A report released by the U.S. Conference of Mayors suggests that the mortgage crisis may impact the overall economy in 2008. With an escalating mortgage crisis, the report suggests that another 1.4 million U.S. homes will be foreclosed while driving the nationwide property values lower by 7 percent next year. Add to the lower property values, it will result in lower property tax revenue to many states to include California and Florida where home values had soared over the past few years.

The forecast, prepared by the economic consulting firm Global Insight, was released as the non-partisan mayors group began a special meeting in Detroit to address the foreclosure crisis and its connection to problems such as neighborhood blight and crime.

The consultants have forecasted that the U.S. homeowners would see property values fall by $1.2 trillion in 2008 with almost half of those overall losses occurring in California, which translates to a 16% drop in property values and costing the state nearly $3 billion in property taxes.

Furthermore, the report stated that the weakening U.S. property market would reduce home values by some $676 billion and another $519 billion in losses could be tied directly to the financial problems facing borrowers that are unable to meet their escalating monthly mortgage payments.

The problem came as a result of the property value booms of 2004 and 2005, which resulted in higher housing values. With the low cost of borrowing money that was prevalent during this period, private investors wanted to increase their profit returns by offering more sub-prime loans which have a higher risk for the investor, but also a higher rate of return than the conventional loans. The investors felt that their investments were safe due to the increasing value of homes. The resulting downshift in property values has made their investments into these high risk loans a liability for the homeowners and the investors. This has resulted in these new homeowners owing more on their homes than the homes are valued.

The representatives of the Conference of Mayors are expected to call upon mortgage investors and loan servicing companies to make a collective effort to work out new payment terms to avoid defaulted loans from these new homeowners.

The report also warned that they U.S. economy would grow by only 1.9% in 2008 with both hiring and consumer spending stagnated.

The effect on the Raleigh-Cary market will be decidedly less than many areas around the country due to the economic factors and housing prices being much better than the rest of the country.  Additionally, the housing prices have continued to increase in this area for the time being. However, it is expected to be a much tougher real estate market in 2008 than it was in 2007 as these market conditions will finally hit the Triangle market, but to a lesser degree than the rest of the country.

It has been bantered about that the doom and gloom about the real estate market should subside after the 2008 Presidential elections. Traditionally, election years generate more apathy and concern about the economy as a whole, despite any actual figures that may counter the cause of concern. For instance, the 1992 election year brought national concern about the economy and the Clinton’s came into office due to the economic climate. The actual figures though suggested that the economy had recovered from its minor setback experienced the year before.

In conclusion, the economy will continue to climb and fall in cycles and there is nothing that can be done about it despite Congress’ claims to fix it. Usually, they are the cause of these declines in the economy and are not the ones to fix the problems. As Americans, it is imperative that we stay the course and continue to do what is right and just for ourselves, our families, and our communities. Everything else will take care of itself.

As long as we have a portion of our society looking to make a quick buck there will be trends that will make money for some, and eventually hurt the majority. Such is the example of the Dot.com era on the 1990s. Caution should be applied to any investment that is made and it better be money that you can afford to lose.

Author Bio

Steven was licensed in 1999 and has recently joined the Keller Williams Realty for the opportunity to better serve his clients. He has a BA in Business Administration and has most recently been a sales representative in the Home Improvement industry. His motto in business is to “not just satisfy the customer, but make him/her, raving fans through ultimate customer service.” When not selling homes or meeting with clients, you can find him on the golf course, reading, working with the youth at his church, or watching hockey or sports in general. He and his new bride reside in North Raleigh in their dream home, an English style townhouse. He has no children, but he does have a miniature schnauzer named Snickers. He and his wife are members of the Capital City Club where Steven is the Vice Chairman of the Young Executives Club and chairman of the Philanthropy committee. As Chair of the Philanthropy Committee, he was a Team Captain for the Susan G. Komen Race for the Cure and volunteered for the Jimmy V Celebrity Golf. He has also served on the planning committee for the Big Bad Ball, which is a black tie event that raises much needed funds for the Hospice of Wake County. Additionally, he coaches youth basketball and sponsors a YMCA basketball team. He feels that it is very important to give back to the community.

As a Realtor, he specializes in Customer Service and negotiates the best price and terms for his clients. He makes his living selling real estate, but his life is fulfilled by helping people navigate the home buying and selling process. He aims to make it as stress free as possible. Contact him to see how he can assist you in your real estates needs or visit his website for his buyer’s packet or to search for homes.

Honest! Integrity! RESULTS!!!

Steven W. Nelson, Broker

Ida Terbet Team

Keller Williams-N. Raleigh

Ph: 919-604-6135

Email: StevenW@IdaTerbet.com

Web: www.StevenNelsonHomes.com

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Founded in 1983, Keller Williams® Realty Inc. is an international real estate company with more than 700 offices located across the U.S. and Canada. Keller Williams began franchising its offices in 1991, and following years of phenomenal growth and success, Keller Williams is currently the fourth-largest U.S. residential real estate firm in North America. The company has succeeded by treating its 72,000-plus associates as partners and shares its knowledge, policy control, and company profits on a system-wide basis.

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