Evaluating the effects of supervised consumption sites on housing prices in Montreal, Canada using interrupted time series and hedonic price models

In 2017, three brick and mortar supervised consumption sites (SCS) opened in Montreal, Canada. Opponents argued the sites would attract people who use drugs and reduce local real estate prices.

We used interrupted time series and hedonic price models to evaluate the effects of Montreal's SCS on local real estate prices. We linked the Quebec Professional Association of Real Estate Brokers' housing sales data provided by Centris Inc. with census tract data and gentrification scores. Homes sold within 200 m of the SCS locations between 1 January 2014 and 31 December 2021 were included. We adjusted for internal (e.g., number of bed/bathrooms, unit size) and external attributes (e.g., neighbourhood demographics), and included a spatio-temporal lag to account for correlation between sales. For sensitivity analysis we used site-specific dummy variables to better account for unmeasured neighbourhood differences, and repeated analyses using 500 m and 1000 m radii.

We observed a price shock after the opening of the first two SCS in June 2017 (level effect: -10.5%, 95% CI: -19.1%, -1.1%) but prices rose faster month-to-month (trend effect: 1.1%, 95% CI: 0.7%, 1.6%) after implementation. Following the implementation of the third site in November 2017 there was no immediate impact (level effect: 2.4%, 95% CI: -10.4%, 17.0%) but once more prices roses faster (0.9%, 95% CI: 0.4%, 1.5%) thereafter. When we replaced neighbourhood attributes with a site-specific dummy variable, we observed the same pattern. Sales' prices dropped (level effect: -9.6%, 95% CI: -15.0%, -3.8%) but rose faster month-to-month (trend effect: 0.9%, 95% CI: 0.6%, 1.2%) following June 2017's SCS implementations, with no level effect (4.9%, 95% CI: -7.3%, 18.6%) and a positive trend (0.9%, 95% CI: 0.5%, 1.3%) after November 2017's SCS opening. In most 500 m and 1000 m radii models, there were no immediate shocks following SCS opening, however, positive trend effects persisted in all models.

Our models suggest homes sold near SCS may experience a price shock immediately post-implementation, with evidence of market recovery in the months that follow.