The U.S. Conference of Mayors (USCM) gathered in Detroit, Michigan, on Tuesday to discuss how the rising tide of foreclosures in America will impact metropolitan areas nationwide.
During the gathering, the mayors introduced an economic report, titled “The Mortgage Crises: Economic and Fiscal Implications for Metro Areas,” which predicts new foreclosures and an economic slowdown will lead to a gross domestic product (GDP) loss of $166 billion in the United States and a loss of $45 billion in the top ten metro areas.
In addition, the mayors’ report says the foreclosure crisis means approximately 524,000 jobs will not be created in 2008 and the economy faces a “potential loss of $6.6 billion in tax revenues in ten states.”
“Not that long ago economists said housing was the backbone of our economy,” said USCM President Douglas Palmer, who also serves as Mayor of Trenton, New Jersey. “Today the foreclosure crises has the potential to break the back of our economy, as well as the backs of millions of American families, if we don’t do something soon. We must not let the economic numbers mask the face of this tragedy – the families who are struggling to pay their mortgages and stay in their homes.”

Detroit Mayor Kwame Kilpatrick reiterated the concerns many city leaders share in regards to the current foreclosure situation.
“The foreclosure crises is no longer just about mortgages, entire neighborhoods are being negatively affected on several levels,” said Kilpatrick. “This issue is now the number one economic challenge of many major American cities.”
Below is a verbatim list of some of the other predictions made in the mayors’ economic report:
(Source: The Mortgage Crises: Economic and Fiscal Implications for Metro Areas)
The foreclosure crisis alone will reduce home values by an additional $519 billion in 2008, bringing the total forecast of lost equity for the nation’s homeowners to $1.2 trillion.
In 2008, the economy will grow at a rate of 1.9-percent, a full percentage point lower than would have been the case without the mortgage crisis.
Foreclosures will increase by at least 1.4 million in 2008: these homes represent a market value of $316 billion.
In ten states, representing a cross section of the U.S., the aggregate loss in tax revenue will equal $6.6 billion.
Home price declines across the U.S. will average 7-percent in 2008, ranging as high as 16-percent in California.
Consumer spending will slip to 2-percent growth, well below a 3.1-percent gain in incomes.
Housing starts will continue to decline until the second quarter of 2008, when the annual rate housing starts will be just 800,000, a drop of almost 20-percent from current levels.
Sales of existing homes also will continue to fall by another 10-percent in 2008.