Bankruptcy, Foreclosure, and Unemployment Amidst “Revitalization”

The W’s filed for bankruptcy, the foreclosure rate is at a high, and unemployment has gone down all in the midst of what many are calling a “revitalized” real estate market.

This is craziness. Here are the bullets.

What’s The Deal With The W?

As you may well know, one of Boston’s newer luxury hotels and residencies, the internationally recognized W Hotel, has filed for chapter 11 bankruptcy.

The W lies in the heart of the Theater District on Stuart Street and is considered an artistic masterpiece, designed by Bill Rawn, however, many consider it too gaudy for the area.

The W was conceived in a crowded market around the same time as two other luxury hotels, The Clarendon and 45 Province, all in a city with only 600,000 residents.

The Menino Administration granted The W a $10.5 million dollar loan months ago, while the hotel was still being completed.

Many think that this loan was inappropriate, and that the city should be lending money to public institutions, not private ones.

Boston Civic groups agree that the money should have gone towards Boston Public Libraries, many of which are closing or are in desperate need of repair.

What The W did, turning a downtown location into a residential area, has been done before, most notably in New York, where bankruptcy and restructuring are all part of the process of becoming successful.

Bottom Line: The question of The W’s success is still up in the air.

Rising Foreclosure Rate Is A Bad Omen For Real Estate

Yes, the housing market is on the upswing compared to past months/years performance

However, the foreclosure rate is rising steadily, as first quarter foreclosures have risen 25% in 2010 from 2009

“Foreclosure auction announcements – which are generally published a month before the event – surged 140 percent in the first quarter to 8,062 statewide.”

The rise in foreclosures is being blamed on the bank’s tight credit standards, the unemployment rate, and various other economic factors.

Bottom Line: Although the housing market is showing signs of life, people are still losing their homes at a troubling rate, and foreclosures and vacancies are also hindering our struggling economy’s recovery.

Unemployment Figures

The national unemployment rate was at 9.3% in 2009

The national unemployment rate rose to 9.7% as of March 2010, and was expected to stay there.

According to data released Friday by the Labor Department, the national unemployment rate has risen from 9.7% in March to 9.9% in April, representing 15.3 million jobless Americans.

However, in the same news release, The Labor Department announced that US employers added 290,000 jobs in April, an unexpectedly large number compared to their estimate of 190,000.

Some question our abilities to keep up such a strong economic pace, as the Labor Department has estimated that we need to create 125,000 net jobs each month just to keep up with population growth.

Experts believe that the increase in unemployment is not a sign that things are becoming worse, rather, they think that it is a sign of improvement as more people are leaving the workforce in pursuit of better employment opportunities.

Most experts seem to be unconcerned with the slight uptick in unemployment, and are encouraged by the huge number of newly created jobs and the jump in payrolls.

Massachusetts’ unemployment rate is currently at 9.3% as of March 2010.

New statewide unemployment figures for April will be released on the 21st of May.

Bottom Line: Our economy and job market is doing better, but the European financial crisis may hinder our improvement.

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