Thursday, May 14, 2015
CNBC Recent article on water in California Most landowners in California say they own the water underneath their land, while others argue groundwater is a common resource. Now with the drought in California, there's a topic many private landowners remain steadfast about: Water well metering. Without a drought the water from rivers lakes and reservoirs is ample enough to supply roughly two thirds of state water each year. Now farmers and drillers are digging deeper for ground water. According to a CNBC article groundwater can account for half of total state water consumed in drought years. This is usually not an issue, but now with a drought groundwater is everyone’s issue. In rural areas in outside Bakersfield, Tulare County ground water is the main water for residents. The Sustainable Ground water Act requires local districts to measure and report details on regional groundwater amounts. It was signed by Gov. Brown last year. The laws guidelines implies rural communities will have to monitor ground water removal which means metering. The argument is that driller may drill 1000 feet below their land but they are also tapping the neighbor’s water peripherally. It is further argued that the landowners say I own the water beneath my land and that is it, and it is not illegal to drill for water. The State and regulator want to regulate with water acquisition and they say that land is sinking because water is being pull out from other areas. The landowners say if it is my water why do I have to report what I take from my land? The State says they need to regulate how much water is being withdrawn. If there wasn’t a drought then likely there would not be an argument. CNBC’s article further reports that while the groundwater law is a place to start, the regulation includes a timeline for implementation, with a target date of 2040. End article. This will most likely affect the rural areas of Antelope Valley as Los Angeles County has been in a law suit with land owners in the Valley regarding the water basin below. This may increase the value of city land where water will be furnished by city services. It more affects farmers and rural residents in Antelope Valley, but as Lancaster and Palmdale are in the High Desert water rationing will likely be a way of life.
Monday, May 11, 2015
The global central banks have been printing money as a means to stop the most recent financial crisis. The biggest three money printing central banks have been the Federal Reserve, Japan and the European Central Bank. Gold has diminished in value instead of increasing the last five years during the QE (Quantitative Easing) era. The US Federal Reserve has ended qualitative easing and will increase rates soon likely in months according to experts. Higher interest and all this money printing to avoid deflation will likely soon cause inflation. The US debt is so large that other countries may also move away from the dollar as the sole reserve currency. There are recent news reports that outline this. These factors will all lead to inflation, and likely very high inflation. Gold is usually a very popular investment to combat inflation as it appreciates in value against a currency during inflationary times. Real estate is also a great investment at any time, and it is even better during times of rising inflation. Real Estate housing prices will likely drop with higher interest rates as the cost to buy a home will be more. The limited availability of land and rising population growth will increase housing demand and hence real estate in general has the potential to beat inflation in the long term. A reason why land is a good inflation investment hedge is because it will not lose value to zero like a stock can. Land doesn’t go bankrupt If you buy land in cash then the value may go lower, but overall will have value if it was a decent purchase price in an area that will see growth with future development. It doesn’t mean all land has value. If a person overpaid for land then the value may take decades to generations to produce a return on investment. Precious metals like Gold and Silver can increase dramatically in inflationary periods so your investment can profit much more than land. But buy land at a good price and the investment can hold its value in inflation. You can also sell it as other may want it as their inflation hold in such an environment.