamy as it may seem. Though the marijuana industry has brought millions in revenue for states that have legalized, many experts predict that our economy might not be ready for such a booming industry, especially the housing market.
Will the marijuana industry cause the next housing bubble?
Using Colorado as the prime example, a recent report by Freddie Mac has labeled the state of Colorado as one of the least affordable, and here’s why:
- Affordable housing for Colorado residents making less than half of the median income decreased by 75% between 2010 and 2016
- Colorado home prices are still on the rise and now almost comparable to California and New York
- Colorado rents are outpacing the national average
- The median rental price for a 1-bed apartment increased by 22.4% by 2014–2x the national average–in 2014, just 2 years after the legalization of medical and recreational marijuana
Ismael Guerrero, the director of the Denver Housing Authority, was even shocked of how quickly Colorado became unaffordable: “Before we’ve realized it almost, we’re a high cost housing city … We’re new to that club, but we’re clearly there, because the wages haven’t kept up,” he said.
Currently, Colorado natives make up less than half of the state’s population. With more transplants moving there and the demand for homes outweighing supply, rents and home prices are soaring excruciatingly high–and too high for wages. Will this cause a housing bubble in Colorado? What will happen to other states as more consider and ultimately choose to legalize marijuana?
*Platinum does not promote or offer any opinion on the legalization of marijuana.