Gas leak impacting Porter Ranch: California issues State of emergency. The impact on local housing and delusional home prices.

There is a major environmental disaster happening in the Los Angeles County suburb of Porter Ranch.  You wouldn’t know it from delusional house humping cheerleaders that seem to think that nothing can happen in SoCal that would diminish the value of real estate.  In fact, there are already lawsuits being put out regarding trying to keep home values inflated (forget about the health impact this disaster is having on local residents in freaking L.A. County!).  This gas leak is major.  Governor Jerry Brown just declared a state of emergency but this is a late notice for something that has been going on for some time.  Many local residents have been evacuated and this is a bigger story than is being reported.

Gas leak impacting health of local residents

If you think local agencies and government are looking out for you, think again.  Just take a look at how long it took for people to be notified:

“(CNN) SoCalGas reported the leak from its Aliso Canyon storage well on October 23.

“Why didn’t it (the state of emergency) come 12 weeks ago?” Rocco asked. “When they came forth with it?”

Rocco’s family first noticed an annoying eggy smell.

“It started just kind of being frantic and wondering why our house smelled like a propane tank for weeks on end — looking for it.” But since natural gas is invisible, they could not see it gushing skyward right up the mountain from them.

Rocco’s husband and son came down with profuse nosebleeds, her daughter had recurring headaches and nausea, and Rocco herself had nagging respiratory problems.

Around Thanksgiving, when the family heard about the leak, to them, the source of their ailments was obvious, so they moved into a hotel.”

Here is a picture of the leak:

Porter Ranch

This is a major incident that is obviously having an impact on people’s health yet somehow, it has only been designated a state of emergency this week.  This is being called a BP spill on land and of course, some people are so house delusional that they are trying to justify high real estate prices despite this disaster.  So how much does it cost to live in Porter Ranch?

porter ranch home prices

This is just insane.  The typical sales price of a home is $647,000.  And those paying these sky high prices are dealing with basically living on an environmental disaster zone.  This leak at some point was spewing out 110,000 pounds of methane per hour and there is simply no telling what the long-term consequences will be from this.  Yet somehow, delusional people are thinking that these high home prices are justified.  A lawsuit isn’t going to negate the health impacts that might have been caused by this leak.  So those that think the government or local agencies are looking out for their health need to think again (and then you have those thinking the Fed is making sure home values stay high in California).  The market and in particular, nature is more uncontrollable than the blind faith some people put on the Fed.

Even the Federal Aviation Administration has established a no flight area around the leak until March of 2016.  This leak is happening near many other local cities as well:

porter ranch map

The government and local agencies reacted incredibly slow to this disaster.  Does anyone in the area have any on the ground details to report?

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69 Responses to “Gas leak impacting Porter Ranch: California issues State of emergency. The impact on local housing and delusional home prices.”

  • Housing is Tanking

    The HARD will come very soon!

  • Anyone who is trying to sell in the immediate area is having a tough time, but this will have negligible long term impact on property values. The site might be shut down permanently after this.

  • Alex in San jose

    This has leak is HUGE and its not being talked about in the media much at all!.

    Meanwhile, I let out one little squeaker during prime time TV watching time, and the remarks about barking spiders abound…

  • Hotel California

    Hey Doc, what’s the date of the data on that chart? Price drop in never lose Manhattan Beach?

  • son of a landlord

    SoCalGas has other underground storage facilities, elsewhere. One of these is in prime Playa Del Rey:

    Scarier than this leak is that few people in Porter Ranch were aware of living atop a time bomb until it blew.

    Every buyer must do their research, and investigate if there something about this or that prime neighborhood that can cause it to suddenly tank?

    • This is much ado about nothing. Many parts of SoCal are sitting on methane gas deposits. Playa Vista is built on top of one. Most of the condos in Playa Vista have gas detectors and fans installed in the basements to vent methane. Beverly Hills is built on top of one. Culver City and Baldwin Hills are a major source. So are the La Brea tar pits, Signal Hill and Torrance.

      Several times a year you’ll hear about sewers and manholes on fire near the La Brea tar pits due to leaking methane.

      The Porter Ranch leak will have no major long term impact on home prices in that area.

  • son of a landlord

    I also wonder, what happens to all that leaked gas? Where does it go? It is eventually blown over the Pacific? Or does it linger and collect in the SFV basin?

    Will the gas reach the wealthy communities south of Ventura Blvd — Woodland Hills, Tarzana, Encino, Sherman Oaks? Then, hemmed in by the hills, will the gas linger on the northern side of those hills? For how long? Is it already building in that area, even if you can’t smell it — yet?

    • I live in Woodland Hills, and as soon as I read your comment I started to cough. I wonder what that means.

    • Methane is lighter than air. It’ll rise to the upper atmosphere and contribute to ozone depletion for the 10-15 years it takes for the ozone and UV to break it down to the equivalent of combustion products. But it’ll dissipate as the plume rises. It’s not a smudge like the BP spill. It !might be interesting to turn a spectroscopy satellite toward the Pacific and make some scientific lemonade.

      • Must be heavier. Plum vid shows it flowing down slope

      • Andy, you’re confusing methane and methyl mercaptan which is added to it so that it is detectable. Methane has a molecular weight of 16 which is lighter than nitrogen gas, the chief component of air (MW 28). Methyl mercaptan has a MW of 48, and thus is heavier than air. That is what is causing the problem. Methane is invisible and odorless.

      • Methane is released — biologically — in staggering amounts — all the time.

        It’s so unstable in the atmosphere that its half-life is quite SHORT.

        Unlike chlorofluoro-carbons, methane reacts at all altitudes with the oxygen in the air.

        All that it needs is a single absorbed UV ray. This starts a chain reaction of destruction — as the methane is oxidized in micro-seconds — to form carbon dioxide and water vapor.

    • Winds blow directly west to east so that gas is going to follow the wind currents east around the world and make it back. Just like Fukushima radiation.

  • Facts and Feelings

    Happy New Year 2016, Doctor, from a reader/commenter since the last bubble popped. As to the coastal west side of Los Angeles County, please note that huge natural gas storage facilities lie DIRECTLY UNDERNEATH most of populated Playa del Rey – underground storage that also extends northward to Venice and Marina del Rey along where Ballona Creek empties into the Pacific. No Porter Ranch area home is closer than one mile to the current spewing gas site, but most Playa del Rey homes sit right above stored gas. Does anyone think such information is dispensed during open houses?

    Below is the link for an aerial view of the Playa del Rey situation. At least Sempra Energy/SoCal Gas provides such information (they also operate storage fields in Goleta and Valencia). But do folks ever consider such information as lust for a piece of California overtakes due diligence?

    BUYERS BEWARE…ask hard questions about safety; don’t be flummoxed by staged properties.

  • One of the things many homeowners and potential buyers overlook is the impact infrastructure, services, even natural disasters may have on the value of their homes. The L.A. news has consistently had stories about one unfunded infrastructure problem or another, ranging from street repairs to water mains. The State, which boast being flush with money now, was in a dire fiscal crisis just a few short years ago. I’m sure most local jurisdictions are in the same boat … any or all could be back in dire shape almost overnight which could impact all services, including public safety. Schools are notorious for impacting housing … the higher rated school districts are in higher demand and command higher prices. People take too many things for granted, including living in an earthquake prone region.

  • You do know that Governor Jerry Brown’s sister is on the board of directors for the gas company?

    Nothing to see here, move along….. Kathleen told Jerry.

  • In regards to Porter Ranch, I think the methane just floats up into the atmosphere. I doubt if there will be any long term impact on home prices.

    There was a toxic gas release (much more toxic than methane) in Culver City / Blair Hills in 2006 from the PHP Oil Field. Long term it had no impact on home prices.

  • son of a landlord

    Check out this Porter Ranch flip:

    Bought in May 2015 for $580k (after being foreclosed in 2014).

    It’s “newly remodeled” and listed in Oct 2015 for $829k.

    This poor bastard flipper bought a foreclosed house, remodeled it, then tried to flip it shortly before the gas leak.

    Can’t say I feel sorry for him.

    • why would i pay somebody $250,000 to remodel my house?

      i just do not understand why anyone would buy a flip, that makes ZERO economic sense to me.

      • Because you don’t have to deal with contractors and the 250k goes into your first mortgage at 4% instead of a heloc at 7%.

      • I don’t think it’s always that cut and dry. Maybe market conditions changed since the house was bought by the flipper. Maybe by the time you buy it, the difference between a beater and a fixed up (flipped) house is only $100K or less (all else being equal), and for ~$100K, it’s worth it for someone to move into a nice turn-key house and not hassle with anything.

        If, in fact, you can buy an equivalent non-fixed up house for $250K less than a fixed up house, then I completely agree with you. I just don’t think it’s always that simple.

    • Modern home staging: change the listing to a neighborhood that is not having a major environmental disaster. Zip codes don’t lie though.

  • I retired from a gas utility company in 2010. To be realistic most people are more at risk from a faulty water heater, furnace or other gas appliance. It ain’t the natural gas ( lighter than air unless propane) but Carbon monoxide that can kill you. If you are home you will almost always smell gas before it reaches combustible levels assuming your sense of smell is not impaired or your leak is not in an attic or basement. Yeah, builders like to put hot water heaters in the attic but insurers don’t like it. I found two people dead from monoxide leaking from a hot water heater and one woman almost died from leaving her car running overnight in the garage. Easy to do with new cars as they have no ignition key and idle so quiet. Her furnace was in the garage and it was sucking in the car exhaust into the house. Other dangerous situation are ovens. There are typically little slits on top of the stove that exhaust the oven burner. Over the years grease can foul them.

    I ruined more than one Thanksgiving when I’d go to a small apartment with an old, small gas oven containing a massive turkey and found it belching monoxide into the kitchen. Other disasters were people trying to heat their home with an oven because the furnace didn’t work. An oven never gets up to temperature with the door open so it just keeps burning and if it doesn’t have a flue guess where the exhaust goes?

    I won’t say there is no health hazard from Sempra’s gas leak ( hell I’d claim damages if I lived nearby too) but you’d probably get the same methane concentration in the air if you lived by a cattle feed lot, pig or chicken farm or sewage treatment plant and the smell would be worse than mercaptan.

    • Since you work in the industry, I ask you: what is the potential for a huge gas explosion in the Porter Ranch area, like the one in 2010 that demolished half a San Francisco suburb?

      I regard natural gas as an immense hazard, and one we all take far too for granted. I’d rather live in the control room of a nuclear power plant that be within 30 miles of a LNG terminal. Chicago has had a number of homes demolished over the years by gas explosions caused by faulty apliances, but more often by deteriorated old “step down” stations- I don’t know the correct term for the stations and substations that reduce the pressure at which natural gas comes into the city, to the pressure at which it enters buildings. All I can figure is that, in most cities and suburbs, there are tens of millions of people sitting atop aging gas lines and storage tanks prone to leaks as they age.

      • Since the source and location of the leak is known the chance of explosion is pretty remote. Gas has a lower explosive limit of 4.5% concentration and an upper limit of 15%. Outside those parameters it cannot explode. As you noted the great danger is gas migrating into a structure, which is what happened in San Mateo County. It can accumulate in crawl spaces or enter the house through sewers too.

        Older neighborhoods are more vulnerable because the pipes are older both underground and in the house. My utility installed gas flow service interupters on all new service lines. This would shut down the gas if the flow exceeded a reasonable limit such as broken gas line in the yard or in the house. Won’t stop a slow leak though.

        It is probably the case that gasoline would not be available as a fuel today ( far more dangerous than natural gas) were it ‘new’ and cars just invented given the kind of attitude many have today. Still, we allow tankers with thousands of gallons of the stuff to cruise the highways and we carry enough of it in our car tanks to cause a tremendous explosion should it leak out and vaporize. The energy density of gasoline or kerosene is enormous which is why it make a good motor fuel. 20 gallons will move a 4,000 lbs car carrying 4 people 400 miles at 70 mph.

  • Even a nuclear meltdown bigger than 3 Mile Island will not affect housing in the west valley:
    There is now a movement backed by the surrounding HOAs to PREVENT the clean up of this nuclear wasteland and keep it quiet. Yet, people buy mansions in Bell Canyon, adjacent to the “accident” site and let their kids play in the creek that runs from the site and brush. Check out the cancer rates – far above normal for the area for the past 30 years. It’s great news for SoCal Gas because they will always be able to point the finger at Rocketdyne. Such is the power of systemic racism: They’d rather live next to a nuclear dump than send their kids to school with those “less fortunate.”

    • I rent in the area and my kids go to school at Oak Park. Property prices have always been high in this area, so we’ve been renting for about a decade. Schools are top of the line. However, the SSFL issue is always on our minds.

      If you are interested in living in Oak Park, check out the comments on this page:

      A few years ago, someone had created a map of Cancer Clusters that was hooked up to Google Maps. There were lots of cases in Eastern Ventura County and Western LA County. I can’t seem to find the page anymore 🙁

      I have a co-worker that lives a few miles west of Porter Ranch. He has been very ill for the last 6 months or more (rapid heart rate, dizziness, etc). If it’s related to the gas leak, then I suspect that the leak has been going on for much much longer than they’ve let on.

    • I agree, I would definitely not live within the general vicinity of the former Santa Susana Laboratory site. Who knows what really went on there, as well as the magnitude of environmental impact and the potential long-term health effects. To me, it is simply not a risk worth taking, regardless of claims made by various regulatory agencies.

      As for you “systemic racism” comment: it’s not necessarily racism- I generally don’t care what color someone is, or what culture they come from (within reason regarding culture), and I sort of doubt a significant number of people in So Cal do either. It’s more a matter of class and common sense. Look at the Great Schools ratings for schools in low-income areas. They’re awful. Do you really want your kid(s) going to 1-, 2, or even 5-rated school? It’s not that schools in low-income areas are attended by “less-fortunate” kids. It’s that they are attended by kids whose parents are (generally) indifferent to their kids’ educational success. These are schools that will facilitate your kids’ future success, and they aren’t schools that I would ever allow my kid to attend if given the choice. Thankfully (or more accurately, because I waited until I was financially prepared to have a kid), I will not likely have to make such a choice.

      • I meant to state, “These are NOT schools that will facilitate your kids’ future success”

      • apolitical scientist

        Look guys, I worked “up on the hill” at SSFL for many years. Yes there was a melt down in 1959, and all sorts of “hot” materials work for decades later, but the site surface has been clean for almost 20 years. Back in the late ’90s they spent months carting thousands of truckloads of soil away to god-knows-where. Afterwards one of the remediation and test guys I was friendly with told me that they’d been over the whole site inch by inch and the only radioactivity they could still detect in the soil was a bump in the background level due to Chernobyl (that covered the whole northern hemisphere in ’86).

        I’m sure there is some residual radioactive material far below the surface – and yes a few parts-per-trillion probably make it into the groundwater now and then. But realistically standard industrial toxins are a far greater worry, both in SSFL and everywhere else in the SFV. The whole area was ground zero for aerospace manufacturing from WWII until the early ’90s. Standard practice during much of that time was to pour used industrial chemicals right down the drain. I’m not talking picograms of tritium here. I’m talking untold thousands of gallons of highly carcinogenic TCE, benzene and whole host of other nasties – for 50 years. If you want to worry about carcinogenic exposure in the valley worry about that mess long before radioactives from Santa Su.

      • Agreed, Responder. I grew up in a private school, and then spent a single formative year (8th grade) in a bad public school (which was about 70% white). I went from a classroom culture of family and friendly competition to one of disrespect, indifference, and fear. The switch in focus from learning to simply surviving put my grades in the toilet. I’ll be damned if I let my kids share that experience. I’m not racist, but I am culturally biased. Ghetto residents are frequently poor for a reason – immaturity and a never-ending series of bad decisions in every aspect of their lives, including parenting. Naturally they pass this on to subsequent generations. Of course there are those who climb above this and raise their kids to be kind, successful adults. I admire those people far more than I do any silver spoon ivy league grad, but let’s face it – they are overwhelmed by the bad seeds. Better to share a classroom with arrogance than violence.

  • Let’s pray that the people do not suffer any long term health consequences. That would be horrible. Big Business and Big Government love to talk from two sides of their mouths. The government does not care about the little people, they only care about their big business cronies. Look at the poor first responders from the September 11th tragedy. Many of them suffered horrible long term health consequences and the federal government dragged their feet and then they settled for a paltry 2.7 billion dollars and divide that up by 7800 first responders who have long term health consequences and they get about $350,000 a piece. Not counting lawyer fees!

    Let’s hope that the health and property damages are negligible in this case.

  • I already own homes in beach cities. However, if I was a renter, I would look for a deal in Porter Ranch. So far, no deals, best I can tell. However, keep your eyes open. If you see people selling at a substantial discount, buy buy buy. In about 5 years, the story will be forgotten, then you can sell for a handsome profit, and move on down to the beach. Keep your eyes open.

    • jt….The story line for the future of CA. real estate increasing is very poor, beach property or not. Investing in Porter Ranch now and waiting till the concern dies down and sell for enough profit to buy beach property is a recipe for investing disaster.
      Overseas money is drying up and caps on investing in American housing is coming soon, oil is the concern of all concerns, labor force is poor in the USA, housing overvalued in many CA. locations by as much as 60% a whopping ratio of what really is affordable and what is Disney Land prices. Throw in a stock market also overvalue (Alcoa Aluminum sells for 20 times less than Amazon a basic pack and ship somebody’s else’s product) and you see the out of whack nature and the fundamentals and of buying and selling plus the banking system and Fed reserve not knowing the right from left ,the real trouble America is in getting so scary that the collapse may not be 2017-18, but sooner than I thought?. take care

      • The issue is central banks have a job of creating inflation. They have your back since they are always making inflation happen. Once in a while some deflation may happen, but if it does, the central banks will print money to stop it. That is why real estate does so well over the long term, and that is why the collapse you talk about is unlikely.

        Over the last several years, SoCal homes did far better than stocks or bonds. With the recent stock market drop, it is possible real estate will outperform stocks and bonds in 2016.

      • @JT

        The central banks have done a good job of inflating and re-inflating asset bubbles at best. However, they failed miserably in creating any major corresponding wage inflation.

        The fall of commodity prices and junk bond prices are proof that even they are not immune to the business cycle. The fear of a recession is prompting the Fed to tighten.

        I doubt that real estate prices, So Cal or not, will remain unaffected by any stock market downturns. After all, Wall Street and other investors have become a major buyer and bankrollers of real estate throughout the country. BTW, a house in which you live in is a consumption item, not an investment.

    • I would also be apprehensive about buying in Porter Ranch solely for investment purposes. Let’s say property values do decrease there by 15-20% and you buy. However, similar to what @robert stated, what if there’s another California housing crash (which seems entirely feasible within the near future)? That will erase any perceived discount you received and maybe more. And, there’s no guarantee that the gas issue will go away (even though my guess is that it will). So if you’re buying for investment purposes, there is compounded risk due to a potential housing crash, AND the possibility that the gas issue might be longer-lived than expected. That doesn’t seem like the wisest investment idea to me.

  • son of a landlord

    This Sawtelle fixer-upper is kind of funny:

    The listing says: “Come quick! This property won’t last at this price, in this prime location.

    Yet it’s been listed on Redfin for 70 days. Yes, come quick indeed.

    BTW, the size of the LOT is 900 sq ft. All this for nearly $600k.

    • WestsideLakerFan

      I’m actually not far from that Butler property and also found it comedic. Guess at least you won’t have upstairs neighbors stomping above you, but your next door neighbors will have front row seats!

    • That is one of the ugliest houses I have ever seen. Looks like a little prison. It looks like something out of a 3rd world country where people are packed in like sardines.

    • LOL 900 sqft lot! Wow I can’t even imagine. With modern day setback requirements could you even build anything on that if the existing structure ever fails?

    • I sure hope an asteroid hits this planet so we can start over on building things the right way.

      • “I sure hope an asteroid hits this planet so we can start over on building things the right way.”

        It won’t happen. Not the asteroid impact, but starting over the right way.

      • Most humans are idiots and will only do what is in their own short-term interest. You can rest assured that they will screw up anything if given the opportunity; the environmental is one such specialty. Probably the best thing that could happen to the planet is that the asteroid destroys all humans. I love living on the planet and am grateful to have a decent life, but I’m as guilty as everyone else (maybe more so due to being a typical over-consuming American) of screwing up the planet.

      • I meant to state the “environment”…

  • Over the weekend my nephew from CA. was out for a visit. A neighbor ask him, he could remember when in Laguna beach he could buy a home for 300k but many beach bums and thrash. My nephew told him, same beach bums and thrash as was there when homes were $300k, only difference, that same house is $3 million?

    • What do you mean by thrash?

      • Responder…Sorry, meant trash around and seedy looking, at the beach you need to paint often and maintain something few do, salt is a killer, window washing business should be good? stay safe

  • Yes, a gas leak is going to crash SoCal housing values, yes, that’s the ticket, no wait, I think it’s going to be a gas leak and also mudslides, don’t you agree, not just mudslides but fires too, just look at what has happened to values in the ‘Bu area, with mudslides and fires devastating home values to the point of worthlessness for decades, yes people, it’s going to be gas leaks, mudslides and fires. Oh, and also a meteor, a big giant meteor, it’s coming I can feel it.

    • This time is really truly different.
      Buy now or be priced out forever.
      They ain’t making any more land.
      Interest rates are their lowest eva.
      [Insert California city] is an international city like Paris, London, or Hong Kong are.

      • And don’t forget

        A) everyone wants to live here.

        A2) the entire states of Michigan and Ohio are preparing a mass migration.

        B) the weather is great.

        C) there may be a bubble in ______, but not here.

        D) population is growing.

        E) economy (based on RE market and equity-fueled
        consumer spending) is strong. – 1,000 maids are
        being hired in hotels each day.

      • As well as:

        F) “Real estate always goes up ”

        G) ” The Baby boomers / Millennials / your unborn Grandchildren will come ”

      • H) The merest .00001% price drop will prompt money on the sidelines to jump in.
        I) Millennials are just itching to buy because they are saving more money than they know what to do with living at home.
        J) FHA’s loans are far more secure than subprime loans are.
        K) Despite their own domestic economic woes and the falling value of the Yuan, Chinese investors will infinitely continue to pour cash into U.S. real estate.

      • son of a landlord

        Prince of Heck: “Millennials are just itching to buy because they are saving more money than they know what to do with living at home.”

        Really? Saving all that money?

        So then, all their student loan debts are fully paid off?

      • @SOL

        [sarcasm]Yes, a veritable groundswell of stay-at-home millionaire millennials ready to erupt onto the real estate market.[/sarcasm]

    • I think a California housing crash is more likely to be rooted in the fact that only a relatively small fraction of the populace can afford to buy a house, and that the economy may not be as robust and invulnerable as some like to think it is. But that’s just me.

    • +1 for the giant meteor theory.

  • The health issues will happen for those people. There will be a fight for them to get out from those mortgage’s. Will take years. Ins. Co.s have buckets of money, the families don’t. Amazing how this story has not been given more “exposure”. We heard about 3 Mile for months, And I don’t think people returned to Chernobyl. Erin Brockavich is on it now. Terrible situation for that community.

  • Believe it or not, people are still buying homes in Porter Ranch. Do a Redfin search on homes sold over the past 3 months. There are even homes that sold for 1 million+ in this disaster zone with supposedly serious health concerns. Even after the current disaster is concluded, there is still the fact that Porter Ranch sits next to some of the largest natural gas storage deposits in CA with a history of accidents. This just demonstrates how house horny people are. They will even buy a home next to a leaking gas well.

    • Another interesting thing I noticed about Porter Ranch. A significant number of homes were bought around summer of 2015 for under market value and recently sold in December 2015 for 20% profit. Wonder what’s going on there.

  • Adding to the housing market headwinds is the debt crisis in China. The debt crisis in their property market could end one of the few things propping up the US housing market.

    What is going to happen when the Chinese slow their purchases of US property?

    With American salaries going nowhere fast and expenses rising – most citizens certainly can’t pick up the slack.

  • Smelling the fumes

    Unless what I have read in the papers is not right, the gas that is gushing from the rupture is all from man-made sources. There is a huge cave system underground, that Siempra Energy uses to store natural gas that is trucked in from all over the country. They actually put this gas into the caves to store it until the need to use it in SoCal. So is this escaping gas going to go away. Yes! Not sure how long it will take for all of it to escape, but at some point if they are not putting gas into the caves there will be none left.

    But I also have read that it is such a major storage location, that we would be in trouble if we couldn’t use it. Natural gas delivery would suffer greatly in the SoCal area.

    So who wins? Homeowners or Gas Company. Time will tell. But home values will suffer until they cap the well.

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