Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a university professor in the University of Toronto’s School of Cities and Rotman School of Management, and a distinguished fellow at New York University’s Schack Institute of Real Estate.
Suburban and rural areas can hide facilities for methamphetamine production. When a clandestine lab gets busted, property values in the neighborhood take a hit.
The TV show “Breaking Bad” made suburban meth dens just as iconic as the urban corners that have become a cultural shorthand for drug dealing on television. As the adventures of Walter White and Jesse Pinkman showed us, methamphetamine can be more easily manufactured domestically compared to other street drugs.
Over the course of the series, partners White and Pinkman graduate from a suburban home with a school chemistry set to a mobile home in the middle of the New Mexico desert to a top-of-the-line meth manufacturing plant hidden inside a laundromat. But where are these kinds of facilities located in real life—and how do they affect the communities surrounding them?
Between 2002 and 2014, more than 118,000 meth labs were discovered across the United States. The DEA has found meth labs in every single state. But, there is a meth belt of sorts that runs through the Rust Belt, especially Ohio, Michigan, Indiana, Illinois, and Iowa, and down into the adjacent states of Kentucky, Missouri, and Tennessee, plus the Carolinas, Florida, and Oklahoma. Meth abuse takes an exacting toll on its users and on society more broadly. About 400,000 people were estimated to be addicted to meth in 2009 and it is the primary cause of an estimated 900 deaths a year.
Back in 2005, a detailed RAND study estimated that the annual financial toll from methamphetamine use was approximately $23.4 billion. Now a new study by Bern Dealy of the FDA and Brady Horn and Robert Berrens from the University New Mexico, published in the Journal of Urban Economics, takes a detailed look at one aspect of that cost: The impact of clandestine meth labs on property values.
The study uses numbers from the Oregon Health Authority’s Clandestine Drug Lab Program (CDLP), a special program that collects detailed data on meth lab discovery and decontamination. It covers 133 meth labs found in Linn County, Oregon, between 1996 to 2013. To gauge the effects of these labs on the community, the researchers looked at roughly 30,000 housing sales between 1999 and 2013, using data from the Linn County Assessor’s Office.
The map below shows the location of meth labs found in Linn County from 1996 to 2013.
The study compared houses within a 0.1 mile radius of a meth lab and houses between a 0.1 and 0.3 mile radius of a meth lab. It looked at the effect of a meth lab on housing prices both when it was discovered and after decontamination and treatment. According to the authors, Linn County is a useful location to chart the location and effects of meth labs: It’s an exurb of Portland, located on Interstate 5 about an hour’s drive from the city, that includes 15 incorporated cities, with three large cities of varying population levels and demographics.
Not surprisingly, the meth labs were located in less desirable and more distressed parts of the county. The average price of a home where a clandestine meth lab was discovered was $144,000 (adjusted for 2013 inflation) while for the entire sample, the average value was approximately $160,000.
Meth labs take a significant bite out of an area’s property values, according to the study. Discovery of a meth lab was associated with a 6.5 percent reduction in the values of adjacent properties, on average. This was the case even after accounting for the fact that meth labs were located in less-desirable areas to begin with. The average home affected by a meth lab saw a decline of approximately $9,315 in 2013 dollars in value.
Since there were roughly 18 homes within a 0.1 mile radius of these meth labs, the study estimates that each meth lab causes a reduction of approximately $170,000 in home values. (Given that meth producers might choose cheaper housing to begin with for a lab, the study compared the change in property values after discovery to similar properties that did not have a meth lab). The chart below shows the average change in home values two years before and two years after the discovery of a nearby meth lab. The dotted line represents the value of homes closest to the discovered lab, while the solid line represents the control group.
The good news, if you live next to a meth lab, is that property values rebound once the labs are treated and decontaminated. The average home bumped up 5 percent, or approximately $7,216, and collectively all nearby properties regained about $131,000. (This is excluding the meth lab itself, which would see an even bigger increase in value after decontamination.)
Casting its net a bit more broadly, the study looked at the effect of meth labs on sales of 1,806 homes within 0.1 miles of a meth lab and 6,129 sales between 0.1 and 0.3 miles. Proximity to a meth lab produces a price decline of 5.7 percent after discovery, with prices rebounding by approximately 3.4 percent after decontamination. In other words, decontamination offsets the negative impact of a meth lab by about 75 percent.
Decontamination isn’t cheap, however. Removing residual contamination, chemical testing, deep cleaning, removing carpets and walls, ventilating, vacuuming, and generally fixing up a single meth lab costs an average of $25,000—and that estimate comes before the cost of providing law enforcement, environmental experts, public health, and social service providers. Meanwhile, the cost of Oregon’s CDLP program is roughly $75,000 a year. Given more than 100,000 meth labs have been discovered across the United States, the numbers adds up quickly. Less than half of states have laws requiring decontamination, and few provide financial support for cleanup.
In most places, meth labs can trigger an unmitigated downward spiral in property values in already distressed communities, further exacerbating their decline. To put their community impact in perspective: An untreated meth lab’s proportionate drag on nearby property values falls somewhere between a hazardous waste site citywide or the mile-radius effect of a typical landfill, alongside other undesirable facilities. But without the Superfund-sized scale problem, it’s unsurprising that the small effect can add up.