3 minute readLeft: David Auld, President and CEO of D.R. Horton
Right: Dorothy Simian-Palmer, President and CEO of Vidler Water Resources
It’s already hard enough to get land these days that’s permitted to build on. But that’s barely the half of it. Now, you’ve got to make sure – particularly in sizzling hot, active housing markets in the U.S.’s western region – you’ve locked in access to water. Here’s the news announced late last week and scrubbed for clarity by the In a Western U.S. region of basins and ranges, of upper and lower basins and streams and supplies, of cities and towns and prairies and deserts, of residential, and agricultural, and of private and Bureau of Land Management, and Native American properties, water is simply the past, present, and future of this region, and those who lock-up water rights and licenses to trade, own a big say in that future. But not without complexity – ownership, access, legal, political, and environmental – no single issue is as fraught. Our real estate strategic executive source tells us: There is no more important issue in the west, and it’s the ultimate control on development,” He says. “While there are some commonalities in water law in CA, AZ, NV and CO, each is different. Not only is it a resource problem, it’s super-charged politically. Move water from an agricultural area to a theoretically higher- and best-use, and small towns literally and figuratively dry up. Inter-basin transfer issues. Rural vs. Urban, growth vs. no growth. Upper basin states vs. lower basin states. Pricing mechanisms that don’t let the market work. Surface water vs. ground water. Seniority of water rights and definitions of beneficial use. AZ is in the worst shape for Colorado River water, but has been the most proactive in its programs, so it acts like it can grow forever. Environmental activists vs cities (what rights do fish and kayakers have????). The complications are endless. Now, D.R. Horton, which does about 27% of its homebuilding operations business in the U.S. Western States, and which owns 63% of Forestar Group, which as of March this year reports that it controls – owned and controlled – on the order of 97,o00 residential lots for sale both to Horton and to other builders, has a lock on one of the critical water rights sources in the Western U.S. Under the terms of the Master Supply Agreement, we [Forestar] supply finished lots to D.R. Horton at market terms and both companies identify land development opportunities to expand our portfolio of assets. Of our total owned residential lots, approximately 21,000 are under contract to sell to D.R. Horton. Additionally, D.R. Horton has the right of first offer on approximately 18,200 of our owned residential lots based on executed purchase and sale agreements The value of those water rights, those tens of thousands of acre-feet of water access no doubt, will flow first through to D.R. Horton community developments and homes, and then to other homebuilder developers for a price. It’ll be a price other builders and developers had better be able and willing to pay, or else all that money they’ve invested in the ground itself may not have the value they thought it did. Join the conversation
![Source: Vidler Water Resources In a Western U.S. region of basins and ranges, of upper and lower basins and streams and supplies, of cities and towns and prairies and deserts, of residential, and agricultural, and of private and Bureau of Land Management, and Native American properties, water is simply the past, present, and future of this region, and those who lock-up water rights and licenses to trade, own a big say in that future. But not without complexity – ownership, access, legal, political, and environmental – no single issue is as fraught. Our real estate strategic executive source tells us: There is no more important issue in the west, and it’s the ultimate control on development,” He says. “While there are some commonalities in water law in CA, AZ, NV and CO, each is different. Not only is it a resource problem, it’s super-charged politically. Move water from an agricultural area to a theoretically higher- and best-use, and small towns literally and figuratively dry up. Inter-basin transfer issues. Rural vs. Urban, growth vs. no growth. Upper basin states vs. lower basin states. Pricing mechanisms that don’t let the market work. Surface water vs. ground water. Seniority of water rights and definitions of beneficial use. AZ is in the worst shape for Colorado River water, but has been the most proactive in its programs, so it acts like it can grow forever. Environmental activists vs cities (what rights do fish and kayakers have????). The complications are endless. Now, D.R. Horton, which does about 27% of its homebuilding operations business in the U.S. Western States, and which owns 63% of Forestar Group, which as of March this year reports that it controls – owned and controlled – on the order of 97,o00 residential lots for sale both to Horton and to other builders, has a lock on one of the critical water rights sources in the Western U.S. Under the terms of the Master Supply Agreement, we [Forestar] supply finished lots to D.R. Horton at market terms and both companies identify land development opportunities to expand our portfolio of assets. Of our total owned residential lots, approximately 21,000 are under contract to sell to D.R. Horton. Additionally, D.R. Horton has the right of first offer on approximately 18,200 of our owned residential lots based on executed purchase and sale agreements The value of those water rights, those tens of thousands of acre-feet of water access no doubt, will flow first through to D.R. Horton community developments and homes, and then to other homebuilder developers for a price. It’ll be a price other builders and developers had better be able and willing to pay, or else all that money they’ve invested in the ground itself may not have the value they thought it did. Join the conversation](https://develop.housingwire.com/wp-content/uploads/2022/04/Screen-Shot-2022-04-19-at-12.41.31-PM.png 1685w){kind=link}