BIG MONEY & THE HOUSING SLUMP

Ok, I don't mean big like Bill Gates big. I merely mean someone who can ostensibly afford a 400K or more house. Last Fall I was canvassing in a wealthy (houses all > $1 M) neighborhood and I was very surprised to see the large number of "for sale" signs. For several reasons, I had been to this neightborhood many times in the past and this was a big change.

Tanta at Calculated Risk makes a great find about those somewhat less well-off up in Phoenix:

The Valley's growing foreclosure problem is hitting the upper and middle class the hardest. Metro Phoenix homes in neighborhoods where prices range from $400,000 to $450,000 now have the highest foreclosure rate. . . . "The two groups of homeowners hit the hardest now are investors and those who overextended themselves," said Jay Butler, director of realty studies at Arizona State University's Morrison School. "That's why more people in higher-end neighborhoods are struggling now."

This housing downturn is having a HUGE effect on state finances:

State's flat economy increases budget deficit to $800 million
By Howard Fischer
Capitol Media Services
Tucson, Arizona Published: 11.17.2007

PHOENIX — Arizona now faces an $800 million budget deficit this year — $200 million more than anticipated — as the state's economy has essentially gone flat.

Gov. Janet Napolitano and Senate President Tim Bee said Friday that tax collections continue to run far behind the figures anticipated when lawmakers put together state government's $10.6 billion spending plan earlier this year.

As usual, those at or near the bottom are hurt the most:

Napolitano: Tapping 'rainy day' fund logical
By Howard Fischer
Capitol Media Services
Tucson, Arizona Published: 11.23.2007

PHOENIX — The cause of Arizona's anticipated $800 million budget deficit this year — and a new estimate of $1 billion or more of red ink the next — is precisely the reason the state can't make deep spending cuts, Gov. Janet Napolitano said Wednesday.

"Families are hurting in Arizona," she said. That has resulted in a "very steep upturn" in people who qualify for the Arizona Health Care Cost Containment System, the state's Medicaid program. "They need health care. We need to take care of that."

Figures show AHCCCS enrollment jumped more than 12,800 — more than a full percentage point — in just one month ending Oct. 1, to 1,082,566...