SACRAMENTO–The drought in California has predictably prompted discussions on water reliability and consumption throughout the state, from increased conservation, to usage by various industries and even how we build and design our communities. Fortunately, the California building industry has taken great strides in previous decades to lead the way on more sustainably designed homes to both reduce indoor water consumption and increase energy efficiency.
Dave Cogdill, CEO and president of the California Building Industry Association, tells GlobeSt.com:
“While the homebuilding industry continues to grapple with the impacts of the Great Recession, it remains committed to designing and building homes and communities that set a national standard for resource efficiency.”
Currently, new three bedroom single-family homes with four occupants use an estimated 46,500 gallons of water per year in internal use, which is a 50% reduction from homes built in 1980. Because of the water conservation mandates for new homes during the past four years, there is significant opportunity in the building sector to save water by creating incentives to motivate current homeowners of older homes to retrofit plumbing fixtures and appliances. Current research shows that existing homes represent the greater water savings potential than newly constructed homes in the state, as new homes in the state account for 0.1% of all housing stock.
A March 2015 research analysis by the state Legislative Analyst's Office outlines the serious impacts to families and the state economy due to the lack of new housing construction. According to the study, the median price of California home costs $440,000, 2.5 times the average national home price of $180,000 and the state's average rent is $1,240 per month, 50% higher than the rest of the country.
With demand far outstripping supply and a current housing shortage, the study states that steep competition, particularly in coastal areas, drives up the cost of housing statewide. As a result, people are spending more of their incomes on high housing costs, increasing the supplemental poverty measure. California would need to build 100,000 units per year more than it is currently building to seriously mitigate its problems with housing affordability.
Should the current housing shortage be exacerbated by ill-conceived drought mitigation measures, the resulting economic harm could be costly for the state. The new home construction industry generates a total economic output of $38.6 billion to the state's economy and supports more than 209,000 jobs statewide. While the industry is strengthening its recovery from the devastating recession, its total statewide economic output is still lagging far behind its peak in 2005 of $68 billion and more than 486,000 jobs.
The building industry has worked hand in hand with state regulators and key elected officials to support effective, smart policies that maximize both energy and water efficiencies. As policymakers work to resolve the most serious ramifications of the drought, they must also ensure they do not jeopardize California's still nascent economic recovery. And, drought mitigation polices that would curb new construction would also compound an already difficult affordable housing environment.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
