New York City's Department of Finance is projecting that real estate values in the city will remain nearly flat this fiscal (ending September) year. More precisely, it expects only a 1.4% increase in property values, versus an 18% climb this past year.
It will be the slowest increment of growth since Mayor Bloomberg took office in 2002, during a real estate boom that enabled budget surpluses, tax cuts, and astounding growth in city spending. The surge in city revenue had been fueled by taxes on real estate transactions, but recently Mayor Bloomberg called for across the board belt-tightening at all city agencies back in September, acknowledging that a slowdown in Wall St. or the real estate market could badly impact New York's budget.
In a stark demonstration of how bad the real estate market is--nationwide and not just in NYC--Citigroup posted a fourth-quarter loss of $9.8 billion for 2007 and wrote down $22.2 billion in bad loans and mortgage-backed investments. The company is expected to cut costs by slashing approximately 4,000 jobs soon, with possibly thousands more layoffs in coming months. This week, Citigroup was forced to raise $12.5 billion in new capital by selling ownership stakes to investors including Singapore's Government Investment Corporation, among others.
And despite repeated assurances that it would not be cutting dividends, Citigroup, decided that it had to reduce payouts to shareholders by 41%, which further drained confidence in the company. On that news, the market continued its January decline on fears of more bad news from financial institutions, fuel costs, and concerns that retailers would bear the brunt of a downturn in consumer confidence.
