BluegrassForeclosure.com

From the AP as posted at NYTimes.com:

“The economy’s 5.7 percent growth last quarter — the fastest pace since 2003 — was a step toward shrinking the nation’s 10 percent unemployment rate.

There’s just one problem: Growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.

And economists don’t think that’s possible.

Most analysts say economic activity will slow to 2.5 percent or 3 percent growth for the current quarter as the benefits fade from government stimulus efforts and from companies drawing down less of their stockpiles.

. . . .

Another way of looking at it: A net total of about 3 million jobs would have to be created this year to lower the average unemployment rate by 1 percentage point for 2010, economists estimate. Yet even optimists think the creation of 1 million net jobs is probably out of reach this year.

High unemployment poses a risk to the unfolding recovery because it leads consumers to spend less, keeping economic growth weak. A sharp pullback in spending might even push the economy back into recession.”

If it takes us until 2015 to get unemployment levels back to normal, further recession or worse, is a distinct possibility.

From the US Department of Labor:  “This past December, the economy lost 85,000 jobs, and the unemployment rate remained unchanged at 10 percent.”

Also mentioned in this article: “. . . many of the report’s findings could be misleading and, to get the full financial picture, you have to dig deep into the data.

For example, December’s unemployment rate appears to have stayed the same as the previous month, at 10 percent.  However, Cook says when factoring in those people working part-time who would prefer full-time work and those who have become discouraged and stopped seeking jobs, the total so-called “underemployment rate” for December rose to 17.3 percent from 17.2 percent in November.”

When you factor in how many workers should have been hired during the holiday season, you can see how far our economy has to go before it truly enters recovery.

From DSNews.com: “It’s hard to argue that the hardships of unemployment aren’t having a notable effect on the mortgage industry and pushing some borrowers into the at-risk column. An analysis of 400,000 homeowners in 2009 shows that nearly one in four needed access to employment services to help them keep their homes.”

That 25% of homeowners who, according to this study, sought some kind of assistance from employment services.  Will that number go up or down this year?

From the Kentucky Office of Unemployment and Training:  Kentucky’s seasonally adjusted preliminary unemployment rate declined .7 percentage point to 10.6 percent in November 2009 from a revised 11.3 percent in October 2009, according to the Office of Employment and Training (OET), an agency of the Kentucky Education and Workforce Development Cabinet. November 2009’s jobless rate is 3.4 percentage points higher than the 7.2 percent rate recorded in November 2008.

“Kentucky’s economy continued to show signs of stabilization in November 2009.  However, individuals who have faced long-term unemployment dropping out of the labor force and a rise in the number of people working part-time for economic reasons contributed to the decline in the unemployment rate,” said Dr. Justine Detzel, OET chief labor market analyst.

The U.S. seasonally adjusted jobless rate decreased from 10.2 percent in October 2009 to 10 percent in November 2009, according to the U.S. Department of Labor. This 10 percent rate is .6 percentage point below the 10.6 percent rate recorded in Kentucky in November 2009.

The remaining information is well worth the read.

From the Kentucky Office of Unemployment and Training:  Unemployment rates rose in all 120 Kentucky counties between November 2008 and November 2009, according to the Kentucky Office of Employment and Training, an agency of the Kentucky Education and Workforce Development Cabinet.

Fayette County recorded the lowest jobless rate in the Commonwealth at 7.1 percent. It was followed by Calloway County, 7.5 percent; Woodford County, 7.6 percent; Scott County, 8 percent; Boyd, Jessamine and Madison counties, 8.1 percent each; Rowan County, 8.2 percent; Oldham County, 8.3 percent; and Franklin and Ohio counties, 8.5 percent each.

Magoffin County recorded the state’s highest unemployment rate — 21.1 percent. It was followed by Metcalfe County, 18 percent; Jackson County, 16.9 percent; Powell County, 16.6 percent; Trigg County, 15.9 percent; Grayson County, 15.8 percent; Menifee County, 14.4 percent; Wolfe County, 14.2 percent; Lewis County, 13.8 percent; and Edmonson County, 13.7 percent.

Click here to read the remaining article.  With 6 counties having unemployment rates above 15%, foreclosures are likely to continue.

The Courier-Journal has an interesting article on investment that are worth taking a second look at, including commercial real estate.

“Commercial real estate — which is now experiencing trouble similar to the housing market — might be a good investment opportunity, [Josh] Gilliam said.

“In that situation, you don’t have distressed properties so much as you have distressed owners,” he said.

People who don’t have millions of dollars to buy property outright can buy into real estate investment trusts — securities that trade on stock markets, he said.

But [John] Roberts said retail bankruptcies and an oversupply of property also means there is “a lot of risk” in commercial real estate.”

In the same article was this little nugget: “the federal government has been buying mortgage-backed securities, pushing interest rates down. In the spring, the rate on a 30-year, fixed-rate mortgage dipped below 5 percent for the first time in Freddie Mac’s Primary Mortgage Market Survey, which goes back to 1971. The rate was 4.78 percent last week.  . . .

. . . “Now is a great time to purchase,” said Adam Hall, a loan officer with Fifth Third Bank and secretary-treasurer of the Mortgage Bankers Association of Kentucky. “Buyers have lots of options.”The low rates have also caused a surge in mortgage refinancing, which makes sense if the homeowner plans to keep the property at least three to five years — long enough to recoup the closing costs associated with getting a new loan at a better interest rate, he said.”

Finally, it looks like the percentages of loans going into default is up as well.  Signs again, that the unemployment rate continues to drive default rates.

This news certainly doesn’t bode well for our local economies and it certainly shows that foreclosure rates will likely continue to break records in 2010.

“Statewide, Ohio’s unemployment rate climbed to 10 percent from 9.7 percent the month before.

Kentucky’s major metro areas followed suit, with Lexington-Fayette inching up to 8.4 percent from 8.3 percent, and Louisville-Jefferson County moving to 10.3 percent from 10.1 percent.”

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.

As we have already discussed, the State’s budget is in some serious financial straits.  The Courier-Journal reports “Code Red” since it has so many problems.

The Pew Center report, which the article is based on, forecasts quite a few problems for the states for the next decade.

“States will continue to struggle over the next decade because of the combination of the length and depth of this economic downturn, the projected slow recovery and the overhang of unmet needs.”

“. . . Key points from the Pew report shine a light on next best practices: diversifying a state’s economy. Aligning revenues and expenditures; rethinking caps, laws and amendments that prevent lawmakers from being able to act; lawmakers stepping up and making the tough decisions demanded by this economic crisis.”

Diversification of the economy should be priority number one, but that supposes we have an educated workforce that will lead the way into knowledge based, information jobs.

I have yet to see a legislature that doesn’t try to pass the buck, so the question is, Will the Kentucky Legislature make the tough decisions needed to right the ship in the upcoming session?  So far I haven’t seen any bills that have been introduced to tackle the problem.  If there are any, please let me know.

All of this begs the question, is the State Budget Code Red?  Or simply Code Blue – dead and needing some serious life support?

The foreclosure rate is not likely to go down anytime soon.  In fact, it appears that not only will it rise slightly, it is starting to hit individuals with good credit scores.  Up to now, most of the foreclosures were in the subprime range.  However, not any longer.  The crisis is slated to last well into 2010.

With no end or relief in sight for the unemployment rate, there is no alternative but for the foreclosure rate to begin creeping into individuals with good credit.

“The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. . . . The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth consecutive quarter.

The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising.

. . . But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.”

Read the full article in the Courier-Journal.  If you are looking for good investments, you need to get to know your local bank’s REO department.