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Rising foreclosures will lead to billions of dollars in lost economic activity next year in the nation's major metropolitan areas, according to a report compiled for the U.S. Conference of Mayors.
The lost spending power, declines in tax collections and loss of jobs will have an impact of more than $10 billion in New York City, the report says.
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The report was released Tuesday ahead of a meeting of mayors from across the country in Detroit, where they hope to create policy recommendations to help address the nation's housing crisis.
Prepared by forecasting and consulting firm Global Insight, the report says 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. Research group Standard & Poor's reported today that U.S. home prices fell 4.5% in the third quarter from a year earlier, the sharpest drop since it started keeping records in 1987.
"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 mayors' report says.
Today, the National Association of Realtors reported that sales of existing single-family homes and condominiums dropped by 1.2% in October to a seasonally adjusted annual rate of 4.97 million units, the slowest pace since it began tracking in 1999. The median price of a home sold last month declined to $207,800, a drop of 5.1% from a year ago, the biggest year-over-year price decline on record.
The mayors' report outlined much of the fallout to come. 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. On a proportional basis, California metro areas are expected to be hit hardest.
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The report estimates U.S. gross domestic product growth in 2008 will be 1.9%, lowered by a percentage point 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.
Metro areas hit hardest, on a proportional basis:
| Metro area | % loss* | $ impact** | Metro area | % loss* | $ impact** |
|---|---|---|---|---|---|
Myrtle Beach-Conway-N. Myrtle Beach, SC | -1.7 | -243.1 | Bay City, MI | -1.3 | -83.2 |
Merced, CA | -1.7 | -275.6 | Stockton, CA | -1.2 | -530.8 |
Madera, CA | -1.6 | -144.5 | Santa Cruz-Watsonville, CA | -1.2 | -208.6 |
Sarasota-Bradenton-Venice, FL | -1.5 | -646.4 | Santa Barbara-Santa Maria, CA | -1.2 | -370.6 |
Napa, CA | -1.5 | -174.6 | San Jose-Sunnyvale-Santa Clara, CA | -1.2 | -1,830.7 |
Rapid City, SD | -1.4 | -108.9 | Salisbury, MD | -1.2 | -110.9 |
Manchester-Nashua, NH | -1.4 | -405.3 | Palm Bay-Melbourne-Titusville, FL | -1.2 | -348.8 |
San Luis Obispo-Paso Robles, CA | -1.3 | -242.6 | Oxnard-Thousand Oaks-Ventura, CA | -1.2 | -647.8 |
Salinas, CA | -1.3 | -406.7 | Odessa, TX | -1.2 | -111.4 |
Mount Vernon-Anacortes, WA | -1.3 | -104.7 | Yuma, AZ | -1.1 | -90.3 |
*Decline in gross metropolitan product **Millions |
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%. And it says 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 says. 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 report forecast GDP growth will rise to 2.9% in 2009. "In the end," the report concludes, "the economy will not come off the rails, and we may actually have learned something."
The National Forum on Homeownership Preservation and Foreclosures, organized by the Conference of Mayors, includes discussions about 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 housing market slump has made it harder for strapped home buyers to sell their homes and avoid missing payments or losing their homes in foreclosure. Increasingly, many borrowers who took out adjustable-rate mortgages and other loans with monthly payments that increase after an initial period also are finding they can't afford the higher payments.
Economic impact across the U.S.:
| Metro area | % loss* | $ impact** | Metro area | % loss* | $ impact** |
|---|---|---|---|---|---|
New York-Northern NJ | -0.6 | -10,371.90 | Kingsport-Bristol, TN-VA | -0.5 | -109.9 |
Los Angeles-Long Beach-Santa Ana, CA | -1.0 | -8,301.8 | Salem, OR | -0.9 | -109.4 |
Dallas-Fort Worth-Arlington, TX | -0.8 | -4,022.1 | Rapid City, SD | -1.4 | -108.9 |
Washington-Arlington-Alexandria, DC-VA-MD-WV | -0.6 | -3,957.2 | Bremerton-Silverdale, WA | -1.1 | -106.5 |
Chicago-Naperville-Joliet, IL-IN-WI | -0.6 | -3,906.0 | Mount Vernon-Anacortes, WA | -1.3 | -104.7 |
San Francisco-Oakland-Fremont, CA | -1.1 | -3,607.1 | Bangor, ME | -1.0 | -100.9 |
Detroit-Warren-Livonia, MI | -1.0 | -3,202.7 | Lima, OH | -1.0 | -100.9 |
Boston-Cambridge-Quincy, MA-NH | -1.0 | -3,021.7 | Champaign-Urbana, IL | -0.6 | -100.6 |
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | -0.6 | -2,596.6 | Battle Creek, MI | -1.0 | -100.3 |
Riverside-San Bernardino-Ontario, CA | -1.1 | -2,372.5 | Longview, TX | -0.7 | -98.9 |
Houston-Sugar Land-Baytown, TX | -0.7 | -2,315.1 | Durham, NC | -0.3 | -97.6 |
Miami-Fort Lauderdale-Miami Beach, FL | -0.8 | -2,082.3 | Redding, CA | -0.9 | -96.7 |
Denver-Aurora, CO | -1.0 | -1,888.4 | Yuba City, CA | -1.1 | -96.7 |
Seattle-Tacoma-Bellevue, WA | -1.0 | -1,863.7 | Port St. Lucie-Fort Pierce, FL | -0.7 | -96.2 |
San Jose-Sunnyvale-Santa Clara, CA | -1.2 | -1,830.7 | Bellingham, WA | -0.8 | -96.1 |
Sacramento--Arden-Arcade--Roseville, CA | -1.1 | -1,729.1 | Greeley, CO | -0.8 | -94.6 |
Baltimore-Towson, MD | -0.8 | -1,636.8 | St. Cloud, MN | -0.4 | -94.5 |
San Diego-Carlsbad-San Marcos, CA | -0.9 | -1,574.1 | Utica-Rome, NY | -0.4 | -93.0 |
Phoenix-Mesa-Scottsdale, AZ | -0.9 | -1,437.8 | Fayetteville-Springdale-Rogers, AR-MO | -0.5 | -92.4 |
Orlando-Kissimmee, FL | -1.1 | -1,433.5 | Montgomery, AL | -0.4 | -91.2 |
Tampa-St. Petersburg-Clearwater, FL | -0.9 | -1,388.9 | Binghamton, NY | -0.4 | -91.1 |
Hartford-West Hartford-East Hartford, CT | -1.0 | -1,260.0 | Yuma, AZ | -1.1 | -90.3 |
Charlotte-Gastonia-Concord, NC-SC | -1.0 | -1,210.4 | Canton-Massillon, OH | -0.4 | -89.9 |
St. Louis, MO-IL | -0.7 | -1,089.3 | Medford, OR | -1.0 | -89.6 |
Richmond, VA | -0.7 | -1,019.3 | Davenport-Moline-Rock Island, IA-IL | -0.4 | -88.1 |
Atlanta-Sandy Springs-Marietta, GA | -0.6 | -954.0 | Ithaca, NY | -0.7 | -87.5 |
Las Vegas-Paradise, NV | -0.9 | -937.2 | Hinesville-Fort Stewart, GA | -0.4 | -86.2 |
Nashville-Davidson--Murfreesboro, TN | -0.7 | -901.6 | Fargo, ND-MN | -0.5 | -85.0 |
Pittsburgh, PA | -0.6 | -885.3 | Bay City, MI | -1.3 | -83.2 |
Bridgeport-Stamford-Norwalk, CT | -1.1 | -873.6 | Dubuque, IA | -1.1 | -82.0 |
San Antonio, TX | -0.7 | -869.2 | Flagstaff, AZ | -1.0 | -80.3 |
Buffalo-Niagara Falls, NY | -0.7 | -797.5 | Jackson, MI | -0.9 | -79.7 |
Kansas City, MO-KS | -0.7 | -754.3 | Chico, CA | -0.7 | -79.1 |
Worcester, MA | -1.0 | -719.9 | Dalton, GA | -0.9 | -77.8 |
Fresno, CA | -1.1 | -716.3 | Jackson, TN | -0.7 | -77.2 |
Virginia Beach-Norfolk-Newport News, VA-NC | -0.5 | -707.3 | Flint, MI | -0.4 | -75.6 |
Cincinnati-Middletown, OH-KY-IN | -0.5 | -690.3 | Tyler, TX | -0.6 | -75.5 |
Rochester, NY | -0.6 | -684.3 | Hanford-Corcoran, CA | -1.0 | -75.4 |
Albany-Schenectady-Troy, NY | -0.7 | -670.5 | Jefferson City, MO | -0.9 | -73.2 |
New Haven-Milford, CT | -0.5 | -661.5 | Winston-Salem, NC | -0.3 | -72.0 |
Oxnard-Thousand Oaks-Ventura, CA | -1.2 | -647.8 | Ocean City, NJ | -0.9 | -71.4 |
Sarasota-Bradenton-Venice, FL | -1.5 | -646.4 | Panama City-Lynn Haven, FL | -0.9 | -71.0 |
Austin-Round Rock, TX | -0.6 | -633.9 | Macon, GA | -0.8 | -70.4 |
Providence-New Bedford-Fall River, RI-MA | -0.4 | -616.3 | Williamsport, PA | -0.7 | -68.8 |
Raleigh-Cary, NC | -0.8 | -590.5 | Fort Collins-Loveland, CO | -0.5 | -68.2 |
Grand Rapids-Wyoming, MI | -1.0 | -575.4 | Amarillo, TX | -0.5 | -68.1 |
Oklahoma City, OK | -0.8 | -573.7 | Brownsville-Harlingen, TX | -0.4 | -68.0 |
Jacksonville, FL | -0.9 | -573.1 | York-Hanover, PA | -0.3 | -68.0 |
Stockton, CA | -1.2 | -530.8 | Lawrence, KS | -1.0 | -66.3 |
Bakersfield, CA | -1.1 | -527.8 | El Centro, CA | -0.7 | -66.1 |
Louisville, KY-IN | -0.6 | -499.4 | Morristown, TN | -0.7 | -65.8 |
Springfield, MA | -0.9 | -490.0 | Jonesboro, AR | -1.0 | -65.0 |
Memphis, TN-MS-AR | -0.6 | -482.0 | College Station-Bryan, TX | -0.6 | -64.0 |
Syracuse, NY | -0.7 | -470.8 | Las Cruces, NM | -0.4 | -64.0 |
Greensboro-High Point, NC | -0.9 | -449.6 | Burlington-South Burlington, VT | -0.7 | -63.4 |
Colorado Springs, CO | -1.1 | -421.9 | Bowling Green, KY | -0.8 | -61.8 |
Birmingham-Hoover, AL | -0.6 | -408.9 | Corpus Christi, TX | -0.5 | -61.8 |
Salinas, CA | -1.3 | -406.7 | Punta Gorda, FL | -1.0 | -60.0 |
Manchester-Nashua, NH | -1.4 | -405.3 | Cumberland, MD-WV | -0.9 | -59.3 |
Anchorage, AK | -0.7 | -403.4 | Decatur, IL | -0.7 | -58.4 |
Tulsa, OK | -0.7 | -391.7 | Lewiston-Auburn, ME | -0.9 | -58.4 |
Santa Barbara-Santa Maria, CA | -1.2 | -370.6 | Danville, VA | -0.6 | -57.9 |
Modesto, CA | -1.1 | -348.8 | Hickory-Lenoir-Morganton, NC | -0.4 | -56.6 |
Palm Bay-Melbourne-Titusville, FL | -1.2 | -348.8 | Abilene, TX | -0.7 | -54.5 |
Tucson, AZ | -0.8 | -342.6 | Wenatchee, WA | -0.8 | -54.4 |
Poughkeepsie-Newburgh-Middletown, NY | -0.7 | -338.7 | Sumter, SC | -0.9 | -53.3 |
Visalia-Porterville, CA | -1.1 | -320.8 | Tuscaloosa, AL | -0.5 | -51.0 |
Knoxville, TN | -0.6 | -311.9 | Dothan, AL | -0.6 | -50.8 |
Santa Rosa-Petaluma, CA | -1.0 | -307.7 | Columbia, MO | -0.7 | -50.7 |
Portland-Vancouver-Beaverton, OR-WA | -0.7 | -303.4 | Great Falls, MT | -1.0 | -50.1 |
Harrisburg-Carlisle, PA | -0.6 | -291.1 | Carson City, NV | -1.1 | -49.7 |
Boulder, CO | -1.0 | -288.6 | Casper, WY | -0.6 | -49.7 |
Lakeland, FL | -1.0 | -283.1 | Kalamazoo-Portage, MI | -0.4 | -49.6 |
Merced, CA | -1.7 | -275.6 | Rome, GA | -1.1 | -49.0 |
Columbia, SC | -0.7 | -275.1 | Johnson City, TN | -0.4 | -48.1 |
Portland-South Portland-Biddeford, ME | -0.9 | -275.1 | State College, PA | -0.6 | -47.4 |
Cape Coral-Fort Myers, FL | -1.0 | -272.0 | Elmira, NY | -0.6 | -46.5 |
Spokane, WA | -1.0 | -270.6 | Bloomington-Normal, IL | -0.4 | -45.2 |
Des Moines, IA | -1.0 | -261.8 | Sioux Falls, SD | -0.6 | -44.6 |
Trenton-Ewing, NJ | -0.6 | -256.1 | Kankakee-Bradley, IL | -0.6 | -43.3 |
Ann Arbor, MI | -0.8 | -244.8 | Longview, WA | -0.7 | -41.9 |
Myrtle Beach-Conway-N. Myrtle Beach, SC | -1.7 | -243.1 | Ft Walton Beach-Crestview-Destin, FL | -0.8 | -41.4 |
San Luis Obispo-Paso Robles, CA | -1.3 | -242.6 | Fort Smith, AR-OK | -0.3 | -41.3 |
Santa Cruz-Watsonville, CA | -1.2 | -208.6 | Altoona, PA | -0.5 | -41.2 |
Rockford, IL | -0.8 | -207.9 | Springfield, OH | -0.5 | -40.8 |
Reno-Sparks, NV | -0.9 | -204.3 | Gadsden, AL | -0.7 | -40.2 |
Allentown-Bethlehem-Easton, PA-NJ | -0.4 | -203.0 | Auburn-Opelika, AL | -0.6 | -39.4 |
Toledo, OH | -0.4 | -197.1 | Monroe, MI | -0.7 | -38.9 |
Augusta-Richmond County, GA-SC | -0.9 | -189.0 | Decatur, AL | -0.6 | -38.8 |
Vallejo-Fairfield, CA | -0.9 | -185.4 | Prescott, AZ | -0.7 | -38.5 |
Boise City-Nampa, ID | -0.7 | -185.0 | Anniston-Oxford, AL | -0.6 | -38.0 |
Eugene-Springfield, OR | -1.1 | -184.9 | Waterloo-Cedar Falls, IA | -0.6 | -37.4 |
Dayton, OH | -0.3 | -183.9 | Muskegon-Norton Shores, MI | -0.5 | -37.2 |
Spartanburg, SC | -1.1 | -176.8 | Brunswick, GA | -0.8 | -35.9 |
Hagerstown-Martinsburg, MD-WV | -0.9 | -175.8 | St. Joseph, MO-KS | -0.6 | -35.4 |
Napa, CA | -1.5 | -174.6 | Dover, DE | -0.5 | -35.3 |
Ocala, FL | -1.1 | -168.8 | Danville, IL | -0.6 | -34.6 |
Lansing-East Lansing, MI | -0.5 | -168.2 | Florence, SC | -0.6 | -34.3 |
Chattanooga, TN-GA | -0.5 | -166.3 | Lewiston, ID-WA | -0.9 | -34.3 |
Pensacola-Ferry Pass-Brent, FL | -0.9 | -164.3 | Johnstown, PA | -0.4 | -34.2 |
Albuquerque, NM | -0.4 | -164.0 | Cleveland, TN | -0.5 | -34.1 |
Greenville, SC | -0.5 | -153.8 | Midland, TX | -0.7 | -34.0 |
Deltona-Daytona Beach-Ormond Beach, FL | -0.8 | -153.6 | Asheville, NC | -0.3 | -33.7 |
Jackson, MS | -0.3 | -151.1 | Burlington, NC | -0.5 | -33.4 |
Reading, PA | -0.6 | -150.9 | Sioux City, IA-NE-SD | -0.7 | -33.2 |
Springfield, MO | -0.7 | -147.2 | Columbus, GA-AL | -0.6 | -31.6 |
Ogden-Clearfield, UT | -0.5 | -144.9 | Valdosta, GA | -0.9 | -31.6 |
Madera, CA | -1.6 | -144.5 | Lubbock, TX | -0.3 | -31.4 |
Jacksonville, NC | -0.4 | -144.4 | Florence-Muscle Shoals, AL | -0.4 | -31.2 |
Saginaw-Saginaw Township North, MI | -1.0 | -141.3 | Corvallis, OR | -0.9 | -30.6 |
Springfield, IL | -0.8 | -141.1 | Cedar Rapids, IA | -0.5 | -28.4 |
Peoria, IL | -0.5 | -139.9 | San Angelo, TX | -0.6 | -27.5 |
Olympia, WA | -1.0 | -139.5 | Iowa City, IA | -0.5 | -26.9 |
Wichita, KS | -0.5 | -138.1 | Hot Springs, AR | -0.6 | -26.7 |
Little Rock-North Little Rock, AR | -0.5 | -137.2 | Joplin, MO | -0.5 | -25.1 |
Tallahassee, FL | -0.7 | -136.8 | Lebanon, PA | -0.4 | -23.7 |
Lancaster, PA | -0.4 | -136.3 | Albany, GA | -0.5 | -20.1 |
Atlantic City, NJ | -0.7 | -134.2 | Billings, MT | -0.5 | -19.8 |
Laredo, TX | -0.9 | -133.9 | Gulfport-Biloxi, MS | -0.4 | -19.7 |
El Paso, TX | -0.5 | -133.5 | Waco, TX | -0.3 | -19.2 |
Kennewick-Richland-Pasco, WA | -1.1 | -133.1 | Hattiesburg, MS | -0.9 | -18.6 |
Erie, PA | -0.7 | -130.8 | Bend, OR | -0.6 | -18.5 |
Mobile, AL | -0.5 | -129.6 | Sherman-Denison, TX | -0.4 | -17.7 |
Naples-Marco Island, FL | -1.0 | -128.1 | Pine Bluff, AR | -0.5 | -17.1 |
Yakima, WA | -0.8 | -127.6 | Clarksville, TN-KY | -0.8 | -13.7 |
Holland-Grand Haven, MI | -0.9 | -127.4 | Owensboro, KY | -0.3 | -13.7 |
Vineland-Millville-Bridgeton, NJ | -1.0 | -126.2 | Killeen-Temple-Fort Hood, TX | -0.8 | -12.1 |
Blacksburg-Christiansburg-Radford, VA | -0.6 | -122.4 | Sandusky, OH | -0.3 | -11.8 |
Charleston-North Charleston, SC | -0.5 | -122.2 | Pascagoula, MS | -0.9 | -11.5 |
Lexington-Fayette, KY | -0.5 | -118.6 | Beaumont-Port Arthur, TX | -0.3 | -9.7 |
Scranton--Wilkes-Barre, PA | -0.4 | -117.3 | Pocatello, ID | -0.4 | -9.6 |
Youngstown-Warren-Boardman, OH-PA | -0.4 | -115.9 | Anderson, SC | -0.4 | -8.5 |
Fayetteville, NC | -0.4 | -115.0 | Vero Beach, FL | -0.5 | -7.8 |
Fairbanks, AK | -1.1 | -114.7 | Elizabethtown, KY | -0.4 | -6.5 |
Glens Falls, NY | -1.0 | -113.1 | Athens-Clarke County, GA | -0.5 | -5.5 |
Gainesville, FL | -0.8 | -111.9 | Idaho Falls, ID | -0.3 | -1.8 |
Odessa, TX | -1.2 | -111.4 | Savannah, GA | -0.4 | 38.1 |
Salisbury, MD | -1.2 | -110.9 | |||
Metro areas not listed showed no net effect | |||||
*Percentage loss in gross metropolitan product | |||||
**In millions |
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