Greenfield Developments Suffer Amid California Drought

"The state’s dry spell is creating challenges for developers at a time when home prices are soaring because of limited inventory," reports John Gittlesohn. "Now the drought, into its fourth year, stands to curb affordability further."

As examples to make the connection between drought and constrained development environments, Gittlesohn cites "areas such as Newport Beach, a tony Orange County town where the median home price is $1.59 million, have been caught in the crosshairs of environmentalists seeking to limit new building." Moreover, says Gittlesohn, "[i]n the San Francisco Bay area suburb of Pleasanton, a proposal to rezone an industrial area for residential use was shot down because of the drought."

Gittlesohn cites one policy as a root of some of the difficulty in getting water supplied to new development: an October moratorium from the State Water Resources Control Board "on new connections at 22 of California’s 7,500 water districts, with more expected this year…"