Housing bubble bursting? Housing bubble bursting? (January 22, 2003)

For Palo Alto residents who bought their homes in the last two years, it's the worst possible news -- the housing bubble, the last good economic news still lingering from the dot-com craze, could be ready to burst.

"While housing prices are holding firm, some experts predict a 10-15 percent price correction across the housing sector within the next six months to a year," wrote Joe Saccio, the city's deputy director of administrative services, in the city's "Long Range Financial Plan," a report released in November.

Prolonged unemployment and poor economic news in the area could bring the change about, Saccio reasoned.

One sign of such a potential decline is that the County Assessor recently reassessed numerous high-end properties around town, Saccio pointed out.

The news would be bad for the city, since property tax has been a stable source of income even in the recession. The city budgeted $13.5 million in revenues from property taxes this year, up from $12.8 million during 2001-2002. The city gets around 10 cents for every dollar of property taxes paid by its residents.

-- Bill D'Agostino