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.

Harrisburg Ordinance 13-2010

Harrisburg Ordinance 13 is up for amendment tonight before the vote on final passage. The City Council agenda does not say what the amendments will be.

Click here for details on the Ordinance.

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Update

8:25 PM

Harrisburg City Council did not vote on Ordinances 13 or 14 this evening. Council did not discuss the Ordinances or the reasons for the delay.

Prior to the announcement of the delay, I spoke in opposition to the ordinances on behalf of CARPOA and AACP. I spoke briefly of lawsuits filed in other jurisdictions resulting from public comments from city officials. City officials in Pittsburgh had stated publicly that inspection ordinances and rental licensure would serve to raise revenue for the city. Such a revenue raising purpose is illegal and those statements resulted in legal action against Pittsburgh. I pointed out similar statements made by Harrisburg officials in support of Ordinances 13 and 14 in recent weeks. (Click here for a fuller discussion of those statements.)

There was no response to my comments.

In addition to prior statements stressing the need to raise revenue from Ordinances 13 and 14, it is significant that tonight's council meeting was devoted almost exclusively to the City's financial problems. Council's final act tonight was to adopt Resolution 72-2010, which reads as follows:

A Resolution authorizing the engagement of professionals to study the advisability of authorizing the filing of a petition under either the Municipalities Financial Recovery Act (Act 47) or Chapter 9 of the bankruptcy code.

Apartment Association of Central Pennsylvania; Best of Living Awards (BOLA); Senator David Argall

On September 23rd 2010, Senator David Argall (R-29) spoke at the annual Best of Living Awards (BOLA) of the Apartment Association of Central Pennsylvania (AACP). Aside from speaking briefly about Senate Bill 900 (the blight bill), Argall made a recommendation to property investors looking to deal with increasing municipal regulation such as inspection ordinances. Investors should get to know their municipal officials before any such municipality proposes legislation that will impact investors.

By becoming a constant presence in municipal affairs, investors can head off damaging legislation and avoid needless disputes.

Senator Argall is currently running for Congress in Pennsylvania's 17th Congressional District.

Harrisburg Ordinances ## 13 and 14

I have written earlier about Harrisburg Ordinances ## 13 and 14 and the City's illegal attempts to profit from investment property licensure and inspection as well as new residency requirements for owning investment properties within the City.

These ordinances are currently scheduled for a vote by Harrisburg City Council on Tuesday, September 28, 2010 at 6:00 PM at the King Center downtown. Public comment will be allowed and may alter the outcome.

Harrisburg to raise revenue through inspection ordinance.

Harrisburg City council members press on in their attempts to pass Ordinances 13 and 14.

On September 7, 2010, Council member Brad Koplinski and codes officer David Patton spoke at the Boys and Girls club on Berryhill avenue in support of the ordinances. They estimate that the City will raise roughly $200,000.00 per year from enforcement of these ordinances and the resulting inspection fees.

Koplinski and Patton admitted that the prior inspection ordinance was not enforced.

On September 1, Councilman Koplinski stated that the ordinances would raise "upwards of $100,000" for the City.

Meanwhile, Pennsylvania's Governor has pledged 4.3 million dollars to help the City meet payroll and other obligations.

Franklin County Landlords Association

A new landlord's group has begun operation in Franklin and Fulton Counties this year. The Franklin County Landlords Association meets monthly and provides all of the benefits of PROA affiliation.