While this article was written with a focus on California, this also applies to Washington which is experiencing a severe drought as well. The first part of this article talks about how drought may affect real estate and the second part has tips to help you in conserving water.
It is not unusual for weather to play a role in the real estate scene. For example, Hurricane Katrina had an impact in the Gulf area; extreme flooding and tornados can wipe out neighborhoods and towns The real estate picture in the West may change again as California, the most populous state in our country, faces an uncertain future in terms of their “liquid assets” by way of severe drought.
According to the California Legislative Analyst’s Office, California has the 8th largest Gross Domestic Product (GDP) in the world. Surprisingly, agriculture (crops and livestock) only account for about 2% of that GDP, yet agriculture consumes about 80% of the water available.
As the drought weathers on, there is no doubt that the agriculture industry is going to have to make some adjustments which could have an effect on real estate markets near and far. For example, if water-thirsty crops or orchards (such as almonds) are plowed under to make way for more water-efficient crops, this may or may not affect labor which will affect real estate in the surrounding area, possibly causing laborers to migrate to find work which could in turn affect local businesses who rely on business from that population.
The other 20% of consumers are municipalities, industry, companies and residents. While agriculture shifts gears, much of the burden of water conservation is on this 20% which may very well have a trickledown effect. Water rates are rising in many areas for households and businesses that not only consume an excess of their allotted amount, but for everyone in order to encourage conservation. Some local water agencies are planning on water rationing. These restrictions may just be enough to cause some individuals and businesses to make a move and migrate to climates where drought is not as much of a concern.
In addition to some expected migration, California is also leading the way on water-recycling and retention efforts including home improvements which may spread across the country in the coming years. Here are some innovations to keep your eyes on:
- Low-Flow Plumbing Expansion – According to Kiplinger, California became the first state requiring older homes, apartments, and offices to replace old toilets, urinals, showerheads and faucet with low-flow models. Additional residential innovations may be around the corner.
- Graywater Systems – Water recycling in the shower, dishwashing, laundry, and even rainwater may become more commonplace requiring adjusted plumbing and cisterns.
- Drought-resistant landscaping – This is already required for new construction in certain areas and some municipalities are offering incentives for homeowners to install plants and hardscapes that do not require as much water.
Almost everyone will be affected by the drought in California whether by paying more at the grocery store or finding they have a new neighbor hailing from the Golden State.
Agents, you can also take a look at the US Drought Monitor here: http://droughtmonitor.unl.edu/