Monday, May 30, 2011

Metal theft points to direction of inflation and economy

As inflation picks up, the value of scrap metal rises. These price increases affect real estate in two ways:

  1. Increasing commodity prices can help predict the general direction of prices of all goods, inclusing real estate; and

  2. Increasing scrap metal values place real estate at risk for theft and vandalism.

In particular, metal theft demonstrates the declining value of the dollar and the lengths to which thieves will go to obtain something with real value. Metal theft has been rising in recent years, and in particular in recent weeks. Consider the following news items:

The problem is nationwide and is no longer limited just to copper or just to abandoned houses or houses undergoing rehabilitation. Iron is considerably less valuable than copper, yet thieves are targetting that metal also.

Monday, May 23, 2011

Glut of foreclosed homes may deepen real estate downturn.

A recent article in the New York Times estimates that lenders own more than 872,000 foreclosed homes at this time:
All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

For each home a lender sells, they foreclose on many more:
In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.

Before the housing implosion, the inflow and outflow figures were typically one-to-one.

The problem is apparently widespread and will contribute to continuing stagnation for several more years.

Sunday, May 22, 2011

Cumberland Valley School District school tax increase

On May 20th Cumberland Valley School District in Cumberland County approved a tentative budget with a 2.9% school tax increase. This tax increase follows a county-wide reassessment last year and a 9.5% school tax increase by the nearby Camp Hill School District in 2010.

Cumberland Valley officials did not comment as to whether this tax increase bears any connection to the statewide lawmaker 2001 pension increase that has been projected to cause large school tax increases throughout Pennsylvania in 2012.

Saturday, May 21, 2011

New Giant and Weis Markets in Hampden Township

The Harrisburg Patriot-News reported last week that Giant plans to open a new 90,000 square foot supermarket in Hampden Township, Cumberland County, while Weis Markets plans to open a 63,000 square foot supermarket nearby. Both supermarkets are planned for Valley Road (near Wertzville Road) - roughly in the northern portion of the developed part of the Township.

If both stores are completed, the number of supermarkets within the Township will double. Hampden is the most populous municipality in Cumberland County.

These plans reflect continued growth in Hampden Township and continued population saturation/expansion in a northern and western direction from the Susquehanna River through Cumberland County. These stores would be part of a trend of development through and near a long strech of Wertzville Road in northern Hampden Township (and northern Silver Spring and other Townships) over the past decade, including office parks, gas stations, retail centers and a school.

Saturday, May 14, 2011

Real estate prices, gasoline prices and stranded motorists.

From Pittsburgh came a report last month on one way in which rising gasoline prices have already begun to affect consumer behavior:
With gas prices pushing $4 a gallon, a lot of people are trying to stretch their dollar at the gas pump, but some of them are trying to stretch it a little too far.

Since the beginning of March, AAA has seen an 18 percent increase in the number of roadside calls for people running out of gas.

I have speculated previously on the relation between gasoline (and other commodity) prices and real estate sales. With this report, it becomes apparant that consumer behavior is already starting to change. While it may appear to be a small matter that more consumers are being left stranded on the roads, this trend is an indicator of larger behavioral trends, including major purchases such as real estate.

Even though commodity prices have stabilised (and even dropped slightly) over the past two weeks, it is highly likely that the recent commodity price run-up will trigger another round of real estate price decline and/or sales stagnation.

Tuesday, May 10, 2011

Harrisburg to announce new blight policies

Mayor Thompson of Harrisburg is set to announce new policies aimed at blighted properties within two weeks. This announcement apparently results from a large empty building on North 18th Street in Allison Hill:
[Code Officer] Patton said his department has cited the building owner nine times, but the problem remains. According to Thompson, in two weeks she will announce new, stricter policies against city blight.

It is not yet known what those new policies will be.