The Veridian Blog

Hello everyone:

The worst U.S. housing recession in 16 years will drive down property values by $1.2 trillion next year and slash tax revenue by more than $6.6 billion, according to a report by the U.S. Conference of Mayors. California, the hardest-hit state, will suffer a $630.6 billion decrease in property values that will cut property tax revenue to local governments by almost $3 billion, the study found. The New York City region will see the greatest slowdown in the output of goods and services because of the mortgage crisis, according to the report. The U.S. residential real estate market is faltering as rising foreclosures among subprime borrowers have pushed down prices and led to a record supply of unsold homes. Foreclosures among homeowners with subprime adjustable-rate mortgages have reached a five-year high.

Not so cheerful news, I know.  However, we believe that our Federal Reserve will continue to battle the onslaught by decreasing the overnight rate by at least another 0.25% on December 11.  Over the long-term, we believe that the economy will be healthier as a result of the subprime shakeout.  Lax underwriting standards have proved to be a serious flaw to the borrowing industry wire severe consequences but it is something we can learn from and improve upon.