BluegrassForeclosure.com

Here is a conundrum for the upcoming census.  “The Census Bureau faces special challenges next year locating residents because of foreclosures, as well as immigrants wary of government workers amid a crackdown on illegal immigration.”

The immigration issue has been one to plague the last several times a census was done.  However, with foreclosures spreading across every community, tracking down individuals will be a little harder this year.

From the Kentucky Transcript: “The number of homeowners on the brink of foreclosure fell in November, the fourth straight monthly decline.

Nearly 307,000 households, or one in every 417 homes, received a foreclosure-related notice in November, down 8 percent from a month earlier, RealtyTrac said Thursday. Banks repossessed about 77,000 homes last month, down slightly from October. . . .

. . . But foreclosure filings were still up 18 percent from a year ago, and a new wave is expected next year as unemployment remains high and borrowers fall out of loan-modification programs.”

Even though some economic reports assert that we may be exiting the recession on a national scale, I find it hard to believe that we are truly on the road to economic recovery just yet.  Not with unemployment rates still looming as high as they are.  With no new jobs or few new jobs being created, the recession, or the after shocks of it, could still be felt all the way through 2010 and possibly into 2011.

Spurred on by the economy, including the foreclosure rate, Kentucky tops the country in child deaths related to abuse.  “Kentucky has the nation’s highest rate of death due to child abuse and neglect, according to a report by a child advocacy group in Washington, D.C. Employing the most recent information available, from 2007, the Every Child Matters Education Fund found Kentucky had 4.09 deaths per 100,000 children.”

The high unemployment rate is still affecting many areas of the economy.  The Courier-Journal reports that the Jefferson County Master Commissioner sales are on pace to break a record.  For the year, there were 4,377 master commissioner sales set.  The Jefferson County Master Commissioner only expects about half of them to take place, which means about 2,142 pieces of property have been or will be sold.  The record number of foreclosure sales was set in 2007 at 2,093.

With the unemployment rate hovering around 10%+, there does not seem to be any relief in sight.  So next year could be and most likely will be even worse as people begin running out on their unemployment benefits.  The article points out that many banks are much more willing to work out a deal with the homeowners to try and keep them in the home.  Even with banks being more flexible than they have been in the past, I would expect that we have not seen the last of the foreclosure crisid.

Even though home sales are up in Central Kentucky, overall foreclosures continue to climb.  According to the Courier-Journal, foreclosures are up 12% for the third quarter of 2009, as compared to the third quarter of 2008.  The article goes on to forecast that the unemployment rate is still the biggest contributor to the foreclosure rate and that it is not likely to peak until sometime next year.  Even it is does peak next year, that is certainly no guarantee that employment will increase, because we are most likely going to have a jobless recovery.  In Kentucky, we are losing coal in the east, tobacco all over the state, and our car industry is down.  If we don’t find new industries or at least try to attract some new businesses, we will be in for a very long and slow recovery to say the least.

Here is a great map of the foreclosure rate in the surrounding counties:

Jefferson

Fayette

Hardin

Warren

Daviess

The tri-state region of Kentucky, Indiana, and Ohio is nestled right in the middle of the rust-belt since each one relied heavily on the car industry and other big manufacturers.

Ohio has seen a decline in the foreclosure rate, but among the three it still has the highest rate of foreclosures over the past 12 months.  From July 2008 – June 2009, Ohio saw approximately 142,000 foreclosures, Indiana about 61,000 and Kentucky with about 10,000, with about 213,000 overall for this region.  See here for more details.

Despite a little bit of light at the end of the tunnel (we just can’t tell how far away that light really is), foreclosure rates are still rising in Kentucky.  2Q saw a rise in Kentucky on the foreclosure rate to 3.04%, up from 2.83% during 1Q, according to the Mortgage Bankers Association.  This equates to about 13,100 homes in foreclosure, including about 3,800 new cases.

Kentucky still fares better than Ohio, where the rate of foreclosure is about 4.51%, and the national rate, which is about 4.3%.  Overall, the foreclosure rate is still higher than last year.  While these number do not come close to the amount of homes that went into foreclosure during the 1930′s, it is still a problem of unprecedented numbers.

This of course, translates into a market of possible foreclosure properties for the investor of unprecedented numbers as well.  To learn more on the Mortgage Bankers Association report, click here.

For better or for worse, Kentucky only ranks 41st in overall foreclosures, according to RealtyTrac.com.  This presents many possibilities for investing, but hopefully will not add to the overall effect of pulling down our economy here in this state.  We will continue to monitor these numbers.

We will review the quarterly numbers shortly, but even though the statewide average continues to climb, Kentucky is still under the national foreclosure rate. I think there are two factors contributing to this.

First, we are a little insulated with our job market not fluctuating as violently as other states. Don’t get me wrong, we still have an incredibly high unemployment rate, just hitting over 10%. But our job market has already taken numerous hits over the years, with coal being down and then up, tobacco farming being down, then dairy farming being up. We’ve weathered it before and we can do it again.

Second, trends just taking longer in Kentucky to manifest themselves. Hopefully, this doesn’t mean that we will be in for a longer downturn than other states, but I wouldn’t be surprised if we had to wait out the down period for quite awhile.