Housing Slump Will Hurt Economies Well Into Future
Everyone knows that housing is dragging the national economy down. Now comes evidence of how the housing sector could hurt local economies for years to come.
According to the
Taken together with the most recent data about the national housing situation, this indicates a grim future for U.S. cities. The latest Case-Shiller Home Price Index report, out today, showed that as of July, the national 20-city home price index was down by 4.1 percent from one year prior.
Indeed, the housing market has a long way to go before it achieves anything close to a full recovery.
And though lawmakers are struggling to come up with ways to help jump-start a stagnant housing market, it may simply be that time is going to be a more effective salve than policymaking. "I think it's mainly something we're going to have to ride out," says Newport.
Of course, property taxes are not the only contributing factor to municipal financial woes. Income tax collections also reflect individuals' earnings from previous years, making for yet another lag, albeit shorter than that from property taxes. Declines in aid from states, facing their own budget troubles, also can hurt cities. All of this makes for a harmful cycle: Cities already crippled by the Great Recession are now being hit by this drop in property tax revenue. Cities facing financial troubles have been forced to lay off employees, freeze hiring and salaries, and cut health benefits. Workers who are uncertain about their future employment or salaries will almost certainly be less willing to purchase a new home.
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