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.