Drought and Land Values in California and Nevada: How Water Scarcity Shapes the Market

California and Nevada experience seasonal fluctuations in precipitation, with long dry spells becoming increasingly common. The reliance on both surface and groundwater has intensified, placing pressure on water supplies and raising concerns about long-term sustainability.

• Climate Change & Rising Temperatures: Warmer conditions increase water evaporation and reduce snowpack in the Sierra Nevada, which is a key water source for the region.
• Strained Aquifers & Groundwater Use: In drought years, agricultural and urban areas rely heavily on groundwater, leading to depletion and potential restrictions.
• Government Regulations: Water restrictions and allocation policies play a crucial role in determining how landowners and businesses can access and use water.

Water availability also affects urban and suburban real estate markets, especially in growing communities where new construction depends on reliable water access.

• Limited Growth in Water-Stressed Areas: Some new housing developments face restrictions due to the inability to secure long-term water rights. This slows down real estate expansion and impacts property values.
• Higher Utility Costs: In drought-prone regions, water prices tend to rise, making homeownership and property maintenance more expensive.
• Regulatory Uncertainty: Cities with stricter water-use policies may become less attractive for new homebuyers, leading to shifts in real estate demand and pricing trends.