Speculation In Housing Explodes

The National Association of Realtors has a study out today with a good breakdown of who is buying what. Readers of this blog will be most interested in the amount of speculation going on; hundreds of billions of dollars!

"The new study, based on two surveys, shows that 23 percent of all homes purchased in 2004 were for investment, while another 13 percent were vacation homes." In light of the historically high vacancy rate of rentals, one must wonder if this is the best investment these folks could be making.

"(T)here was a record of 2.82 million second home sales in 2004, up 16.3 percent from 2.42 million 2003. The investment-home component rose 14.4 percent to 1.80 million sales in 2004 from 1.57 million in 2003." So we have the highest prices ever paid, the greatest number of houses ever sold, and speculation is at an all time high and surging. Just what one would expect in a housing bubble.