(NaturalNews) The only proof you need that many Californians are still living in a water fairy tale is the fact that California real estate prices haven’t yet collapsed. Even as the California Governor has declared a state of emergency — and emergency water rationing is under way — there are still people purchasing commercial and residential real estate in precisely the areas that will be hardest hit by that rationing.
What is the value of a home or business that has no functioning connection to a water system? Essentially ZERO.
How many California homes and businesses are headed for a zero-water future? Many millions.
How many Californians are aware of all this and already have their homes on the market so they can move somewhere else? A very small number… a tiny fraction of the total number of home and property owners invested there.
What these people are unfortunately not yet seeing is the catastrophic consequences of a continued drought and how it can utterly destroy the value of their property.
Understanding the psychological dynamics of real estate valuation
To understand what’s coming, you first need to understand the dynamics of real estate valuations. Here’s a question for you: How many homeowners selling their homes does it take to collapse real estate prices?
The answer may surprise you. On any given day in most areas, fewer than 1% of homes are for sale. (99+% of homes are not for sale.)
Valuations of “for sale” homes are buoyed solely by the demand of a ready market of buyers who are actively looking for new homes (and willing to pay for them). Home prices are rarely a reflection of their hard asset value but rather a reflection of what buyers are psychologically willing to pay for them.
The single greatest determining factor in this psychological formula is the idea of SCARCITY. A home or building in downtown Los Angeles is worth what it’s worth because it is a scarce asset, meaning there are more people who want to own it than actually own it. (There might be a thousand people who wants to own it, but only one who does.)
In real estate, scarcity is also strongly tied to geographic location, obviously. While a home in an elite neighborhood of Santa Barbara might be extremely scarce (and thus extremely expensive), an isolated home in the middle of nowhere has only a fraction of that value, even if it has the exact same build quality and square footage.
Now that you understand all this, ask yourself: What happens when the California drought eventually motivates a growing number of people to decide to sell and move? You get:
1) A dumping of “for sale” homes onto the open market.
2) A collapse of scarcity. Suddenly, buyers have a huge number of homes to choose from.
3) A resulting collapse in home valuations.
…As property taxes collapse, California cities and towns will plunge into bankruptcy
Property taxes are the primary revenue sources that keep cities financially afloat. Because cities can’t print their own money like the Fed, they can’t create money from nothing and spend it to run their corrupt fiefdoms.
Sure, cities can issue bonds, but those bonds have to be repaid. And you can’t repay the bonds if you don’t have the cash flow to do it. Cash flow comes from property taxes which will plummet. Do you see the problem here?
This situation is made far worse by the fact that many of California’s cities and towns are already in a state of near-bankruptcy. The California lifestyle, led by delusional Democratic lawmakers who simply refuse to follow sustainable economics, has always been one of “consuming more than is sustainable.” So California governments have been big spenders on social programs. But those social programs now exist as giant anchors around the necks of all California taxpayers, which is why California is one of the very worst tax states in the union.
…Home loan defaults will send banks careening toward bailouts
All this will cause a wave of home loan defaults across California, sending local banks into their own financial plunges, much like what we saw with the housing bubble crash. This, in turn, will necessitate banks sharply reducing lending to local businesses, denying capital for business expansion and stifling the future growth of the California economy.
Eventually, California’s cash-strapped government will have no choice but to raid its own state pension funds while claiming it is “saving” them. When a California bureaucrat puts a gun to your head and says, “Give me half of everything you’ve saved,” you’re supposed to answer, “Yes sir! I’m happy to help bail out your corrupt socialist empire of debt with my life savings!”
But the far more dire reality is that as towns and cities go bankrupt, they will inevitably slash police and firefighting budgets. This will lead to an emboldening of the gangs that already dominate many areas of Los Angeles, San Diego and San Francisco, even while politicians running for office will absurdly claim how they’re “tough on crime!”
Before long, Collapsifornia citizens will find themselves living in cities where police protection is practically non-existent. This is at the very same time that citizens are denied their right to self-defense by the same anti-gun socialist government that thrust them all into bankruptcy and crime in the first place. Dial 911 and die, in other words. Because your own state government is too broke to provide police protection, but also too corrupt to allow you to own a firearm to protect yourself.
So as the California drought really takes hold, its citizens will be headed for a brave new world with no water, no police, no pension and no future. Their homes will plummet in value, their agricultural hubs will be deserts, and their tax burden will be impossibly arduous. Under such circumstances, everyone who still has the resources to flee the state will do so, leaving behind the entitlement class who don’t pay taxes at all and therefore will only drag the government into certain financial insolvency.
Okay, you say, so fossil fuel power is out the window. Why not use nuclear power?
Another awesome answer! Let’s build Fukushima-style nuclear power plants on the coastline of California so that the next great tidal wave causes them all to go into nuclear fuel meltdown. Cesium-137 is good for you, didn’t you know? And so is radioactive uranium and plutonium. After all, California is home to some of the world’s most absurd biotech scientists who claim glyphosate and GMOs are good for you… why not add radioactive isotopes to their list, too?
Even if you could build nuclear power plants on the West Coast that were immune to meltdowns, it would take 10 – 20 years to build them. But California is running out of water starting NOW. The crisis has already begun…
How else could we solve the water crisis in California? I’ve heard all sorts of loony ideas, like, “Let’s blanket the deserts with solar panels to power the desalination plants.” People who come up with these ideas have never owned or run their own businesses, of course, so they don’t have much familiarity with practical, real-world logistics. They engage in what I call “magical thinking” which involves coming up with an idea and believing it’s real because you thought of it. This is what drives Hollywood, of course, which is why this sort of magical thinking is so prevalent. But solar panels are not movie scripts. They’re physical objects that need a massive infrastructure to carry the power to where it’s needed on the coast.
Solar panels are also made from some really dirty rare earth elements mined in China’s ecologically disastrous mines. So before you can go “green” with solar, you first have to get dirty with a serving of eco-destruction and horrendous labor practices in a foreign land. The up-front costs of such an installation are daunting, too, running into the hundreds of billions of dollars for a large-scale power infrastructure that could power desalination plants (which are extremely energy-hungry).
…Study this rainfall map before you decide where to go
Why is Austin such a hip destination these days? I mean, aside from the tattoos, dreadlocks, night life music scene and SXSW?
Here’s why: If you look at the annual rainfall map of America, it doesn’t take long to realize “Holy smokes! There’s no water from San Diego all the way to Austin!”
Austin is the dividing line where the rainfall begins for the Southern USA. West of Austin, almost everything is desert or near-desert. East of Austin, you get enough rainfall to live off rainwater collection.
If you keep going East, you end up in Houston, where the humidity is suffocating and the waterways are full of alligators (that’s not a metaphor, they really are full of alligators). And if you go very far North, you get freezing cold winters and deathly-hot summers, neither of which Californians are prepared to brave.
So they often end up in Austin, where there’s just enough water to get by, but not any sort of horrible humidity, tornados, hurricanes or anything of the sort. The greatest natural disaster threat in Austin is called “Interstate 35,” which is dotted with on-ramps and off-ramps that were designed by a madman high on crack.