Berwick Borough rental inspection ordinance; Berwick Area Landlord Association

The Columbia County Court of Common Pleas will shortly hear oral arguments in the case of Berwick Area Landlord Associaton v. Borough of Berwick. Berwick landlords are challenging Berwick Borough's rental inspection ordinance largely on the basis that the ordinance would impose liability on the landlords for the actions of their tenants.

Recent court cases in Pennsylvania and elsewhere have struck down local ordinances that are inconsistent with existing state law (on a variety of issues). This principle can now be applied to landlord-tenant law to prevent municipalities from changing existing state law as it relates to landlords and their tenants. (I am briefly summarizing arguments that have been made by the Berwick Landlord Association in court.)

The oral arguments will provide the last input before the Court decides a "Motion for Summary Judgment" filed by the landlords. Whoever loses in this Motion will file an appeal to the Commonwealth Court. The Commonwealth Court's decision (expected later in 2011 or 2012) will profoundly affect rental ordinances throughout Pennsylvania.

This case is docketed at 2008 - CV - 1873 in Columbia County.

A victory in this case would not invalidate all of the rental inspection ordinances across Pennsylvania, but it would limit many of those ordinances. Many municipalities now consider similar ordinances without knowing that these ordinances (such as Berwick's) are often tied up in court. A victory in this case would cause other municipalities to consider future legislation more thoroughly rather than simply copy the ordinances from Berwick (and others) verbatim.

Philadelphia City Council must recognize Sunshine Law; HAPCO

Two weeks ago, Pennsylvania's Supreme Court struck down Philadelphia City Council's ban on public comments at council meetings. The ruling results from a 2007 lawsuit filed by PROA affiliate HAPCO. The ruling is based on and enforces Pennsylvania's Sunshine Law.

Luxury apartments vs. homeownership; suburban highrise development.

From CNBC comes the story of consumers from the high end of the real estate market that choose to rent instead of own because they fear losing their investment if they own their own homes. While the story focuses mostly on New York City, this trend has nationwide implications:

Demand for luxury rental units has increased as wealthier individuals who can afford to buy are deciding not to, according to brokers and real estate analysts in affluent areas of the country such as New York City, Chicago and San Francisco.

“More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “Within the last year, so many people have seen their family and friends get burned in real estate. They don’t see it as being a risk free investment as they used to.”

And they're paying top dollar to rent.

A year ago, I wrote of the nationwide trend toward high rise development in the suburbs and away from the cities. A move toward luxury rentals and away from ownership could accelerate this trend. This trend could also be increased if urban financial troubles continue to destabilize urban real estate markets.

City of York to raise real estate taxes.

Fox 43 News in York reports that the Mayor of York has proposed an increase in city property taxes in the amount of 11.9% for 2011. The measure must be voted on by York City Council by the end of 2010.

Increases in costs (any costs) tend to have an inverse effect on the value of properties - especially investment properties. These increased taxes, if approved should be taken into consideration in any assessment appeals for York city properties starting in 2011.

New lawsuit filed against Penbrook Borough;

I have written previously about actions of Penbrook Borough in Dauphin County against investors, including charges for filing false tax returns against those who had filed no returns at all. On November 3rd, one such investor filed a lawsuit against the Borough in the Dauphin County Court of Common Pleas. The suit, filed by a pro se Plaintiff, identifies several acts of the Borough and its manager that have created liability.

The suit is docketed at 2010 CV 14365 CV and is available for public review.

More such suits are possible.

Cotton price surge matches other commodities; Inflation and its consequences for real estate

I have written earlier about rising prices in such commodities as wheat, fuel and gold. Now cotton has joined the list of commodities with surging prices:

The cotton surge is part of a broad-based commodities rally since the beginning of the year, underpinned by fears over a weakening dollar, healthy demand from emerging markets and various weather-related supply disruptions. Along with cotton, prices of so-called soft commodities such as sugar, orange juice and coffee all have soared, adding to concerns that consumers might soon be paying higher prices for daily necessities.

Surging cotton prices should have the same effect on agricultural real estate as surging wheat prices (although not directly in Pennsylvania).

As commodities surge, the dollar declines.

It is better for investors to consider the effect of an overall commodity surge now before the effect on real estate prices becomes apparent. Rampant inflation, if and when it arrives, will affect all real estate prices regardless of interest rates.

Gasoline price movement and real estate prices

I have written previously about gasoline prices - particularly how movement in gasoline prices can foretell a broader inflationary climate.

Locally, the price at the pump has increased roughly 20 cents per gallon in the past week. This is a major increase that bears implications for the economy as a whole, particularly real estate prices.

On the other hand, crude oil prices may have begun a pullback globally.

We do not really know which way oil related prices may go, but whichever way it is, real estate prices should go with them.