Wednesday, April 05, 2006

Lies, Darn Lies and Statistics - Mark Twain

At the risk of scaring away all of our new readers with a story on statistics, this has to be the consumer/economic story of the year so far.

"Sales of second homes increased by 16% in 2005 to a record 39.9% of all U.S. housing sales, the National Association of Realtors said Wednesday.

Sales of vacation homes rose 16.9% to a record 1.02 million, while sales of homes owned for investment purposes increased by 15.7% to a record 2.32 million, the real-estate trade group said, reporting on two surveys.

Home owners in the South bought the biggest share of investment homes: 38%."

So four out of every ten existing homes sold in the US last year was a vacation home or purchased as an investment?!?!?!?!?!

Vacation homes prices tend to fluctuate to a much greater degree than primary residences because when times are tough or rates go up and a family is looking to cut costs, the house on the lake is one of the first things to go. The investment homes # is off the charts. When I was in Miami last year I was struck by how fixated the entire community was on housing and prices. It felt very much like the stock market when your Dentist was telling you about the killing he was making on In my opinion, there will be some very affordable condos in Miami/Key Biscayne in about 5 years.

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