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Do all those ARM's blow up the economy?

Do house prices fall, lowering taxes, which fucks City/County/State budgets?

ELI5, what would a 1-2% raise in the interest rates do to US housing?

Do all those ARM's blow up the economy? Do house prices fall, lowering taxes, which fucks City/County/State budgets? ELI5, what would a 1-2% raise in the interest rates do to US housing?

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[–] • 0 pt

If there aren't limits to tax raises then falling valuations can be made up with a tax increase. There was a county? that assessed a parcel at $1 million instead of $1k. They budgeted based on the error. When it was discovered the county raised taxes rather than adjust the budget.

For California properties the cpi adjustment only went negative twice in 60+ years. So a severe recession will reduce tax collections. But if the market recovers the loss will only be temporary.

[–] • 1 pt

For California properties the cpi adjustment only went negative twice in 60+ years.

What do you mean?

[–] • 0 pt

Because of limitations imposed by Prop 13, the most your evaluation can go up by is 2%, tied to the consumer price index. If the index goes up less than 2%, than that is the change.

But I the negative part was an error, sorry. Only two times in 60 years did the expected tax receipts go negative. I think it went negative in 2009, like -1.6% for Los Angeles. It doesn't sound like much, but that something like -$30 million for one year and growth is always expected.