No matter the property you own or presently invest in, the future will change. Many of the factors that will affect the investments you make, and ultimately the properties you purchase will be affected by issues yet unknown.
That the drought in California is one of the known factors may be one of the only good things coming out of this otherwise disastrous water situation. Everyone involved with California real estate, in Contra Costa and Alameda Counties, as well as across the state, whether as developers or financiers, as builders or simply as buyers and sellers will benefit from paying attention now and making adjustments as the drought continues.
Although far wider implications are due in the agricultural properties markets, where land values and prices are beginning to be seriously affected, we in the residential properties market also need to carefully monitor developments in policy, regulation and conservation. These are serious issues statewide, but at the local level, too, water conservation is beginning to affect residential and commercial properties, prices, planning – and projections – regarding all of the above. We expect the affects will change and probably increase in severity.
1) Prices will Go Up
As state mandated reductions in water use go into effect, those who’ve invested now in conservation and efficiency systems will reap rewards in terms of savings. Water waste will be more harshly punished, but access to efficient systems will also affect the prices of properties and finance. The development and implementation of conservation and reclamation systems is of vital importance, though it will increasingly depend on municipal and city-level participation. This is not going to develop evenly or across the board, but communities with realistic and mid- to long-range plans will reap the benefits in better financing and possibly lower prices down the road.
2) More Water Will Go Gray
That’s a good thing. More storm, runoff and rain water will be retained for re-use with ever smaller developments. More retrofits will accompany the newer developments designed with LEEDS standards in mind from the very beginning. More retrofits are also going to span more cooperative systems or multiple developments. This is going to simultaneously call for more multi-party cooperation and – again – those who get some experience early on will find a growing market for their skills.
3) Higher Densities
One of many things developers have learned from the developing world is that cramming people in closer together is a lot more efficient – not only for water, but for sewage, electricity and gas distribution, too. Apartment buildings lose a lot less water (and everything else) than the same number of people spread over a suburban collection of lawns and gardens. Access to good mass transit and similar amenities are going to be more important as populations are pulled towards California’s coast and out of the agricultural inland. Water treatment and reuse is going to be a bigger issue for all communities, inland or coastal.
4) Water Treatments Will Change, Too
Better treating more waste water is expensive. But communities and developments with better systems in place will benefit in the near future. Stronger regulations are going to affect what goes down the drain and what goes back into natural eco-system. These kinds of rules and regulations will strongly affect local tax rates and communities that implement them earlier will avoid the kinds of shocks that they’re likely to provoke. These will probably be seen most clearly in utilities costs, especially in sewage and water bills. So even small businesses can benefit from planning ahead.
5) Longer-Term Property Values
As mentioned above, the most radical changes in investment opportunity are likely to occur with agricultural land where water is a key condition of profitability. But many communities are going to feel the pinch in higher utilities costs and the costs of all of the above. Your best investment bets are going to be in communities and markets that plan and implement strong strategies now – so that finance continues to be available for the sustainable cities of the future. That implies that the smart investor will go with some mix of all of the above, and with the smarts to start counting on such changes even now.
Importantly, some of the biggest changes will probably come in wealthier communities that already use more water. How exactly future restrictions on water use may affect such communities has yet to be seen. But no doubt, some communities are going to have to learn from the unfortunate consequences of those who don’t adapt early on. It seems that more efficient lower-income neighborhoods may actually have something to share with their more prosperous and wasteful neighbors.