Nov 14, 2022
Mike Andrews Authors Fortune Article Warning State, Local Governments of Mortgage Slump Impact
On November 4, 2022, McGuireWoods Consulting senior vice president and McGuireWoods partner Mike Andrews authored an article for Fortune on how a housing and mortgage slump may present an unwelcome surprise for state and local governments across the country, as there may be a significant drop-off in revenue due to a housing slump.
Andrews notes that in the coming years, governments may have a big drop in revenue from the loss in fees and supplemental taxes that are generated from refinancing and homebuying opportunities. This hardly noticed impact fee will have repercussions for many local and state budgets.
Andrews explains that the average recording fee and transfer tax for a homebuyer or refinance brings in almost $100 to $200 per transaction. In 2010, the U.S. recorded more than 3.1 million refinances. In 2020, in Maricopa County, Arizona, for example, there were 78,101 refinances. This brought in nearly $15 million to county budgets that were used to offset traditional property tax increases which funds county services.
“With the record low of homebuyers caused by high interest rates, inflation, and a sporadic bond market, local governments will need to look elsewhere to supplement this revenue loss and maintain an even smaller rainy-day fund. Sadly, this could result in either higher taxes or a loss of substantial assistance to the residents they serve,” Andrews said.
Mike is former chief counsel to the Senate Committee on Indian Affairs, who worked for Sens. John Barrasso, John Hoeven and Lisa Murkowski, where he was instrumental in passing over 50 bills signed into law. He also served as a senior executive at both the U.S. Department of Housing and Urban Development as well as the U.S. Department of Homeland Security, where he focused on border security matters.