According to Jack Healy in an article he wrote in The New York Times, based on a survey conducted by the National Association of Counties, "76 percent of large counties said that falling property tax revenue was significantly affecting their budgets".
This doesn't surprise me at all. In fact I have written about it more than once. The housing market is intimately intertwined with local municipalities both in terms of existing property tax revenue as well as new property tax revenue which is a product of new homes being built.
Unfortunately for local municipalities, home values on average have fallen over 20% from their peak in 2006 and new home sales are down nearly 75% from their high in 2005.
It is no wonder that according to The Center on Budget and Policy Priorities that 46 out 0f 50 states are experiencing budget stress.
California certainly is one of the states making the most headlines, not surprisingly they are also one of the states with the hardest hit real estate markets in terms of home value declines. And yet despite their budget crisis they understand the positive impact that a robust housing market can have on an economy. California has taken it upon itself to have their own $10,000 home buying tax credit in addition to the $8,000 Federal one.
The first priority of this economic crisis which is devastating municipalities, banks, consumers, and the stock market, is that you need to stop home value declines by increasing demand for real estate through fiscal policy and absorb the excess supply of homes.
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