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Slumping Homes Sales and Declining Values Impact Cities, and Municipalities!

No man is an island and neither is the effect that a sluggish real estate market has on local governments and municipalities!  The problem when a real estate market is rising - everyone thinks the party will never end!  Increasing home values, new more dense zoning are dollar signs in the eyes of tax assessors and city officials!  Higher home prices translates into more taxes, and in fact so much tax that to hide the fact the persons in charge want to spend it.  Increased education budgets, new school buses, raise in pay for employees, new fire trucks, new roads, local city projects now require acquisitions of land for new schools, firehouses and police stations.  Of course the employees will need new transportation and even a new fleet of patrol cars to better serve the community!  Spending on the local and county level are based upon an ever increasing revenue for the rising price of real estate.  But what happens when this stops?  What happens if home prices fall?  Did you ever wonder that if foreclosures increase exponentially and people also stop paying property tax?  What happens then?  Layoffs and budget cuts follow a declining tax revenue.

No one is immune from city, municipalities and state government layoffs!  Essential services  like police and fire may be spared until the end, but at some point their budget are also looked over to trim the fat.  The cutting of overtime is a start in many city departments!  But it goes further, schools after school activities like bands and sports can be the first items cut out of a budget.  Cities are in a real bind that taxes have been raised, and property values and tax revenue have declined.  The bigger budgets from the boom days now have to be slashed and will now provide mediocre services for a top dollar price!

How is your city doing in a declining real estate market?  Is your city affected?  Are any budget cuts in the plan?

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James Crawford ABR, Broker Associate

 

 

 

 

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Comment balloon 12 commentsJim Crawford • March 24 2008 11:49PM

Comments

yes I just saw our market numbers in realtor magazine but our market is performing better locally
Posted by Ross Quintana, Real E Smarter Real Estate Coach - 509-362-1966 (Real E Smarter) over 10 years ago
Jim, my whole area has been rocked by job losses, naturally foreclosures soon followed.  
Posted by Kris Wales, Real Estate Blog & Homes for Sale search site, Macomb County MI (Keller Williams Realty - Lakeside Market Center) over 10 years ago
 Great post. Our market is doing ok. Homes are still selling if priced right.
Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 10 years ago
Spokane Real Estate - Ross Quintana  We must keep in mind that big cities have more than one area of concern.  So whereas one part of town may be doing well others may become a drain. Most city budgets are coming under pressure.
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) over 10 years ago
GITA BANTWAL, REALTOR BUCKS COUNTY, PA HOMES  It will be interesting to see how this applies a year from now in most markets.
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) over 10 years ago
Kris Wales- Metro Detroit real estate agent-Chesterfield Twp-Macomb County MI   I understand Detroit has some major issues.  We have them also!
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) over 10 years ago
Here in NH where small towns abound the towns reassessed property at the top of our market in 2005 and have no plan to reassess any time soon as prices decline. It was as if they had an insider telling them when to make their move.
Posted by Judy Tuscano, NH Real Estate Professional (Prudential Verani Realty) over 10 years ago

 

Jim,

Well, the ripples continue their trip across the pond. Pretty interesting news from CA yesterday, wan't it?

 

Steve

Posted by Obeoman Glade Jones (www.obeo.com) over 10 years ago

We don't have the massive foreclosures yet like other parts of the country do, but we do have more.  We also don't have a real estate transfer tax.  I wonder how states are doing that have that. I mean that has to be a huge source of revenue.  No sales, no transfer tax...I've been thinking about this as well, and am interested to see what the year brings.

Posted by Melina Tomson, Principal Broker/Owner, M.S. (Tomson Burnham, llc Licensed in the State of Oregon) over 10 years ago
Judy Tuscano, NH Real Estate Professional  They're no dummies!   LOL!  They know when it is peaking, they can see trends before us!
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) over 10 years ago
Obeoman Steven Stearns  Were you referring to all the teachers being laid off in CA?
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) over 10 years ago
 Melina Tomson, M.S. Salem Oregon Real Estate Specialist  A lot of states raised the transfer tax!
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (Crye-Leike REALTORS®) over 10 years ago

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