I’m not sure if I understand how drought will impact home building/real estate which is already in another massive bubble.
It was interesting to learn that only about 2% of the GDP of California comes from agriculture which accounts for about 40% of water usage statewide. Perhaps more interesting is that so called ‘urban’ usage only account for 10%. Although agribusiness seems like a small fraction of the California economy it still represents about $21.2B worth of economic output which is about the annual revenue of IBM.
Another interesting topic to monitor will be population migration out of the drought zones. As the year continues I would expect to see outflows from places like Las Vegas and Los Angeles to points north and east. The annual United Van Lines movers study is a good source of information as to where people are migrating to and from.
Produce prices like milk, tomatoes and almonds will also be interesting to watch.