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Calif. city of billionaires is going broke — why town’s housing market is on the edge

Billionaire's Row City Goes Broke

Why the Housing Market is on the Edge

California’s most affluent city, Atherton, is facing financial ruin as its housing market teeters on the brink of collapse. Once a haven for Silicon Valley executives and tech billionaires, Atherton is now grappling with a shrinking tax base, rising costs, and a plummeting real estate market.

A Shrinking Tax Base

Atherton's financial woes stem from a sharp decline in its tax base. The city relies heavily on property taxes, which have been falling as home values have plummeted. In 2022, the city's property tax revenue dropped by 15%, a trend that is expected to continue in the coming years.

Rising Costs

While Atherton's tax base has been shrinking, its costs have been rising. The city has been struggling to keep up with the rising cost of public services, such as police, fire protection, and infrastructure maintenance. In addition, Atherton has been hit hard by the rising cost of employee benefits, such as healthcare and pensions.

A Plummeting Real Estate Market

The most visible sign of Atherton's financial troubles is the collapse of its real estate market. Once one of the most expensive housing markets in the country, Atherton has seen home prices fall by more than 20% in the past year. This has led to a decline in property tax revenue and has made it difficult for the city to sell its own properties.

The Future of Atherton

The future of Atherton is uncertain. If the city cannot find a way to address its financial problems, it could face bankruptcy. This would be a major blow to the city's reputation and could have a ripple effect on the entire Bay Area.

One possible solution to Atherton's financial problems is to increase its tax base. This could be done by attracting new businesses to the city or by raising property taxes. However, both of these options are politically unpopular and could face resistance from residents.

Another option is to reduce the city's costs. This could be done by cutting back on public services or by negotiating lower employee benefits. However, these options could also have a negative impact on the city's quality of life.

The city of Atherton is at a crossroads. It must find a way to address its financial problems without sacrificing its quality of life. If it can do that, it has a chance to recover from its current crisis and regain its status as one of the most desirable places to live in the country.