In parts of the San Joaquin Valley, sinking land has become such a serious problem, it is beginning to depress home prices, new research shows.
Homes in large portions of California’s Central Valley have been sinking, as have roads, bridges, canals and levees, as too much water is drawn out of underground aquifers.
Now researchers at UC Riverside have found that home sale prices are 2.4% to 5.4% lower than they would be if the land were stable, translating to per-home losses of $6,689 to $16,165. The paper looks at sales between 2015 and 2021.
Mehdi Nemati, a UC Riverside assistant professor of environmental economics and policy who led the study, said his team knew that sinking land was already affecting homes and homeowners across the Central Valley, with cracking foundations, dry wells, higher insurance premiums and increased stress. But he said they were startled by their results.
“We were surprised because land subsidence is not like flooding or wildfires,” Nemati said, describing those climate-fueled disasters as much more visual and sudden. “Land subsidence is a very slow problem.”
The economists found that land subsidence has lowered the value of homes across eight counties in the San Joaquin Valley by $1.87 billion over the six-year period.
“What this study does is tells us that it’s not just ground sinking, it’s a billion-dollar problem tied to decades of groundwater overuse,” Nemati said.
The study, published in the journal Land Economics, analyzed home sales and “vertical land surface displacement” across the San Joaquin Valley.
Although it was clear there was a strong correlation between areas with higher rates of subsidence and more dramatic drops in housing values, he said his team spent more than a year to establish causation. They did that by taking pairs of similar homes, each of which sold twice during the six-year period, one in an area with subsidence and one not.
“In general, home values in California — as you know — are going up,” Nemati said.
Brad Franklin, a research fellow at the Public Policy Institute of California’s Water Policy Center, said the study’s findings are credible. But he said other factors may also be affecting home prices at the local level.
“If you talk to real estate agents across the Central Valley, they would certainly have a lot of theories about what’s driving housing prices,” Franklin said. “And I expect that land subsidence is going to be very low on their list of things that they think affect the price.”
Agricultural wells have been drawing heavily on groundwater, lowering aquifer levels. That has caused underground clay layers to compact. The ground surface has been sinking several inches per year in parts of the San Joaquin Valley.
The phenomenon has been altering the valley’s landscape since the early 1900s. During the last decade, the ground in some areas has sunk as much as 1 foot per year.
In another recent study, Stanford University researchers also found that the problem has been worsening in recent years, and that large portions of the valley have subsided at a record pace since 2006. The problem has deepened as climate change has unleashed longer and more intense droughts.
Under California’s groundwater law, local agencies must work toward plans to limit pumping and address overdraft by 2040.
Researchers project that large portions of the Central Valley’s irrigated cropland will need to be permanently left dry to comply with the restrictions. The state, meanwhile, is also prioritizing projects to capture more stormwater to help replenish groundwater and slow land subsidence.
The study’s findings show that lower home values are one more costly effect of chronic groundwater overpumping that warrants attention, said Amanda Fencl, climate science director for the Union of Concerned Scientists.
“It’s not just small communities having their aquifer depleted. You’re actually affecting the wealth accumulation of homeowners in the valley and their ability to sell their homes not at a loss,” Fencl said.
She said local groundwater officials should be looking at how they’re protecting homeowners, how pumping can be reduced, and how groundwater can be replenished to help combat the problem. The goal, Fencl said, should be to prevent the “very clear harms that are occurring from this extensive groundwater overuse.”
She said she hopes the link between subsidence and home values will lead to a “rallying cry” from people in the valley who feel it’s unfair that “we aren’t the ones pumping, and yet you’re affecting our ability to maintain and sell our homes.”
The researchers said it’s a major problem that requires big solutions — and fast. Areas with rapid subsidence dropped about 7 or more inches a year across the eight counties they studied, with parts of Tulare and Kings counties seeing the most dramatic movement, up to a foot or more a year.
Nemati called the state’s Sustainable Groundwater Management Act crucial to combating land subsidence.
“We can see what’s the cost of doing nothing,” Nemati said. “We can’t lift the land back up — subsidence is permanent — but we can slow it or even stop it. And the market is already telling us it’s worth such investments.”
Sen. Melissa Hurtado (D-Bakersfield) said she has been hearing about subsidence affecting homes and property values. She said sinking ground has damaged her own parents’ home in Sanger.
“Subsidence is causing foundation issues in the home,” Hurtado said. “It’s been creating cracks on the tile and on the wall.”
The value of agricultural land is declining, too, Hurtado noted.
She blames the ongoing implementation of the state’s Sustainable Groundwater Management Act as well as “bad actors,” including hedge funds and other outside investors that are among the region’s major water users.
“When you live in this community… you obviously care about this community. You’re going to do everything that you can to mitigate these issues of groundwater depletion,” Hurtado said. “But if you’re not, then you really don’t care, because you don’t live there and it doesn’t impact you.”
The post Central Valley homeowners are watching property values sink with the land appeared first on Los Angeles Times.
