Bell's Take on the Economy Today

There is certainly enough out on the web and in the daily news to read about the current economy. The trouble is, who do you believe, how much of it is just the doom and gloom spin created by the media, and how much of it is true.

I'll try to give you my personal perspective on the economy with one disclaimer. This is my personal opinion and not the opinion of my employer or anyone else that matters from a legal perspective.

I recently attended a real estate seminar put on by a local well-respected Appraisal firm, Integra Realty. They presented all sorts of good data in this half day seminar and included some Q&A panels that included some of the local heavy-hitters in the local real estate industry. (Darryl Isaacs was not there so excuse the heavy-hitter phrase.)

The main thing I took out of the seminar was the tremendous amount of inventory that exists in Jefferson, Oldham, Shelby, Bullitt and Spencer counties. The good news is it seems most homebuilders have stopped building the spec homes they had been building and are really only starting contract homes. The bad news is, they still have many of their spec inventory that they built last year.

Oil prices reached a record high this week at $103 per barrel. This converts to higher prices at the gas pump, higher commodities prices, etc. At some point this does and will affect consumer spending. We're back to paying over $50 to fill up our SUVs. For those of us who drive quite a bit, this adds up.

One interesting thing that was brought up at the Integra seminar that ties the fuel to the housing: It was noted that Bullitt and Shelby are being hit particularly hard in this housing crunch with a tremendous amount of inventory. Some speculate that because the fuel prices have climbed so high, more people are deciding to move in closer to the places they work instead of having the longer commutes.

Last but certainly not least, the financial sector continues to disappoint with the whole sub-prime stuff that's going on. I continue to hear that we have not yet witnessed all the issues that are out there for some of these institutions. There is still more fallout to come from this mess. I suspect that we are in for some very interesting times with the real estate market even in this area. Louisville has historically been sheltered from most real estate corrections but I think we will see corrections occur right here in our hometown.

I was reading an article this past week describing how various banks are reviewing their portfolios and beginning to make market adjustments writing down the estimated value of homes in their portfolios and then beginning conversations with their clients about sending in checks to pay down their loan balances to get the Loan-to-Value ratios back within acceptable terms. How widespread this becomes remains to be seen.

I basically think we have too many things going on negative to think this will end anytime soon. I think we are in a 2 year slump. I think rates will drop again in an effort to provide stimulus to economy but they can only go so low and I don't think Bernanke is likely to take the rates as low as Greenspan did. We'll see.

In the meantime, take a look at your line of credit rate, take a look at your term debt rates, meet with a great banker (I might know someone!), and review your debt structure. Also, don't forget to have me check on what you're paying your bank for depositing money in their bank. I am shocked by what I am seeing charged in analysis charges on commercial accounts.

Give me a call. I look forward to showing you the way!