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The year 2007 marked the height of the housing bubble. Residential real estate prices were through the roof, especially in Arizona, Nevada, and California where speculators had swamped the market. This overvalued sector resulted in exceptionally high revenues for the Sun Belt cities that based most of their budgets on steadily growing property taxes.
Several cities, understanding the ups and downs of business cycles, maintained their level of spending or increased it by a modest amount. But other municipalities acted as if the good times would never end. Glendale, Ariz. borrowed to build a gargantuan pro football stadium and hockey arena nearly 20 miles from the city center. Stockton, Calif. borrowed $300 million to build their own arena, shopping centers, theaters, and a palatial waterfront complex.