Metal thefts in schools.

Metal theft has increased to the point of threatening this fall's opening of schools in parts of California:




The above films shows that metal theft has become more brazen, the thieves are more knowledgable and are branching into new areas.

In other metal theft news this week, thieves have stolen -

• highway guard rails.


• bronze flower vases attached to cemetary headstones.


• iron sewer grates.


• HVAC parts from a center for cancer stricken children.

As the dollar continues to lose value, any unsecured piece of metal becomes the equivalent of real money in ever widening sectors of the economy. This is a nationwide trend that real estate investors cannot ignore. The ascendency of metal value affects not only the physical safety of buildings, but (most importantly) the fluctuating value of real estate.

Hazleton Inspection Ordinance tabled; Ordinance 2011-13; Hazleton Area Landlords Association

On Wednesday, July 20, 2011, the Hazleton City Council considered a rental inspection ordinance. The ordinance would have required city inspections of every rental property in the City. The Ordinance was tabled by a unanimous vote of Council after numerous landlords, including the Hazleton Area Landlords Association, brought various facts to the attention of council.

A fair amount of discussion focused on the legal principle that the City could not use a measure like this as an income generator. I believe that Council lost much of their enthusiasm for this proposal when it became apparent that the fees imposed on landlords could not be used to close budget gaps or fund other projects.

Equally disturbing to Council was the news that prior ordinances had not worked. City employees reported to Council during the meeting that the 2006 rental registration ordinance had not been successful in obtaining addresses and registrations from every landlord with property in the city. Hundreds of property owners remain out of compliance with that measure. Council has not found the answer to the question of how the City would be able to conduct inspections of every unit when it could not ensure compliance with a simple registration ordinance.

More information was reported in the Hazleton Standard Speaker.

The following clip is from WYLN.

Federal and state governments attempt to treat symptoms of inflation

Various states and the federal government are considering measures to make it more difficult to sell stolen copper. These measures are being considered in response to the upsurge in stolen copper and other metals in recent years:

When thieves ransacked eight air conditioners in an apartment complex in the city of Mobile, Alabama, the culprits made off with $800 worth of scrap metal and left residents with $38,000 worth of damages. "We've had copper robberies since forever," said Officer Christopher Levy of the Mobile Police Department, "but we've seen a spike so far this summer." Record copper prices have caused a surge in U.S. copper thefts, plaguing law enforcement and local governments and prompting states to pass new laws. "Since the beginning of the 2004 spike in copper prices, copper theft and copper prices have been directly linked," a 2010 U.S. Department of Energy study on copper wire thefts said.

These laws will not address the real problem, as metal prices will continue to rise as long as the currency is being devalued. The Reuters article attempts to explain the rise with reference to increased Chinese usage, but that explanation tells only part of the story. Copper is not the only metal that is being stolen in larger amounts. Other commodities have seen rising prices for several years, including fuel, gold and silver. The new laws will only treat the symptoms. If the government truly wants to stop the brazen metal thefts that now plague homes and businesses, the government must stop reckless deficit spending.

In related news, California scrap metal thieves have stolen the irrigation system from a vineyard, threatening the entire grape crop.




For other examples of rampant metal theft in recent months, click here.

"Downfall;" Hitler explains the real estate collapse

By now, everyone has a "Downfall" movie parody relating to the issue of the moment. (I even saw a "Downfall" parody about the vuvuzelas that have annoyed so many soccer viewers recently.)

So I would be remiss if I did not include a copy of a "Downfall" parody that explains the real estate collapse.

Rising interest rates; The end of an era.

The New York Times last week predicted "a sustained period of rising interest rates." The projections at issue are for a long period of rising rates, not merely a short term fluctuation:

The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.

“Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”

The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

emphasis added

Everyone who has borrowed money in the past thirty (30) years has done so in the climate of falling rates. No one who is fifty years old or less has personally experienced borrowing in a climate of high rates. Attached is a commercial from January 1983 that might remind us of the way things used to be and are soon becoming again. [The film relates to car loans instead of real estate, but the concept is the same.] The ad assumes that the audience would be excited about car loan rates of 11.9%. In 1983, they were right, and they may be right again soon, even though current car loan rates are less than half that amount for 5 year loans and even less for shorter loans.



[H/T Need4Video.com for video conversion]

Youngstown film points out real estate issues affecting Harrisburg properties.

I found the following nine minute film on Youtube. It was filmed in Youngstown (a short commute from Pennsylvania's western border) this winter. The narrator's comments should sound familiar to Harrisburg investors, as the film touches on many issues that we deal with here. I noted a few points while watching this:

• Out-of-town investors usually pay too much for properties. New York real estate is far more expensive than real estate in Harrisburg or other smaller cities. Being unfamiliar with Harrisburg, a New York investor will have little basis to compare prices when he is confronted with a seemingly "good deal" at a price far below what the market would bring in a larger city. Experience with the local market is the important factor - not necessarily "touching" or "seeing" the property as the narrator stated.


• I am guessing here, but I would bet that the second property in this film is so cheap because there is some title defect preventing its sale at market prices. The property has probably been through a tax sale at least once (the narrator made reference to a company that buys tax liens). Without spending the money necessary to resolve this title defect, the owner cannot get a loan to make needed repairs. Properties that come with a sale price of "$1,000" usually also come with another price - unknown attorney fees necessary to clean up title defects.


• Appraisals often mean nothing. The narrator mentioned an $82,000.00 appraisal for the house that was listed at $1,000.00. I haven't seen the appraisal, but I imagine that any such document relied on completely irrelevant comps and/or failed to account for the title defects.

When we see these issues out of the context of our own neighborhoods and properties, we can look at them with a more objective eye.

Flood potential - March 2010; Pittsburgh; real estate implications; St. Patrick's Day Flood

No discussion of real estate would be complete without a warning about the potential for flooding at the end of a winter that has already brought near record snowfall. The Pittsburgh Post-Gazette warns of the potential for March flooding near Pittsburgh if predicted additional snowstorms arrive. Such an outcome, while far from certain, would have implications continuing far longer than the immediate damage and danger. Local economies, disclosures, misrepresentations, insurance coverage, income streams, appraisals and numerous other aspects would be forever altered by such a cataclysmic event.

If you are buying real estate in the next few weeks, pay particular attention to whether the property is in a flood plain. If you are uncertain about the possibility of flooding, buy flood insurance if you can. Most importantly, make sure the seller disclosure is as clearly and fully completed as possible. Sellers tend to be vague if there is something to hide (especially in the current fraud-prone market conditions). Pay particular attention to all explanations under section 16 (b) of the PAR disclosure form.

Buyers should ask their settlement attorneys now what options they will have if their newly purchased basements take on water during the March/April thaw. Sellers should know that the more they disclose now (before settlement), the fewer remedies the buyers will have in court later on.

According to the Post-Gazette, the worst flood to hit Pittsburgh in the last 100 years occurred in March 1936 ("The St. Patrick's Day flood"). Attached is newsreel footage from the same flood in Johnstown.




In Harrisburg, the most recent winter-related severe flooding happened in January 1996, when ice flows on the Susquehanna River destroyed the Walnut Street bridge.
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Update - 3-14-10 - Click here to find out how the flood situation turned out in Central Pennsylvania.