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The City Café

For those interested in sharing ideas and perspectives regarding local government.

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Harvard Avenue–not Salt Lake, but Cleveland– once was a vibrant area of Cleveland before numerous foreclosures.

 

The mortgage meltdown is continuing and taking the stock market with it. Countrywide Financial, the nation’s No. 1 writer of mortgage loans, was forced to tap an $11.5 billion line of credit today to address its looming liquidity crunch, and as a response Countrywide is tightening their lending standards.

So what does this mean for cities and towns? Well for some cities the rate of single family home foreclosures are alarming. The number of foreclosures in Cuyahoga County, Ohio (Cleveland metropolitan area) has spiked from 2,500 in 1995 to 15,000 last year. For example, the mayor of Cleveland estimates that 10,000 of the city’s 84,000 homes are now empty. As a result many of the suburbs around Cleveland are spending millions of dollars trying to contain blight.

So what about here in Utah? There are still a lot of reasons to be optimistic about the housing situation here in Utah—or are there? It is becoming a confusing issue, not only is the issue complex due to the nature of subprime lending (I’m still not entirely clear of the mortgage maze of who is exactly backing all the debt…this NY Times graph helps “Mortgage Fault Line”), but the issue is also complex because Utah is always a bit behind the national trend. Utah still has a low unemployment rate and the growth projections are good for the housing industry. However, the costs of homes are now out pacing income levels (which becomes an even bigger concern when mortgage lenders tighten their financing standards). Some local economists are optimistic, others are already starting to notice the housing downturn. For example just take a look at two articles in the SL Tribune and Deseret News today (August 16th):

And if you have been a little confused or more curious about the subprime discussion the Urban Institute just hosted a great forum a couple of weeks ago that is podcasted here: The Future of Subprime Mortgages

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