San Carlos Pipelinegate: Will it Impact Home Values?

October 8, 2013

Shades of San Bruno.

By now you've very likely heard about the sequence of events that took place over the weekend between the City of San Carlos and Pacific Gas & Electric that culminated in a court order to shut down gas transmission line #147 which runs up the heart of San Carlos.   Lest you think that the plethora of news trucks that were parked along Brittan Avenue were there to cover youth soccer matches, this was definitely the talk of the town over the weekend — and it put the City of San Carlos in unenviable company with San Bruno as a community that is now linked with gas pipeline safety concerns.

After much wrangling, both in the press and in the courts, the City of San Carlos was ultimately successful in getting PG&E to agree to shut down line 147 until a hearing can be conducted regarding the safety of this critical transmission line.

Pipeline Disclosure and Real Estate.

In the wake of the San Bruno tragedy, laws were passed to help increase the public awareness of the presence of gas transmission lines in their neighborhoods, or in places where they were considering buying a home.   The two main real estate purchase contracts that are used this area (PRDS and CAR) recently inserted advisories into their respective contracts about the possible presence of gas and hazardous liquid pipelines in the area.  The advisory points interested parties to the National Pipeline Mapping System website that is maintained by the Department of Transportation as to the location of the various pipelines in their areas.

In addition, several brokerages — including mine — are mandating that a separate advisory with basically the same information be included in the disclosure packets that buyers are required to sign, just to ensure that the initial advisory was not glossed over in the contract.  The advisory also directs interested parties to contact their utility company with any questions about the pipelines in the area.

Is it a perfect solution?  No.   First of all, when you click the link above today you'll find that it's a dead link — courtesy of the federal government shutdown.  Second, the information that is disclosed in the map (when the website actually works) is only enough to send you into PG&E's massive phone tree to get more answers.

Pipelines and Home Values.

Whether it was because of the economy or the pipeline explosion (or both), home values plummeted in San Bruno after the tragedy in September of 2010.   And it's still a topic that taints any conversation about real estate in San Bruno, even with homes that are miles from that transmission line.

Will a similar effect happen in San Carlos now that this issue has become front and center on every news broadcast?   After all, Line 147 runs right under Brittan Avenue all the way up through the hills.  You probably couldn't pick a more centrally located place to put a pipeline, right?

I think the answer in this case is no.  First, the updated advisories and increased public awareness have been in place for over a year, so anyone who has recently purchased a home directly on Brittan Avenue, or in close proximity to Brittan, should have been aware of the presence of this transmission line.   And as you have seen from the performance of home prices in San Carlos lately, nothing has dampened the enthusiasm for San Carlos real estate.

Take a look at the price performance of 3BR homes on Brittan Avenue over the past 3 years since the San Bruno tragedy:

3-Bedroom Home Sales:  Brittan Avenue, San Carlos

3-Bedroom Home Sales: Brittan Avenue, San Carlos

This growth average sales price is in lock-step with the rest of the home in San Carlos, so clearly there's not much concern about what's happening under the ground.

Second, I think rapid response of the San Carlos City Council in forcing PG&E to re-evaluate the safety of this line will placate the concerns of homeowners and prospective buyers.   This public vetting process will push PG&E to produce evidence that they indeed thoroughly understand and have documented the history of this transmission line, and can prove that it can be used safely before it is turned back on again.

The bottom line is that San Carlos is no different from any other community on the Peninsula in this respect — high-volume natural gas transmission lines run through every community here.  The concerns of prospective home buyers will likely be the same whether they are close to a gas transmission line in San Carlos, or San Mateo, or Menlo Park.    Buyers are either going to care, or they're not.   This episode of Pipelinegate should have no adverse affect on the local real estate market.

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