Colorado's legalization of marijuana has brought its share of benefits to the state's economy and inspired a new generation of entrepreneurs. And for home inspectors like Ken Peter, finding evidence of "grow homes" has become a moldy daily adventure.
During one recent inspection, Peter found that the previous owners had excavated next to the house's foundation under a patio, tapped an underground electric line under the home's service entrance, and set up a separate electrical panel in the basement—all to grab free electricity to power lamps for pot cultivation.
"We ended up doing a mold test and it came back terrible," said Peter, the owner of a Pillar To Post home inspection franchise in the Boulder-Denver area. "We have done more mold tests in the last two years than we have ever done before. I can't say it is all because of marijuana, but it certainly is playing a big role."
Besides the moldy results of many a legal—and illegal—marijuana operation, inspectors say pot-growers are also creating dangerous electrical situations. At one home Peter's company inspected, residents took cables intended for the hot tub and spliced them to power their grow lamps—boosting the chances of a fire or electrocution.
But prospective home buyers aren't too concerned these days about the risks posed by the state's new pot-growing freedoms. They are too busy waging bidding wars against dozens of others in the Denver metro area—one of the hottest sellers markets in the country. And marijuana, which was legalized for recreational use in 2014, has, well, helped light up the market even more.
"Sellers are not willing to do much of anything unless it is a life safety issue," said Michelle Ackerman, a Denver-based agent with Redfin. "In the end, buyers absolutely are taking a house as-is" these days.
Buyers have "not seemed to care," agreed Scott Lunsford, a Denver-based inspector. "As long as there has not been real damage they just go, 'Oh, that is interesting.' There has become a little more acceptance" of home pot plants.
Denver's housing market has been on a tear the past three years. The average sales price in the Denver metro area was $345,000 in March, up 9.9 percent over 2015, according to Redfin. The number of active listing on the market fell 9.4 percent in March over the previous year.
Homes in Denver are spending an average of 26 days on the market, up from 19 last year. While the speed to sale may appear to be slowing, it's misleading, Ackerman said. Sellers are fielding so many offers that they are now settling into a pattern of taking the weekend to review them before responding.
"I am definitely seeing the word 'buying' taken out of the buyers' vocabulary," she said. "Everybody here is using the word 'bidding. I am bidding on a house.'"
The competition has been especially fierce for first-time buyers vying to get a house in the $200,000 to $250,000 range. Interest for one home in the Perl Mack neighborhood near Boulder reached a fever pitch earlier this month. The owners of the one-story brick ranch-style home, with three bedrooms and two baths, received 32 offers in one weekend after listing it for $235,000. Brokers showed the home 215 times in one weekend, Ackerman said.
"I can't imagine that you hear there are 28 other offers, and you want to be number 29?" she said. "But now that will be the new comp for that neighborhood."
Another four-bedroom, two-bath home in Denver, listed by Redfin, sold in March for $530,000 after 98 showings over two days. The owners received 19 offers the first weekend, a Redfin spokeswoman said.
The buying environment has been tough, especially, for a wave of millennials flocking to the state (Colorado's median age is 34), many of whom would rather live in moderately priced condos than rent apartments or buy single-family homes. The state's developers haven't been building new condo units because of a "construction defect law" dating back a decade.
The law, installed to protect consumers against shoddy construction, allows as few as two condo owners to bring a class-action lawsuit against a builder. The fear of lawsuits has led developers to stop building affordable condos and pushed them instead to build apartments, said Kelly Moye, an agent with RE/MAX Alliance and a spokeswoman for the Colorado Association of Realtors. Only 3.4 percent of home starts in 2015 were condos, down from 25 percent in 2007, according to one report.
"There has been a condo drought, statewide," Moye said.
That reality has done little to stem soaring rents, which have doubled in downtown Denver the past five years, and has kept the focus on single-family homes to serve the influx of out-of-staters, said Kyle Malnati, a commercial broker with Madison & Company Properties.
"A lot of people want to say that marijuana is solely responsible for our recovery," Moye said. "I don't think that is the case. I think it is one piece of a very big puzzle that all relates to jobs."
Indeed, Colorado has been adding thousands of jobs, especially in the tech and oil and gas sectors. Google and Twitter are building or expanding offices in the Boulder area.
Still, people in the pot industry are popping up everywhere. Redfin has worked with one client who sells security systems for marijuana businesses, another that sells software to track sales, and yet another who sells and distributes bags that are used to package weed, Ackerman said.
On the commercial side, more than one-third of the total industrial space that was absorbed between 2009 and 2014 went to legal pot growing operations, said Jessica Ostermick, director of research at CBRE, which released a study last year on the topic. In recent months, that activity has slowed, she said, as the industry has matured.
On the home front, the opportunities for Coloradans to indulge in marijuana money-making opportunities—or just to indulge—has made life interesting for agents and inspectors. The new law allows residents aged 21 and over to grow up to six pot plants in an "enclosed, locked space."
"Once a month I go into a house and say, 'Oh, there's a grow house in the basement. Let's get out of here,'" Moye said. "It used to be, 'Oh god, I am totally freaked out.' Now it is like, 'Oh, here we go again.' It has become almost standard practice now."
Inspectors encounter pot-growing residents doing everything from stealing power from neighbors; to cutting huge holes in floors, basements, through closets, attics and roofs, for ventilation purposes; to installing elaborate piping and ducting to reduce humidity and smell.
Mold is the biggest worry. Humidity is a natural outgrowth of growing the plant. When mold gets into dry walls or in roofs it can cost thousands of dollars to get rid of, Lunsford said. And there is the health concern. Lunsford said his inspectors have been finding more toxic-type molds like Stachybotrys—the infamous toxic black mold—than in previous years, though they note that flooding in the area the past two years is also a likely contributor.
Still, the risks don't seem to be dissuading many entrepreneurs and pot enthusiasts. Peter said one of his franchisees who recently inspected a "dump" in the rural Pueblo area asked him, "Why is someone buying this and not even looking at it?" The prospective buyers' only concern, it turned out, was that it had sufficient electrical service. "They are going to turn it into a grow house," Peter said.
"It's a little scary," the inspector said. "It is certainly a little bit of the Wild West out here right now."