Diana Olick over at CNBC made some interesting comments on the impact foreclosures have on local governments and local economies. Here is an excerpt:
Today in Detroit, the U.S. Conference of Mayors is holding a meeting to talk about a new report showing the impact of foreclosures on local cities. The numbers are staggering: billions of dollars in losses from weak residential investment, lower spending and income in the construction industries and curtailed consumer spending due to decreased home equity.
New York State alone is projected to lose $10 billion in 2008 economic output as a result of the mortgage crisis. The report gives all kinds of scary numbers, giving the impression that the foreclosure crisis, whether it’s in your backyard or not, will affect everything in your city from potholes to pencils in school, thanks to all the money lost.
The trouble is, the mayors don’t offer too many suggestions to fix it, other than the usual working with community groups, more communications with lenders, ad campaigns and the ever-popular “reform the FHA.â€