Posted on 11/27/2007 5:26:02 AM PST by Hydroshock
Edited on 11/27/2007 5:38:55 AM PST by Admin Moderator. [history]
NEW YORK (CNNMoney.com) -- The mortgage meltdown will take a heavy toll on home prices in 2008 with declines expected to average 7 percent across the nation and lost property value of $1.2 trillion, according to the United States Conference of Mayors.
The mayors, meeting in Detroit this week, are predicting even more substantial plunges in local markets, with California home prices expected to shrink 16 percent.
The organization has representatives from more than 1,100 cities and were meeting to address problems brought on by spikes in foreclosure rates.
"Today the foreclosure crisis has the potential to break the back of our economy, as well as the backs of millions of American families, if we don't do something soon," said USCM President Douglas Palmer, Mayor of Trenton, N.J., in a written statement.
Foreclosures in 2008 will increase by at least 1.4 million, according to the mayors.
The economic impact will be substantial.
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Yippee..my property tax bill will go down....but only in my dreams
The media has created this "emergency," Sir, so slash those rates to 3.75% as to not appear partisan.
The day they lower the property tax will be the same day they discover a new species of avain hogs.
We need a rate hike to combat inflation.
Thanks!
yes...so true...and only in my dreams (sigh)
Done
Interesting that California is expected to experience the worst decline. This reflects the exact statements of some Freepers on several threads on this subject in the last two years. One of the things that’s driving this — and this is something we’ll start to see in other areas of the country — is a combination of two things: (1) an over-heated market to begin with (the turning point in California came back in 2005 when prudent financial advisors started telling some of their California clients to sell their homes and become renters instead); and (2) the pernicious effect of the Alternative Minimum Tax (AMT) on the real estate market in states with high income and/or property taxes (because Federal tax deductions for mortgage interest and state/local taxes are eliminated in the AMT bracket).
I expect to see a large amount of crying in city halls across the US. But instead of cuttign the fat they will cut necessary services and scream for a tax hike. The old Fireman First policy.
Political corruption, tangles of bureaucratic nonsense, high taxes and fees, useless bureaucrats, crumbling infrastructure, the exodus of young people ( the future) and growing armies of welfare bums will continue to plague liberal northern cities, as they race to the bottom of the socialist welfare state.
The economic impact will be substantial.
I imagine the mayors are setting the stage to beg for a federal bailout of some sort.
With what money? We are in real danger of seeing what happens to a credit/debt based economy when many if not most are no longer able to borrow anymore.
Interesting link. I don’t agree, though, with the blogger’s conclusion that this housing crisis has made all homeowners “sub-prime.” My husband and I own our house outright. If housing prices decline over the next few years, if credit tightens up, we won’t be affected since we don’t have to move and we don’t pay a mortgage.
The current housing crisis demonstrates the foolishness of buying more house than one can afford.
Oh, PLEASE Federal Government!!!!! Please bail us out!!!! How can our cities function if we don’t have our inflated property taxes?????? We’re counting on this money!!!!!
All of this hubbub misses a very important point.
What is a house *worth*? If you compare what you pay when you buy a house with what it is actually worth, it is obvious that it is a rip-off.
In today’s market, would you be willing to pay $8 for a cup of coffee? $20 for a donut? Probably not. So why are people willing to pay $400,000 for a house worth perhaps $50,000?
The bubble had to burst eventually. For years, some people have known that they could save a huge amount of money if they contracted the building of their own new home, and subcontracted the work out. But most people just wanted to buy an off-the-rack house, without the hassle.
And it just plain wasn’t worth it.
On top of that, the inflated price of housing had the side effect of paying far more property taxes than was fair.
So it is a good thing, and long overdue, that this bubble is bursting. Hopefully house prices will plummet, and government will be forced to lower property taxes to a fair level.
What we can get out of the deal is better homes, at much lower cost. Instead of the slapdash affairs thrown together on a poorly laid slab of concrete, with a green pine lumber frame, chicken wire wall board, and the appearance of value in lots of expensive extra angles.
The heck with biodegradable housing! Give us a house that we can pass along to our children in good condition.
The Levittown subdivisions of the 1950s and ‘60’s need to be gentrified. But instead of tearing them down to build cheap condos, or more cheap houses, they should be replaced with better housing.
Suburbia can be redesigned. Lots can be combined. Things like basements, steel frames, far more efficient insulation and design, created for easy maintenance and repair, energy efficiency and better security.
People should be living in the “homes of the future”, not just expensive, glorified cardboard boxes. We deserve to get value for our money.
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