DETROIT, Nov. 27, 2007
Report: Foreclosures Will Sap U.S. Cities
Metro Areas Face Billions Of Dollars In Lost Economic Activity Next Year
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A "foreclosure" sign tops a "for sale" sign outside a home in Denver. A new report says rising foreclosures will cost major U.S. cities billions of dollars in lost economic activity next year. (AP)
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
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News Tools Real Estate Glossary A glimpse at some of the terms a home buyer or seller will encounter during the process.
The report was compiled for a conference of U.S. mayors in Detroit. The mayors hope to create policy recommendations to help address the nation's housing crisis.
Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation's economic activity.
"The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods - and it's not over yet," the report said.
The biggest losses in economic activity are projected for some of the nation's largest metropolitan areas. New York is expected to lose $10.4 billion in economic activity in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion each, and Chicago at $3.9 billion.
The report estimates U.S. gross domestic product growth in 2008 will be 1.9 percent, coming in about $166 billion - or one percentage point - lower as a result of mortgage problems. GDP is the value of goods and services produced and is considered the best barometer of the country's economic fitness.
The report also projects property values will decline by $1.2 trillion in 2008, due in part to the foreclosure crisis, with drops in home prices across the U.S. averaging 7 percent. And it said the loss of property, sales and real estate transfer taxes will hurt local and state governments.
But homeowners, banks, holders of mortgage-backed securities and loan servicers can work together to ease the economic effects, the report said. Agreeing to new payment terms on some loans, for example, could make the difference between a family keeping a home and losing it in foreclosure.
"Such actions will help to lessen the number of foreclosures thereby avoiding the further negative effects on local housing markets and on the broader economy," according to the report, titled "The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas."
The Detroit conference will address the state of the mortgage industry, ways homeowners can avoid foreclosure, and strategies to keep foreclosed properties from dragging down the quality of life in neighborhoods.
The mayors' recommendations are to be presented at a conference in January.
© MMVII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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See all 32 CommentsHowever, those low initial rate to balloon pmt mortgages were basically for the House Flippers market. Now those are being left to foreclosure when prices drop & profits arent there.
The major reason? easy home equity loans at low to high rates, Poured money into the economy like water.
The real affect of inflated housing prices came from People taking out HomeEq loans off their newly appraised home. This sent 10s of 1000s per customer into the economy by way of Paying for College tuition, new cars, paying off credit cards and loans freeing up more purchasing power, computers/electronics, new furniture, Home updates and remodeling (which fueled Home Depot, Lowes, and others like crazy)
All those things went right into the economy and boosted it in big chunks.
that never happened in the past.
This was a 1 time 10 yr period of rediculous boost that is now gone.
With Credit tightened like a vise, and many people that had gotten loans no longer able to, housing prices dropping to or even below mortgage values, it wont happen again in the near future if ever again.
WAKE UP AMERICA, IF YOU WANT CHANGE THEN LETS HAVE A AMERICAN TEA PARTY(REVOLUTION) AND TAKE ARE COUNTRY BACK. WE THE PEOPLE HAVE THIS OPTION, ITS IN THE CONSTATUTION, IF THE GOVERNEMNT IS NOT RESPONDING TO THE WILL OF AMERICANS, THEN ITS UP TO AMERICANS TO CHANGE IT..AND START OVER. CLEAN AND SIMPLE.
The prices will drop.
Eventually the market will level off.
And then it will rise again.
These cycles just keep going on.
Its just a little worse this time because so many people overloaded themselves.
That''s because the real estate guru''s were working with the banking elite to sell their artificialy inflated houses to the poor and middle class, any number fudging way they could. The Fed lowered the interest rate to 1% and were allowing people to come in with APR loans knowing full well, how could it possibly be cut any lower. Then it just started to get rediculous with interest only loans and, right at the end, I even heard a 50 year loan plan. No government intervention was not an accident. The bankers, government REPRESENTATIVES (D.C. meaning of representation) and real estate elite knew exactly what they were doing... passing the buck to the poor and middle class. Now it''s time to bring in the nets and see how many fish they caught. Foreclosure companies are lurking in the shadows. As quietly as they can, they are sucking up these peoples hard earned money for even more profits.
If you vote GOP, your intelligence is seriously in question. Don''t think Hillary isn''t just more of the same, either.
Who would have guessed, the same combination of greedy pie-in-the-sky live-the-American-Dream-as-long-as-it''s-not-at-my-expense big spenders and severely under regulated profiteers who created this fiasco, will also go through a personality change and fiscally take full free-market accountability and responsibility for their temporary lapse in unregulated judgement.
I sure hope All of the Conservative Lard worshiping idiots who voted for george lose their homes too.
Why buy when Rent is so much cheaper and your not stuck in a State like North Carolina (full of Lard worshipers) where the jobs just keep going,and going, and going. While Food prices keep rising.
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Posted by beecuster at 02:08 PM : Nov 27, 2007
Typical LIB hatespeach.
B) bought a college education for many kids.... not now.
C) bought a new SUV.... not now.
D) made people feel comfy that they could go out to eat a lot and see movies, and events like dirt bike racing and bull riding, ballets, concerts, nascar, football, baseball.... not now.
economy slows because less money in the hands of consumers while cost of living skyrockets and takes more money out of the pockets of consumers for necessities like Heat, Electricity, gasoline, food. And right back into the hands of the richest, most predatory industry in the world.. the energy conglomerates that control you all like sheep.
Cut up all your credit cards and do all your shopping with cash only at "Sally Anne''s" (also known by some as the Salvation Army)
This way you can get great deals and you can be sure you are not buying a product straight off the boat from China.
Not so~ President Ron Paul will be loved by a large majority and have the backing of the American people like no other president since maybe JFK. His ideas are common sense and he will expose those in Congress hiding behind special interests or corporate greed.
Join the party!! www.teaparty07.com
Keep up the good work you morons until people get mad and take it out on you. Of course they are the ones who don''t believe it and ask why me.
Meanwhile, organizations that hate pirates give the worst offenders sweet deals and the folks who say "get educated" know it''s cost prohibitive, except for the countries they''re giving away education to.
Offshoring indeed. Globalization? Not until the US standard of living meets the countries we''re offshoring too. Then we''ll be competitive.
Don''t worry people...the trickle in Bu$h''s trickle down economics is coming. Just wait...it''s coming. We just need to keep giving huge tax breaks to billionares and oil companies. It''s coming...don''t worry.
What we need is a President who will show us the way. Not the old way. Not the same way, but a NEW way. Think about this for a minute. What if we pulled all of our troops out of South Korea? They''ve been there for 50+ years. What if we quit worrying about Iran, but instead, realized that its having a nuclear weapon will not mean the end of the world? What if we pulled all of our troops out of the Middle-East, and brought them all home? What if we realistically addressed the National Debt, and paid attention to REALLY DOING SOMETHING about stopping illegal immigration? These are the ideas of Presidential candidate, Ron Paul. He''s a ten term Congressman and a physician who has delivered over 4,000 babies. He''s an intellectual who''s published four books, three of which are devoted entirely to sound economics and one to foreign policy. He was raised on a dairy farm in Pennsylvania as a pious Lutheran, but now he attends a Baptist church. Paul is given to mulling things over morally. Whenever he recollects the helicopter pilots he treated as an Air Force Flight Surgeon (Captain) during the Vietnam War, a war which he now says was "totally unnecessary and illegal," he laments, "They were gung-ho. I''ve often thought about how many of those people never came back." Candidates with the high level of personal integrity and proven track record of adherence to The Constitution, Congressman Paul has always demonstrated only come around once in a lifetime, if we''re lucky.
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