October 9, 2009
In the Eye of the Housing Hurricane
Some Goffstown homeowners may be confronted with the effects of the 2nd wave of adjustable rate mortgage (ARM) resets. In the next 2 years, the Alt-A (liar loans), Option (pay what & when you like), commercial and prime loan interest rate resets will occur.
It is a complicated chart and what it means according to Bloomberg, Sept 25, is that nationally about 7 million mortgage interest rates will adjust upwards in 2010 and 2011.
This could raise some Goffstown resident’s mortgage payments significantly.
This may further depress the housing market and could include properties in Goffstown.
At a time of possible significant job loss/underemployment, excessive debt and homes being “underwater”, it could be very difficult for some homeowners to deal with the very real probability of property taxes doubling within the next decade…again.
It might be fair and reasonable to expect that the town and schools will anticipate these problems and reduce substantially, or, at a minimum, level fund their individual budgets.
Cutting expenses on the only "variable” (70-80%) portion of budgets – total compensation (wages and benefits) - could do this quite well. The focus could be on administrative costs and not on personnel directly involved with “services.”
The “fixed” (20-30%) portion of budgets such as utilities, supplies and transportation should not be the focus of significant budget cuts. In the past, this has been the focus.
The alternative of raising property taxes isn’t a very fair and sensible option at this time.
“Board up the windows and batten down the hatches” -- there is the other wall of the housing hurricane coming.
I thought that you had a right to know.