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The unemployment figures that the Labor Department released earlier last month showed a national increase from 7.2% to 7.6%. Forecasters are calling for the potential of a double digit number if not this year then possibly the first quarter of 2010.
Right now Wall Street is in full swing of corporate earnings releases. Of the earnings releases that have been announced so far it would appear the labor market has some tough times ahead for it. My estimation is that at least a third of the corporate earnings announcements have come with the news of job cuts. As the economy worsens companies are looking for ways to cut expenses.
Connecticut so far has not been insulated from the downturn in the economy. Unemployment has been on the rise statewide. From June of 2007 to December 2008 the total jobless claims in the state went from 81,000 in June to almost 125,000 in December of 2008. The unemployment rate nationwide is 7.6% and Connecticut is currently at 6.6% not very far off from the national average.
The job market is going to be the key as I have said before to the recovery of the economy both nationally and in the nutmeg state. If we can stabilize the job market we can start to see a recovery statewide in the Connecticut economy and National economy as well as the real estate and mortgage market’s both nationally and in Connecticut.
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On Friday the 13th the economic stimulus bill passed through congress. Being as optimistic a person as I am even I do not think this is going to be the cure all. It is a start but we still have a long way to go. I hope that I am wrong. The bill itself however is going to help a lot of people in both the State of Connecticut and the country. One important part of the bill is the tax credit that was extended through the end of the year. If you are a first time homebuyer you can receive a tax credit of $8,000 for buying a home. Some of the other highlighted points for Americans are tax breaks for families that send their children to colleague purchase a new car or make their home more energy efficient. Health insurance which is a prominent topic in this financial downturn is being addressed. Workers who lose their health insurance due to the loss of their job will find it much cheaper to carry that coverage through COBRA. Some of the other highlighted sectors are infrastructure where money earmarked here will help keep and or create new jobs. Energy, in the recent package has $20 billion aimed at “green” jobs. There is also money allotted for schools, the environment, police officers and higher education, all of which are aimed at sustaining or creating new jobs in these fields. There is also help for the less fortunate in the way of more food stamps, extra funds in unemployment checks as well as tax credits. Here is an itemized list of how the State of Connecticut will benefit from the stimulus bill.
-$1.3 billion in Medicaid assistance
-$613.8 million is state stabilization grants
-$378 million for highway and bridge construction
-$162.9 million for transit projects
-$132 million for special education
-$97 million for Title 1 education
-$63.5 million for weatherization
-$28.7 million for public housing
-$20 million for HOME Investment Partnership
-$17 million for homelessness prevention
-$12 million for Community Service Block Grants
-$4.6 million for Head Start
-$1.1 million for emergency food and shelter
The bill will also is expected to provide a $400 tax credit to about 1.4 million Connecticut residents.
While the Connecticut housing market may not be as bad as some of the “ground zero states” of the housing meltdown it is certainly on the decline. The state has heavy ties from a population stand point to the financial markets especially in Fairfield County and the insurance sector in Hartford and its surrounding areas.
Late last week The Warren Group, the Boston based publisher of The Commercial Record reported a 26.6 percent drop in single family home sales as well as a 16.2 percent median price drop between November 2007 and November 2008.
It will certainly be interesting to see what the years’ end figures will be. Being a mortgage broker I see appraisals on a regular basis and in some towns the prices have been flat but that is mainly due to a lack of sales in that respective town. In some instances I have seen sharp declines and in speaking with several appraisers that cover the state they are reporting the same thing.
Below is a brief look on a Town by Town basis:
Town 07 sales-08 sales Median price 07-08
Ansonia Homes sold 14-7 -50% Price $236,650 - $190,000 -19.71%
Bridgeport Homes sold 40-33 -17.5% Price $235,950 - $168,500 -28.59%
Derby Homes sold 4-4 0.00% Price $260,500 - $249,000 -4.41%
Easton Homes sold 4-10 150% Price $618,750 - $577,500 -6.67%
Fairfield Homes sold 46-19 -58.7% Price $598,000 - $615,000 2.84%
Milford Homes sold 41-22 -46.34% Price $355,000 - $261,250 -26.41%
Monroe Homes sold 17-16 -5.88% Price $439,000 - $423,750 -3.47%
Oxford Homes sold 5-13 160% Price $363,400 - $345,000 -5.06%
Seymour Homes sold 8-6 -25% Price $241,250 - $263,500 9.22%
Shelton Homes sold 27-16 -40.74% Price $375,000 - $327,500 -12.67%
Stratford Homes sold 26-24 -7.69% Price $264,950 - $266,950 0.75%
Trumbull Homes sold 28-22 -21.43% Price $423,000 - $362,500 -14.3%
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Other than Washington Mutual that failed and had state branches and ties or the other bank mergers that took place this year this was kind of alarming to find. It is not just the large banks that are at risk it is the small Credit Unions and the local mom and pop type institutions as well. If nothing else it shows us no matter where we park our money you need to always be cautious. Here is the press release from NCUA.
West Hartford Credit Union ClosesConnecticut Department of Banking Appoints NCUA Liquidating Agent; Member Funds Are InsuredDecember 5, 2008, Alexandria, Va.– The National Credit Union Administration (NCUA) today accepted appointment as receiver/liquidator of West Hartford Credit Union, Inc., in Farmington Connecticut, following the State of Connecticut Department of Banking decision to close the credit union. The Connecticut Department of Banking assumed control of West Hartford Credit Union, Inc. operations and appointed NCUA receiver after determining the credit union was experiencing problems with its capital level, earnings, delinquency, record keeping, and management. At the time of liquidation, the credit union had $2.9 million in assets and served 1,206 members. The credit union began operations in 1950 and served Litchfield, Hartford, Middlesex, and New Haven Counties in Connecticut. This is the 14th federally insured credit union liquidated in 2008. The NCUA Asset Management and Assistance Center will issue checks to members holding verified share accounts in the credit union within one week. The NCUA National Credit Union Share Insurance Fund insures credit union member deposits to at least $250,000 on regular accounts and $250,000 on certain retirement accounts. The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of millions of account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. |
-NCUA-
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