Quote of the Day – and More on Existing Home Sales
by Tom on October 24, 2009
in Market Musings
Quote of the day – “Never mistake activity for achievement.” Coach John Wooden
CR does an excellent job explaining the difference between activity and achievement. So I’m going to let him do it.
Calculated Risk: Existing Home Sales: More Activity, Little Achievement
The following graph is a turnover ratio for existing home sales. This is annual sales and year end inventory divided by the total number of owner occupied units. For 2009, sales are estimated at 5.0 million units, and inventory at the September level.Although the turnover ratio has fallen from the bubble years, the level is still above the median for the last 40 years. This suggests activity in 2009 is slightly above a normal year for existing homes.
The reason turnover hasn’t fallen further is because of all the distressed sales (foreclosures and short sales) primarily in the low priced areas, and because of the “first-time” home buyer tax credit.
The distressed sales activity is a necessary step towards a healthy market, but the burst in activity associated with the “first-time” home buyer tax credit is “mistaking activity for achievement”.
