I don’t have any links to post on this, because I haven’t found it being covered anywhere, but in some conversations I’ve been having with state housing trust fund managers, an additional ripple effect of the whole foreclosure crisis keeps coming up:
Many states, such as Missouri and Illinois, fund their trust funds through revenue sources that rise and fall with the real estate market — real estate transfer taxes or deed recording fees. This makes sense when the market is hot: some of that activity gets translated into preserving affordability. But in a situation like now, when housing groups are struggling to deal with foreclosure counseling, displaced homeowners (and tenants from foreclosed properties too), and widespread abandonment, the trust funds that help fund them are running short on cash — sometimes dramatically so.
We may need less new construction around now, but we certainly don’t need less affordable housing funding. Ouch.