Where will Californians Live??

[Kelly Sennholz]

A recent post on BiggerPockets indicated the imposition of a new $500 per day fine in California for using potable water for ANYTHING but regular in-house use. No one at all commented on this. 

This is a serious statement that water is scarce. $500 fine. Per day.

Headlines indicate:

Water stores in California will last only ONE YEAR.

Many properties are having collapse of earth due to usage of groundwater. This is called subsidience. ""The rates of subsidence we are seeing are about a foot per year in some areas. They are just phenomenal," said John Izbicki, a research hydrologist with the US Geological Survey." In other words, people's property is sinking into the ground, sometimes at rates of a foot a year. A FOOT a year. Think sewer line, water line, sink holes.

Businesses which use water will be increasingly stressed by increased costs and lack of availability of this key component of their business. They will be incentivized to leave CA. Protests at, I think, Hershey bottled water plant already occurred. 

Water reserves are NOW being tapped which contain rainwater which fell to earth 20,000 years ago (during a much rainier time of history) and is basically irreplaceable and being used at massive rates of depletion.

The area of main agricultural activity in our country is being affected: "The pace of depletion has jumped dramatically since 2000. And Konikow identified one area that appears to have the most serious depletion problem in the nation—California's agricultural powerhouse, the Central Valley, especially its more arid southern portion."

Here is one article:

http://www.latimes.com/opinion/op-ed/la-oe-famigli...

My questions are: 

What implications do you think this will have on real estate prices, both in CA and rest of country?

What is your estimate of lost economic strength due to high water prices?

Do you think this is a short term problem or a long term problem?

My experience, (and economic research), indicate changes like this and those which will inevitably happen on the coast of Florida, do not happen gradually, but move in a "tendency" until accelerated by an incident. For instance, if a massive hurricane hits Florida and the Feds remove hurricane insurance (which they will ultimately have to do) all of the homes along the coast will become valueless instantly due to inability to insure. Likewise, I think one incident will hit California, bringing the entire water problem to its proper significance.

Thoughts?

By the way, it was easy to see the coming housing crisis of 2008-10 with similar news stories. I sold 6 months prior to the downturn. Being able to put economic trends into global or national perspective is a massive part of being in real estate.

[Account Closed]

Originally posted by @Kelly Sennholz:

A recent post on BiggerPockets indicated the imposition of a new $500 per day fine in California for using potable water for ANYTHING but regular in-house use. No one at all commented on this. 

This is a serious statement that water is scarce. $500 fine. Per day.

Headlines indicate:

Water stores in California will last only ONE YEAR.

Many properties are having collapse of earth due to usage of groundwater. This is called subsidience. ""The rates of subsidence we are seeing are about a foot per year in some areas. They are just phenomenal," said John Izbicki, a research hydrologist with the US Geological Survey." In other words, people's property is sinking into the ground, sometimes at rates of a foot a year. A FOOT a year. Think sewer line, water line, sink holes.

Businesses which use water will be increasingly stressed by increased costs and lack of availability of this key component of their business. They will be incentivized to leave CA. Protests at, I think, Hershey bottled water plant already occurred. 

Water reserves are NOW being tapped which contain rainwater which fell to earth 20,000 years ago (during a much rainier time of history) and is basically irreplaceable and being used at massive rates of depletion.

The area of main agricultural activity in our country is being affected: "The pace of depletion has jumped dramatically since 2000. And Konikow identified one area that appears to have the most serious depletion problem in the nation—California's agricultural powerhouse, the Central Valley, especially its more arid southern portion."

Here is one article:

http://www.latimes.com/opinion/op-ed/la-oe-famigli...

My questions are: 

What implications do you think this will have on real estate prices, both in CA and rest of country?

What is your estimate of lost economic strength due to high water prices?

Do you think this is a short term problem or a long term problem?

My experience, (and economic research), indicate changes like this and those which will inevitably happen on the coast of Florida, do not happen gradually, but move in a "tendency" until accelerated by an incident. For instance, if a massive hurricane hits Florida and the Feds remove hurricane insurance (which they will ultimately have to do) all of the homes along the coast will become valueless instantly due to inability to insure. Likewise, I think one incident will hit California, bringing the entire water problem to its proper significance.

Thoughts?

By the way, it was easy to see the coming housing crisis of 2008-10 with similar news stories. I sold 6 months prior to the downturn. Being able to put economic trends into global or national perspective is a massive part of being in real estate.

 Kelly, where do I begin.  

Do people not realize how huge California is?  Where I live, average rainfall is 60" per year.  Way up north here on the coast.  There is no water shortage here.

Personally, I think all of the doomsday garbage is being promoted by people who want to put in desalination plants, and backed by the huge agriculture businesses here.  Water has always been a problem in CA.  And the Central Valley never had enough water to do massive agricultural projects.  So, do we continue to make huge congolmerate agriculture businesses' profits the state's problem?  Kinda like they're too big to fail, right?  

We have been diverting water to them forever.  Since the day of the railroad tycoons after the gold rush.  Ever heard of Hetch Hetchy?  Way back then, big money in CA dammed a beautiful valley in Yosemite, to provide water to these "real estate investors" who envisioned huge money by being able to send more water to San Francisco.  Then the Central Valley project diverted water to the Central Valley back in the 1930's.  

Did you know that there are rice paddies in the area around Sacramento?  Big business. Yep, rice is still grown in CA, by diverting water from the Sacramento River.

Now, who is promoting this as a crises as if ALLLLL of California will be crawling on there bellies within one year whispering water....water.......water......?

Look at the article again.  The fine is for use OTHER than normal household use.  What does this translate into?  It won't affect the normal lives of Californians.

Does EVERYONE in Colorado smoke pot?  Are ALL real estate prices equal to those in Aspen?  Are there any areas in Colorado where water will always be an issue, and other where it won't be?

Can people really be this gullible?  Sheesh.  It rained on me again today while walking my dog.  So, where will ALLLLL the people of California live?  Uh, California?

Basically, the issue is that there may not be enough water to continue growing rice - as if that was ever a good idea.  Or to grow crops that required enormous amounts of water.  Look into almond growing.  They use an enormous amount of water, and yet, growers are still planting new orchards of almond trees in CA, because the profits are still there, especially for the Asian market.

What we need to do is quit subsidizing ag business, and limit how much water the growers who are putting in new almond groves can use.  Or the giant rice growers.  

Nope, there isn't enough to do all that.  But, should that be my problem?  Why should I fund these big operations by not being able to water my lawn (if I had one) because some idiot who wants to sell almonds to Japan, gets away with using all that water?

So, do we really need to desalinate the ocean?  Heck no!  We need to tell people they can't grow almonds or rice in CA, for starters.  Or make THEM pay for the darn desalination plants.  

Also read up on how these rich ag companies get government subsidies.  That will open your eyes, too.

It just amazes me how people don't think for themselves when they watch the news.  Where's the common sense factor?  Doesn't anyone think, "Hey, really?  The entire state is without water?  Does this problem miraculously end at the Oregon or Nevada borders?

Ugh.  Okay, rant over.