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I hate to sound like a complete dunce but I would like to know the consequences for home value price drops. I know that obviously homes are worth less and cannot be sold for as much money by their owners.
What else does it do though?
Does it cause an influx of low income people? (thus increasing crime)
Does it do any major damage to a city as a whole?
Does it cause low income people to emigrate? (thus bringing in richer people and making neighborhoods safer?)
I don't get it. Please explain affect it has on demographics and the city in general. Feel free to ad anything else.
Thank you City-Data.com/forum and HAPPY NEW YEAR FROM LOS ANGELES!!!
Depending on the area and the new prices you may get investors in buying up the foreclosures. These will most likely then become rental properties.
The values of the the remaining owner occupied properties will drop to reflect the new reality in pricing.
The assessible base on which property taxes are levied will drop, causing either a drop in local tax revenue or an increase in tax rates to maintain revenues, or a combination of both.
As far as an of low income residents goes, again that depends on the market rent and local conditions. There are several areas where I live that the properties, even now, are worth $500K and up (down up to 40% from their peak). The market rent on those would be unsupportable for Section 8 residents.
There is no one response that fits all situations and locations.
What matters is the price point and motivation of the people buying property. Is the intent qualified owner occupancy and putting down roots within the community or speculation and ROI?
Here once housing drops investors flock to the area. We have subdivisions that are almost entirely rentals now, and the other homeowners that actually paid their mortgages have seen their investments tank as a result. If you take out a loan and then the value drops - unless you have a huge cash reserve your stuck regardless of the need/want to move your stuck. It results in a lot of abandoned properties, luders (sp?) and general problems all around. A lot of abandoned/foreclosed properties in a particular area = no jobs, lower incomes, etc.
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