September, 2009 Economic update for Wichita, KS

Wichita, KS Economic Update

September, 2009

The unemployment rate dropped in August for the 1^st time in 2009.  The revised rate for Wichita in June was 10% and it has dropped to 8.9% in August.  The rate in Kansas was 7.1% and the lowest rate in the state was for Manhattan at 4.1%.

RealtyTrac has reported that 1 in 347 homes received a foreclosure filing in August.

Option ARM loans are the next big worry for the economy starting in the next few months.  The mortgages differ from other ARMs by offering an option to pay only the interest each month or a low minimum payment that leads to a rising balance in the loan's principal. When the balance of the loan reaches a certain level or the mortgage hits a specific date, the borrower must begin making full payments to cover the new amount.  The majority of these loans were taken out by borrowers who could qualify for regular conventional loans and many loans tend to be on more expensive homes. In many cases the borrower could choose the payment they wanted, often $100's per month below what the payment should be. 

Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they threaten a much greater hit to the consumer than the subprime loans which were often extended to less credit-worthy borrowers.

Tanker Contract: Round three.......

For the 3^rd time the defense department is expected to put up for bid a $35 Billion dollar contract for the new-generation USAF refueling tankers.  Boeing will submit a bid based either on the 767 or 777 airplane. The other main bidder will be Northrop Grumman in partnership with Airbus.  Wichita Boeing is hoping to do the modification work which would create 300-500 jobs plus another 500 jobs by local contractors.  The request for bids should happen in the next two weeks.

Wichita real estate #'s will be released in a few days but appear to be 15% below last years level.  YTD sales to July were down 25% from 2008 numbers.  Nationally, August sales matched 2008 sales and in many depressed markets were up dramatically.  The $8,000 1^st time buyer's credit will end the 30^th of November, 2009.  There is a push in Washington to extend the program and possibly make in available to any one buying a residential, owner-occupied home.  There is only a 60% chance this will probably happen and then only if it can be done with out increasing the deficit.