Are you ready to pay a higher water bill in coming months? I shudder to think about more money leaving my wallet yet again, but it seems inevitable for water companies to raise rates and create mandatory restrictions because of the severe drought we’re having in California. That’s why this home owner without a front lawn is starting to look pretty smart. This guy is hands-down going to save money, but most of all he may be ahead of the curve in case severe lawn watering restrictions come into play. Yes, it’s still not as common to see xeriscaped front yards, but wouldn’t you say it’s growing in popularity? Might the drought spur on more yards like this?
The Drought & Real Estate: The truth is the drought in California can definitely impact real estate. Over time buyers are simply going to have to think about water usage during their real estate decisions. How much is it going to cost to fill and operate a built-in pool? How much is that expansive front yard going to cost to keep green? Will buyers pay more if the front yard has been dialed in already to save water? Will buyers pay a premium for water-saving appliances, instant tankless water heaters, or water efficient toilets or faucets? Will a golf course view be worth less if the “greens” are brown? Will builders struggle to get new construction off the ground because of water shortages? These are relevant questions.
Cake, Water & our Wallets: I talk constantly about how the real estate market is like a multi-layered cake since there are many layers of the market that impact or create value. We know it’s obvious that things like inventory, interest rates and cash investors can strongly influence the direction of values, but we should add the cost of water as a layer of value since it is bound to be something buyers more readily consider in coming time. Granted, I doubt the cost of water will sway the market like interest rates can, but it is nonetheless a consideration and something to keep on our radar. Most of all, until there are severe restrictions in place and the cost of water dramatically increases, we may not see too much sensitivity in the market. Whenever our wallets are hit though, that’s when change can come.
Parcel Mullet: By the way, since we’re on the subject of lawns, it seems natural to ask if you’ve incorporated the word “parcel mullet” into your real estate vocabulary yet. Heather Ostrom and I coined this term during a Twitter conversation two years ago, and the word was recently mentioned in Inman News, The Chicago Tribune and on Word Spy. Enjoy.
Questions: In what ways do you think the drought can impact real estate? How have you seen buyers respond to front yards without lawn? Any tips for water conservation?