Liquefaction

Categories: Trading, Real Estate

To demonstrate the concept of liquefaction, we’d like everyone to close their eyes and visualize their favorite sandbox. Are we all picturing it? Great. Now let’s go ahead and build a G.I. Joe-sized skyscraper out of popsicle sticks and set it in the sandbox. And now let’s go fill up a bucket from the hose and pour the water into the sandbox. What happens to our skyscraper? That’s right: it falls over. Or sinks. Or leans precariously to one side. Whatever it’s doing, it’s certainly not standing upright on stable soil anymore, which could pose big problems for our G.I. Joes.

When soil gets too moist and loses its stability like that, whether due to something man-made (like fracking) or something natural (like a flash flood), it’s called “liquefaction.” And liquefaction can cause big headaches for real estate developers and the contractors who love them.

We can combat liquefaction a number of ways, like testing and compacting soil before we build, making sure our site has adequate drainage, and shoring up our structure with piers and pylons. Because let’s face it: no one wants to live or work in a building that’s going to topple over in the next heavy rainstorm.

In the real estate development world, it’s much better to be a mover and shaker than to build on ground that is, uh...moving and shaking.

Find other enlightening terms in Shmoop Finance Genius Bar(f)