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Mayors' report forecasts housing's toll on economy
WASHINGTON - The deepening housing crisis will cut economic growth by more than 25 percent in 143 U.S. metropolitan areas next year and by more than a third in 65 metro communities, according to a new forecast for the U.S. Conference of Mayors.
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WASHINGTON - The deepening housing crisis will cut economic growth by more than 25 percent in 143 U.S. metropolitan areas next year and by more than a third in 65 metro communities, according to a new forecast for the U.S. Conference of Mayors.
A report for the mayors by financial forecaster Global Insight warns of cascading problems caused by falling home prices, an expected 1.4 million foreclosures and the pending reset of millions of adjustable-rate mortgages. The mayors are to release the report today.
The report predicted no loss in growth for the Minneapolis-St. Paul area.
"The foreclosure crisis will have profound economic effects in 2008," the report warns. U.S. mayors are meeting in Detroit to discuss the growing problems arising from the national housing slowdown.
While the thrust of the report's findings already was known, the report lists metropolitan areas that are expected to see their gross metropolitan products slip the most as housing problems deepen.
The cities with the biggest loss growth by percentage Myrtle Beach, S.C.; the California cities of Merced, Madera and Napa, and Sarasota-Bradenton, Fla. In dollars the largest losers are expected to be New York, Los Angeles and metropolitan Dallas.
A number of metro areas aren't projected to lose growth because of the crisis; they tend to be areas that didn't experience the housing boom, including Akron, Ohio, Baton Rouge, La., and Charleston, W.Va.
Mayors hope that their report will put additional pressure on lenders to rework problem loans and head off massive foreclosures, which would further delay recovery in the housing sector.
"It's very important for the investors who own these loans to ... work out modifications where it makes sense. If they don't, the economic impact is only going to get worse," said David Gatton, a Conference of Mayors senior adviser. "Every time you have a foreclosed property, it drags down the value of properties around it."
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