Homes in California’s Central Valley have collectively lost nearly $2 billion in value over the last few years—all because excessive groundwater pumping is causing the land to sink, experts say.
A new study from the University of California, Riverside, has found that properties in subsiding—or gradually sinking—areas across eight counties shed 2.4% to 5.8% of their sale value.
Looking at the exact dollar amounts, each home was estimated to have lost $6,689 to $16,165.
All told, land subsidence has resulted in $1.87 billion in total house value losses across the Central Valley, according to the 49-page analysis.
“Basically, the land is sinking and so are the property values,” Mehdi Nemati, a UCR assistant professor of environmental economics and policy who led the study, said in a press release. “This is the first time anyone has quantified how much land subsidence costs homeowners in this region.”
Land subsidence happens when groundwater is pumped out faster than it can be naturally replenished, causing underground layers of clay and silt to pancake and the land surface to sink over time.
Nemati compared what happens to over-pumped land to “a sponge.”
“If you squeeze water out and never let it soak again, it flattens and hardens. That’s what’s happening underground,” explained the researcher.
The San Joaquin Valley, a global agricultural hub lying in the southern part of the Central Valley that supplies world markets with grapes, citrus fruits and almonds, has emerged as a ground zero for overzealous pumping.
According to the study’s authors, farmers in the area have been increasingly relying on groundwater to keep their fields fertile, especially during periods of drought, sending land sinking into overdrive.
But the issue is not limited to industrial-scale farming.
Overpumping and the resulting subsidence have been blamed for damaging canals and roads, harming wildlife habitats, and slashing the storage capacity of aquifers.
“It’s like permanently shrinking your savings account,” said Nemati. “Once compaction occurs, some of the groundwater storage capacity is lost forever.”
How are home values impacted?
To determine the impact of land sinking on home values, the UC Riverside researchers used satellite-based radar data to measure ground-level changes. They then matched subsidence data with nearly 200,000 home sales across eight counties: San Joaquin, Stanislaus, Merced, Madera, Fresno, Kings, Tulare, and Kern.
To isolate land sinking as a factor influencing home prices, the study’s authors relied on advanced statistical models.
“Our research shows that subsidence is not just an agricultural or environmental issue,” Ariel Dinar, a UC Riverside distinguished professor emeritus of environmental economics and policy, said in the release. “It is a serious economic issue that affects families and communities.”
The analysis found that the adverse effect was not spread equally across the eight counties. Home values plunged by the biggest margins in areas that saw the most dramatic sinking.
Notably, the losses were most pronounced in communities populated by people with higher levels of education.
According to Nemati, home values have been plummeting in part because buyers tend to stay away from properties in areas known for land sinking so they can avoid dealing with cracked foundations and insurance limitations.
“It’s a wake-up call,” Nemati said of the study. “Ignoring groundwater overuse doesn’t just affect farmers and water agencies. It also hits homeowners—especially those living on sinking ground.”
Parts of Central Valley showing resilience
(Getty Images)
But not everyone agrees that the issue of subsidence is a matter of urgency—at least when it comes to the housing market.
Kyle Chaney, governmental affairs and public relations director for the Fresno Association of Realtors®, tells Realtor.com® that home prices in Fresno, CA, and the surrounding areas have not been adversely affected by land sinking “in any way, shape, or form.”
“I don’t think anybody’s arguing that subsistence is taking place in certain parts, but the idea that it’s affected land value at this point, related to housing, I’m not aware of, nor are my members aware of,” Chaney added.
The FAR spokesman noted that the growth of home prices in Fresno has, in fact, slowed down over the last year-and-a-half and the volume of transactions has declined, but properties have continued appreciating.
Realtor.com data indicate that the median list price in Fresno has seen three months of declines, settling at $475,000 in July.
In Merced, CA, the typical home was priced at $452,000 last month, down nearly 5% compared with the year before.
And in Stockton, CA, located in the heart of the San Joaquin Valley hit hard by subsiding, prices have been nearly flat since May, inching up to $595,000 in July.
How to fix the problem of land sinking
California’s 2014 Sustainable Groundwater Management Act has required local agencies to balance groundwater pumping with replenishment by the 2040s, but Dinar said progress has been slow.
And with climate change triggering more frequent droughts, the study co-authors warned that the problem of subsidence is accelerating—and increasingly hitting California homeowners in the pocketbook.
“There are families trying to build equity through homeownership,” Dinar said. “When their property values decline because of something beyond their control, like land subsidence, it becomes a matter of social equity.”
Nemati said he believes that this kind of analysis could play an important role in shaping future water policy by making it clear that every inch the ground sinks has a measurable impact on people’s lives.
“If you can attach a dollar amount to the damage, it becomes easier to justify investment in mitigation and regulation,” he said.
