California has just experienced its driest January and February ever, and snow cover is dangerously low. As the West enters its third year of drought, water sources are drying up and restrictions on the Colorado River are now hitting every sector of the Western economy, including housing.
While there is a shortage of water, there is also a shortage of housing. The US currently needs over a million homes just to meet current demand, according to the National Home Builders Association. Other estimates are even higher. As Millennials hit their home buying heyday and Gen Z jumps into action, the supply of homes for sale is at an all-time low. Builders are hampered by high costs for land, labor and materials, so they focus on the West and fast-growing areas like the suburbs of Phoenix.
On a vast strip of land in Buckeye, Arizona, just west of Phoenix, the Howard Hughes Corporation is building one of the nation’s largest planned communities. Douglas Ranchflooding the desert with habitation.
Howard Hughes CEO David O’Reilly says there will be no problem with water.
“Every home will have low current fixtures, national desert landscape, drip irrigation and reclamation,” he said, adding, “We are working with local municipalities, Buckeye City, all water areas to make sure we are taking real conservation action not only on our territory, but throughout the region.
The community is projected to have over 100,000 homes with at least 300,000 new residents. Large community developers such as Pulte, Taylor Morrison, Lennar, DR Horton and Toll Brothers have already expressed interest in building houses, according to Howard Hughes Corp.
And this is just one of more than two dozen developments being developed around Phoenix, while the West is in the midst of its worst drought in over 1000 years.
“They expect growth in the area to be a million people. And there is no water to support this growth. Not with groundwater,” said Kathleen Ferris, senior research fellow in water research at Arizona State University.
Ferris made a documentary about the State’s Groundwater Management Act of 1980. Developers must prove that the land they are building on has water for 100 years. Douglas Ranch is located on the Hassayampa Aquifer, which will be the main source of water.
“And the problem is, with climate change, there are no back-up water sources that you can use to save development entirely based on groundwater. If it loses all of its water supplies, there will be no water to support it,” Ferris said. .
Mark Stapp is director of the Arizona State University Real Estate Development Program at the WP Carey School of Business. He points to various reservoirs that could replenish groundwater, but acknowledges that the risk still exists due to the sheer scale of development.
“I would argue that there are legitimate concerns about our future and politicians are well aware of that,” Stapp said.
O’Reilly argues that the current need for housing outweighs future fears, which may be unfounded.
“I don’t think the answer is to tell people who are looking for an affordable home in Arizona, ‘You can’t live here, go somewhere else.’ I think the responsible answer, the thoughtful answer is to build affordable homes for them, but build them on a self-sustaining basis,” O’Reilly said.
Report Last spring, ASU’s Kyle Water Policy Center warned that the amount of groundwater in the Hassayampa sub-basin is significantly less than regulators estimate, and that without a change in direction, “the physical groundwater supply under Bakay will diminish and be unsustainable.” The report also states that the centenary groundwater model is constantly changing, especially given the changing climate. The State Department of Water Resources is currently in the process of determining if the basin actually has water for a hundred years to come.
“The bottom line is that in this state, in this valley, there are places where there is enough water to support new growth. We don’t have to go into the desert and pump groundwater to build new homes,” Ferris said. .
Land, of course, is cheaper in the desert, but Ferris counters, “Well, you have to pay for it at some point.”