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7 Ways The Water Crisis Will Impact California Real Estate

The California water crisis is in full swing. Dramatic water use reductions have captured media attention and daily conversation. So how will the crisis and new regulations impact California real estate?

California Governor Jerry Brown has ordered mandatory, statewide water restrictions. New restrictions are set to reduce water use by 25% from 2013 levels. This not only impacts individuals, but municipalities too. So what will these limitations mean for the future of California’s property markets?

• The Scenery: According to Governor Brown: “the idea of your nice little green grass getting water every day, that’s going to be a thing of the past.” This will result in a very tangible change in the California landscape. Scenery will change. Public property will visually change, and the landscaping of many private properties will have to change too. The extent to which it changes may depend on where you live, as use restrictions vary by area. But done well; this will ultimately be a great move for everyone. If it means conserving water, that’s a good thing. It may take some getting used to. But we’ll be thankful for it in the long term. It may even spur economic activity.

• Cost of Utilities: The desperateness of these new measures clearly signals that water, and other utility costs are only going to rise. Electricity and other conventional utility prices are going to rise too. And it is only likely a matter of time before oil and gas prices are surging again. How much they rise, and how much of these utilities are even available may depend on where people live as cuts are not even everywhere. Overall living costs in California are going up, but thankfully the economy is too. As smarter solutions are developed and adopted, utility costs will take less of a bite out of housing. The financial gains of innovative California companies helping in these areas will also work to keep housing affordable.

• Available Land: The battle to control water is going to impact California land. There will certainly be more battles over the flow of water through various properties. There may be land seized to secure water for various agencies, or even to build desalinization plants. The demand for land and water could even limit how much land is available to be purchased and developed into housing. On the bright side; this should increase the value of real estate that individuals do own.

• In-Demand Home Features: The water crisis will also continue to change the home features which are in greatest demand. Wells, and other self-sustaining water supply features will be in higher demand. Rainwater harvesting is another feature which may be integrated into more California homes and properties. These can be ground or rooftop units. They can supply water for irrigation or to cover all interior household needs. Some may argue that it doesn’t rain much in California, but everything helps. These rainwater harvesting systems can be very affordable. It is also critical to note that groundwater and wells aren’t actually considered a renewable and sustainable source of water. Harvesting rain is more sustainable.

• The Attention & Value Placed on other Sustainable Home Features: The size of this crisis and new water cuts is sure to increase awareness of the need, and benefits or all types of sustainable home features. Solar, sustainable gardens, and other features and practices will increase in visibility and value. This can make them a smart addition to California homes. These features may come with a premium and make some housing more expensive in the short term. But over the lifespan of a home they can be well worth it.

• Southern California Rebates: Southern California has said it will help homeowners out with the transition by providing rebates. Rebates are to be provided to SoCal homeowners for replacing grass with more sustainable landscaping, as well as appliances which use less water.

• Where People Live: National Geographic says California’s population has doubled to 40 million. Like Las Vegas, NV, and other dry areas, some places just don’t have the water resources to sustainably accommodate so many people. That doesn’t mean there isn’t room for a growing population in Southern California, but it does mean they’ll have to think about where they live, and how they live in order for it to be more sustainable. Perhaps new home buyers will be drawn to certain, better watered areas. Others may spread out where there isn’t as much competition for both surface and groundwater.

Summary

The water crisis will reshape California, both now and over the long term. Those with land and water should be in line to see their wealth grow. This is not a challenge that is exclusive to CA. Renters and home buyers all over the U.S. will be wise to pay attention to what is happening here so that they can get ahead of the curve.