All Forum Posts by: Kelly Sennholz

I think science has a role in our lives. 

Mark  It's science. Using trends and known data. 

This is part of why we now have 10 day weather forecasts as our ability to predict improves over time with more data. Incidentally, the U.S. system is far less accurate than the European system and many stations/sites have gone to using their data. And again, they are talking about CLIMATE, not WEATHER. 

The science:

From this article:

"Up to $10 billion of coastal property could be at risk from flooding by 2050 because of rising sea levels. By century’s end, that number will increase to $19 billion, with a one in 100 chance of a $26 billion risk, concluded researchers"

[The question being, how quickly will the wealthy respond to this and will that response be uniform, i.e. all at once]

"By 2100, Southern Californians will suffer temperatures exceeding 95 degrees Fahrenheit for more than 200 days of the year, researchers found. In the Sierra Nevada, meanwhile, the number of days with below-freezing temperatures will fall by 90 percent. The loss of snowpack will mean a permanent water crisis."

http://www.takepart.com/article/2015/04/03/high-co...

This is the kind of problem which is going to snowball rapidly. And yes, people don't care and don't see a problem until it affects them (sadly). But when it hits their pocket book with higher water rates and higher rents, it will happen quickly. If water bills begin reaching 10-15% of citizen's take home pay, this will speak loudly. And yes, California needs to act quickly on doing away with grass lawns. 

Bob,

I understand how you would think that way. However, that is a very human-centric thinking which is problematic.

Here's a saying I heard this week:

If insects were destroyed, all animals and humans would be quickly extinct.

But if humans were destroyed, the rest of the earth would blossom. 

We truly have to learn how to operate as a PART of the environment. Or we will become quickly extinct. We are in the early stages of one of the largest mass extinctions in history. A short term solution to a water problem is not a good reason to accelerate that. We have to become more mature in our problem solving.

From today's news release:

For the first time in state history, the Governor has directed the State Water Resources Control Board to implement mandatory water reductions in cities and towns across California to reduce water usage by 25 percent. This savings amounts to approximately 1.5 million acre-feet of water over the next nine months, or nearly as much as is currently in Lake Oroville.

To save more water now, the order will also:

-Replace 50 million square feet of lawns throughout the state with drought tolerant landscaping in partnership with local governments;

-Direct the creation of a temporary, statewide consumer rebate program to replace old appliances with more water and energy efficient models;

-Require campuses, golf courses, cemeteries and other large landscapes to make significant cuts in water use; and

-Prohibit new homes and developments from irrigating with potable water unless water-efficient drip irrigation systems are used, and ban watering of ornamental grass on public street medians.

***

Might be an opportunity to take advantage of programs to re-do landscaping, etc

Haaaa!!!  :)

Lovely place, Matt.

Interesting discussion.

A couple of points:

1. When I got ready to sell my properties, knowing a downturn was inevitable, people were telling me I was crazy, that it was the hottest market in history and nothing would happen. But the FACTS were all there. People just didn't want to see it.

2. Bill's points about the cost of desalination are noteworthy. Can it be done? Yes. But not without having all water at possibly 3 times the cost of bottled water (just a wild guess) and huge energy and infrastructure demands. It is the cost which will drive people out.

3. Re: Colorado water. It is a VERY hot issue here and I do not think a drop of Colorado water will be sold. There are large areas of the state which are basically uninhabitable due to water issues. 

4. If businesses (read: Jobs) find that the cost of water is too prohibitive and they move out of state, that will definitely affect not only the population, but all assoc businesses.

5. My comparison with Florida was only for the purpose of showing how rapidly this can happen, rather than a slow decline. The insurance for hurricanes has been under assault for decades, but a trillion dollar hurricane, one time, could change everything. A few miles of affected beach may be quite different than miles and miles, states and states, of homes. I feel this is part of the reason Florida has not recovered more quickly. People like myself, who have lived through multiple hurricanes are well aware of the challenges. 

I'm not trying to be negative (because I am not) and I fully understand that some of this may be industry related news. But there have been many years ripe with scientific information on this, and the fall in water tables is surpassing all of the prior estimates.  Clearly, this will be in various areas around the state and not all of CA.

I also think modern people have become somewhat immune to the value of water, as for 100 years it just comes out of the pipe.

Benjamin Franklin said, "When the well is dry, we know the value of water".  

My only reason for bringing this up was to point out how a large exodus from California due to the water squeeze could definitely affect all areas of the country, due to the large population. 

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.