Will the Drought Impact the Bay Area’s Real Estate Market?

Will the drought in California, which is weighing heavily on all of our minds as the water from the faucet starts to taste a litter funkier every week, have any kind of impact on real estate prices? There are several possible scenarios:


  1. The price of water continues to go up, as it becomes a scarcer resource. As the price of water goes up, the cost of that increase is passed on to home- buyers and home owners. Increased water prices may:
    1. Impact the amount and price of new construction
    2. Impact the cost of home maintenance – the same way a home buyer is attracted to home that has solar panels because of possible lower electrical bills and energy efficiency, so it will come to pass that homes with grey water systems are also more attractive and expensive.
  2. As the drought drags on year after year, this will force home-owners and home builders to install newer technologies to save and recycle water (i.e gray water systems, rain catch systems, etc). This environmental upgrade will at first increase the price for homes until it becomes expected.
  3. Point of sale ordinances that have to do with water use and efficiency? Just like the sewer lateral ordinance forces buyers and sellers to upgrade aging sewer connections, there may be water ordinances that ensure that either a buyer or a seller will take on the cost of making a home water efficient.
  4. With increased water prices, landscaping will become more and more drought resistant (check out our pinterest pageDrought for some cool drought resistant landscaping tips).
  5. With decreased water supply, the price of food (most of which is grown in California) will go up. More of a family’s income will need to be spent on food, creating less disposable income, less capacity to save, and ultimately less buying power in the real estate market.

Although cyber space seems to disagree with me, I think the drought will have significant impacts on both home prices in the Bay Area and buyer’s capacity to purchase.

We all need to do our share in saving water now and supporting the creation of systems that will ensure future droughts will have less impact.

To do your part, check out this great website: 100 Ways to Use Water Wisely.


And let me know what you think…will the drought impact real estate prices in the Bay Area?