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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: nextrade! who wrote (28836)	4/1/2005 7:28:12 PM
From: nextrade!	Respond to of 306849

Market Observations April 2005 from our friends at Contrary Investor contraryinvestor.com Seconds Anyone?...The folks at the National Association of Realtors (NAR) have done us a big favor. For the first time ever, they recently released a detailed study of the complexion of second home ownership. What they found was that in 2004, 23% of all homes purchased in the US were "second homes" for investment purposes. Moreover, another 13% of all home purchases were "second home" vacation properties. There you have it, over 1/3 of all residential real estate purchased in the US last year were not primary residences at all. Unfortunately, since there is no longer term definitive data broken out in terms of second home purchasing patterns over time, we have little data with which to compare prior history of second home purchasing. What we do know is that according to the folks at the NAR, second homes purchased for investment were up 14.4% last year and vacation home purchases surged 19.8% year over year. Those are pretty big numbers. We also know that in terms of polled sentiment, many an individual believe real estate is now a good investment. The chart below comes from University of Michigan consumer sentiment survey data and pretty much tells the story of current bullishness regarding residential real estate as an asset class. As you would imagine, after prices have already skyrocketed, it's now that the public is convinced that real estate is a great investment. Quite analogous to the fact that the public always tends to buy equity mutual funds after prices have already risen. At least one thing's consistent, public money always chases the inflating asset, until it stops inflating, of course.