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Realtors warn on pot
Plan on growing marijuana at home? Well, there goes the neighbourhood, realtors say.
Canada’s real-estate industry is coming out in force, warning about what it sees as the dangers of legal home cultivation.
They include, among other things, the threat to home prices, which may pale in comparison with other dangers but nonetheless could be the latest hit to a sector already trying to come to grips with rising mortgage rates and regulatory measures meant to cool real-estate markets.
The Canadian Real Estate Association and others aren’t complaining about the coming legalization of recreational marijuana – God knows they may need some themselves as their industry takes a hit – but rather the issues surrounding home cultivation.
“We’ve heard from homeowners and tenants across the country who are worried about living beside grow-ops,” CREA president Barb Saukkau said in a statement this week as the group made its case to a Senate committee hearing in Ottawa.
“What does this do to their home value?” she added. “Will this increase their rent? How safe will their kids be? Will their quality of life diminish because of the prevalence of drugs in their neighbourhood? These are all concerns that need to be considered before the passing of Bill C-45.”
To be clear, the group has many concerns beyond the question of property values. In his speaking notes, CREA chief executive officer Michael Bourque, pleading for an amendment to the bill, cited the threats of fire and nasty stuff such as mould, spores, fungus, pesticides and fertilizer, which can affect air quality and health.
He cited not only homeowners but also landlords, who would pass on the costs of property damage to tenants.
Canadians would be allowed to grow as many as four plants in their homes, which may sound “moderate,” Mr. Bourque said.
“But the legislation doesn’t limit the number of crops or the size of each plant,” he added. “With proper irrigation and lighting, an individual could grow very large plants and harvest three or four crops a year.”
(I’m sure some Canadians are thinking: I should be so lucky.)
“Yields could reach over five kilograms a year,” Mr. Bourque said, seeking a moratorium on home cultivation until national regulations are in place.
“At that level of production, four plants have the potential to cause damage to a dwelling, with associated health consequences [for] residents.”
The Ontario Real Estate Association went further, calling last month for protection for home buyers from getting into a former grow-op.
It wants illegal grow operations to be deemed unsafe, plus training for home inspectors so they can spot telltale signs. And, oh, yeah, reducing the number of plants that can be grown to just one in units of 1,000 square feet or less.
The Ontario group is running a campaign that, among other things, tells you what you should look for, including mould, a lot of roof vents, freshly painted window frames, weird wiring or indications that someone has fiddled with the hydro meter. My favourite: a dented front door, from where the police rammed it.
There’s another side to the story when it comes to the impact of legal marijuana on home prices.
A study by James Conklin of the University of Georgia, Moussa Diop of the University of Wisconsin-Madison and Herman Li of California State University, which looked at what happened when medical marijuana outlets converted to retail in Denver, found this:
“We find that after the law went into effect at the end of 2013, single-family residences close to a retail conversion (within 0.1 miles) increased in value by approximately 8.4 per cent relative to houses that are local slightly farther from a conversion (between 0.1 miles and 0.25 miles) in 2014, compared to the previous year.”
To give you a sense of how this industry has been hit, Tuesday’s Statistics Canada report on gross domestic product in February showed a second consecutive decline in activity in the real estate and rental and leasing sector.
The dip of 0.2 per cent followed a drop of 0.5 per cent in January, marking the first time since mid-2010 that the industry has shrunk two months in a row.
“The output of offices of real estate agents and brokers fell 7.9 per cent in February after a 12.9-per-cent drop in January,” the federal agency said.
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What to watch for today
Just about everyone expects the Federal Reserve to hold the line this afternoon after raising its benchmark interest rate target by one-quarter of a percentage point in March.
“To be sure, interest rates are likely to grind higher, but the ‘gradual’ pace expected probably means not at back-to-back policy meetings,” said Royal Bank of Canada assistant chief economist Paul Ferley.
“Attention will be more focused on indications of the likely pace of future hikes,” he added.
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