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Consumer spending could be hurt By Randi F. MarshallNewsday Long Island December 17, 2006 When area homeowners aren't able to pay their mortgage, experts said, they're not buying much else. So, local shops and restaurants aren't getting their business, and, in some cases, municipalities aren't collecting property taxes, either. A slowdown in consumer spending, which makes up two-thirds of the economy, hits a region like Long Island hard, especially since it was the housing boom - and the spending that came with it - that primarily propped up the area's economy for the past five years. Until recently, area homeowners borrowed on their homes to buy big-ticket items or renovate, assuming the equity they gained with rising home prices would more than compensate. Not anymore. Falling real estate prices could have an ugly side effect, as homeowners who borrowed against their equity might have homes worth less than what they owe. "A lot of homeowners used their houses to buy products such as cars and other things," said Bob Moulton, who heads Americana Mortgage Group in Manhasset. "If they don't have the equity in their houses anymore because they've tapped it out, and values have come down, it will have a trickle-down effect." More defaults could also result in more people leaving Long Island if they are forced to sell their home, while others work endless hours to make ends meet. Either solution, said the Rev. Thomas W. Goodhue of the Long Island Council of Churches, is not a good one. "This is just further straining and stretching families on Long Island," said Goodhue, whose programs help people with mortgage payments, heating bills and other costs. "We're seeing folks who have pretty much run out of options."
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