Recently, economists declared the recession to be officially over. If you follow this logic, you might also assume that home foreclosure numbers are on the decline as well. Unfortunately, this is not the case.
Home foreclosures continue to rise, and will for some time, for the following reasons. This means a very profitable 2010 on the horizon for foreclosure cleaning companies.
The Economy and Unemployment: The economy is still shedding jobs, putting unemployment at record highs. Proof?
In the Sept 18, 2009 New York Times article, August Joblessness Hit 10% in 14 States and DC , it was noted that, "Compared with the same time last year, unemployment rates increased in every state and the District of Columbia, fueling expectations that the many government efforts to tame the recession will not prevent a jobless recovery. "
Without the basic of a job, homeowners simply can't afford to pay their mortgages. Hence, home foreclosures can be expected to rise – at least until the economy starts to create [well-paying] jobs.
But, this is not the worst of it for many. What's meant by this? Read on.
Retraining the Workforce: Many of the jobs that have disappeared are not coming back – they're gone forever. As the aforementioned article highlights, two of the hardest hit industries with layoffs have been construction and manufacturing.
While construction will eventually recover, many jobs in manufacturing won't. Many companies are shipping these operations overseas, where work can be done cheaper and without the oversight of unions, which many manufacturing jobs have.
An unemployed technology worker in the October 2, 2009 New York Times article, Jobs Report Highlights Shaky US Recovery states: "I've got to go where the opportunities are.. The problem is, there aren't many opportunities."
While he may have to relocate to find a job, many in the manufacturing industry are not so lucky, as jobs are gone for good. What this means for many who lost jobs in this industry — which is a huge part of the middle American workforce – is that they will have to be retrained in other industries. And, this takes time – time that many don't have savings to cover.
Hence – once again – home foreclosures can be expected to rise.
Credit Restraints: When hard times hit (ie, a prolonged layoff), many homeowners have taken out home equity loans to tide them over.
However, this is no longer an option, for two reasons: (i) many are upside down in their homes (ie, owe more on them than they're worth); and (ii) banks simply aren't lending like they used to do.
Furthermore, many homeowners have taken a hit to their credit because of unemployment. Therefore, their credit scores are lower, which further make previous options like a home equity loan possible.
And not too be too repetitive, but this leads to more home foreclosures.
For all of these reasons, home foreclosures will likely continue to rise – for at least the next couple of years, making foreclosure cleaning an excellent business to start.