The far reaching effects of the housing slump

Although it has not been widely publicized, the effects of the housing market down turn is effecting communities.  The highlight has been mostly about housing, but it seems less money is coming in the tax coffers as consumers slow their spending. The slump in home sales is currently effecting the tax base and we are amidst the tax scramble.  The trickle down theory didn't take long to effect the tax base. 

It appears some miscalculations were made concerning the far reaching effects of the housing slump!

What has happened in Paradise California real estate markets, it's the old law of supply and demand. Too many houses and too little credit has dried up the buyers. Houses are sitting on the market longer.

Then there was the effect of all those (HELOC) home equity loans. It seems everyone was getting one of these loans. Consolidating their credit cards, putting in a pool or maybe just fixing up the house. Well it seems those purchasers are dried up too!

Home renovations that caused a run on building materials are easing up. And so when you add on a new room, of course you need new furniture. So, the sofa sales are down. If you've ever bought a couch, you know they are not cheap. Sales tax collection on all this spending is drooping.  States like California are pulling back on their state budgets as less tax money comes in. Admittedly, some cities in California experienced uncontrolled building and there are many other states not going through this much pain.  It's not hard to see that this epidemic is spreading like an disease.  As always, for every action, there is reaction.

An interest rate cut maybe coming soon!