Real estate and hazards go together like oil and water — which is exactly what happened in Huntington Beach on October 2, 2021.

An oil pipeline burst four miles off the shore, dumping an estimated 25,000 gallons of crude oil. Investigators are still determining exactly what caused it and who is at fault, but so far speculate that a ship’s anchor dragging on the ocean floor months earlier likely led to October’s rupture.

For perspective, the Deepwater Horizon oil spill released over 130 million gallons of oil. While comparatively, that might make Huntington Beach’s oil spill seem like small potatoes, it is still an ecologically and economically devastating event. The effects and extent of the damage to California’s coastline is far from over.

Just a little over a week after the oil spill was first reported, Huntington Beach reopened its shores to the public after water quality tests found no detectable amounts of oil-associated toxins in the ocean water. Even still, exposure to crude oil and dispersants used to break the oil down still poses health risks to the public, leaving cleanup workers at greatest risk.

The City of Huntington Beach is still routinely performing water quality tests twice a week to assure continued public safety, but recreational fishing six miles out from the shoreline from Sunset Beach to Dana Point is still prohibited.

Water quality tests are not the only hurdle to climb before Southern California’s in the clear in terms of its ecological and economic recovery. Property values are bound to be affected, similarly to those in the wake of the Deepwater Horizon oil spill. Property owners are already filing suit with the owners of the oil rig  to this effect.

The Deepwater Horizon oil spill negatively affected property values within a few months of the spill, with reported home value losses of 5% to 15% year-over-year. Aside from the spill’s physical damage to homes, property values also dipped thanks to the stigma of its association with such a traumatic ecological event.

Even more concerning, property values fell well outside of the Deepwater Horizon spill zone. The impact of the Huntington Beach spill stands to undermine markets well beyond the 70 miles of Orange and San Diego coastline where oil is still being cleaned up. While the Huntington Beach oil spill is not as severe as Deepwater Horizon, its hidden impacts are far reaching.

This is because the spill affects not only real estate, but tourism, rental income, restaurants, and other businesses that are already vulnerable while still trying to recover from the pandemic. California Attorney General Rob Bonta describes the oil spill as an environmental disaster with far-reaching consequences for California’s wildlife, communities and economy.

Experts say the ecological effects of the oil spill will take some time to fully estimate and is bound to be a rocky recovery. The ecological damage affects local marine life and already endangered plants and animals. Restrictions in the wake of the spill also affect recreational fishing, fish markets, and restaurant supply — silently impacting some of the region’s biggest perks for residents.

California is already in a fragile economic state in recovering from the recession hangover. To boot, the state is also dealing with a housing crisis and water shortage, further roiling an already volatile housing market. The contamination from the oil spill only exacerbates California’s water shortage struggles.

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Droughts and water shortages limit new development

Don’t be fooled by the small size of the Huntington spill or its beach’s quick reopening. The twin crises of a water shortage and ongoing pandemic form the perfect storm for a real estate crisis, especially in terms of property values.

The old real estate professional adage — location is everything — rings true thanks to man-made disasters and hazards like Huntington Beach oil spill. Nevertheless, agents are a resourceful bunch. Be prepared to draw up a Unique Factors and Conditions Affecting Property form if you’re selling homes affected by such a hazard or others such as Industrial Use Zone or Contamination of a Controlled Substance. Documenting such hazards efficiently is a prudent practice to effectively serve your client’s best interest and secure your hard-earned fee.