Real Estate Ripple Effects

The tough real estate market isn't just affecting home sales — it's also prompting consumers to buy fewer TVs, digital cameras and other electronics. Sacramento, Phoenix, Tampa and Detroit were the four metropolitan areas with the biggest drops in consumer-electronics spending in the fourth quarter of 2007, compared with the previous year, says a study out Monday from researcher NPD. The study examined retail sales in the 40 largest urban areas in the USA. Those four cities were also among the top 10 major markets for declines in housing prices, says the National Association of Realtors. Sacramento posted the biggest drop in both electronics sales and housing prices. Nearly every area with a decline in electronics sales also had falling home prices, says NPD analyst Stephen Baker.

The mortgage foreclosure crisis has caused a drop in cities' revenues, a spike in crime, more homelessness and an increase in vacant properties, a survey of elected local officials out today shows. About two-thirds of 211 officials surveyed by the National League of Cities reported an increase in foreclosures in their cities in the past year, according to the online and e-mail questionnaire. A third of them reported a drop in revenues and an increase in abandoned and vacant properties and urban blight. "There's a reduction in revenues at the same time that more services are needed," says Cynthia McCollum, president of the National League of Cities. "Because of foreclosures, people are stealing, crime is on the rise and we don't have more money for cops on the street."

• JJ commentary: Inflated home prices and underfinanced mortgages were bound to cause problems. Why do we keep thinking we can consistently violate sound economic policies?