With drought, wither real estate?

A respected real estate consultant believes the Western drought is likely to have an impact on the housing market, including -- unfortunately -- a reduction in demand.

John Burns, CEO of John Burns Real Estate Consulting, shared his thoughts on the topic in a newsletter article, “Western Drought to Hurt or Help Housing?” Three likely impacts, he wrote, are 1) a decrease in demand; 2) an increase in home prices; and 3) an increase in market share for new homes, compared with existing homes.

Demand will be negatively impacted by rising water bills and even job losses related to agriculture. On the more positive side, he writes: “Builders will use water efficiency as a sales tool, similar to the way builders use energy efficiency in the South as an effective tool. Cost-conscious and environment-conscious buyers will respond.”

The water situation doesn’t appear to be improving, according to stats in his article. Snowpack is 95% below normal and the 22 largest reservoirs are 34% below normal.