The spring residential market hasn’t recovered at all, inventory is rising, and not only is Prince William still the leader in active residential foreclosures, but the gap is widening between Prince William and other areas in Northern Virginia. What makes this even more painful is that if you look at the number of active foreclosures and compare it to the number of residential units in the locality, the picture gets even worse. Local municipalities better start considering what impact this is going to have on their fiscal 2008 budgets, particularly if spending plans are contingent on this problem starting to level off, or improve.
Courtesy of NovaBubbleFallout, here are the statistics for Northern Virginia:
* includes Manassas, Manassas Park, and Prince William County
A recovery in the residential housing market isn’t going to happen in this area until the fallout from risky sub-prime mortgages starts to subside. Instead, it’s still building.
One of the first impacts is going to be a reduction in the amount of bonds issued in localities in order to protect credit ratings. Sound financial management practices (for example in Prince William County) have been to reduce the number of bonds issued in order to keep the ratio between debt and revenues at a level that supports a favorable bond rating. Next there will likely be efforts to identify ways to reduce spending in the current budget cycles in order to lower the impact of a further erosion of residential assessments in the next fiscal year. Saving money now will make it easier to get through next year’s budget process. If not enough savings can be identified, start looking forward to discussions about tax and fee hikes.
My expectation is that Manassas Park, which has 20% higher tax rates than surrounding jurisdictions, is going to be the first out of the gate with talk about a tax hike or fee increases.
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