Soft 2009 Home Sales Create Buying Opportunities

This is the final "installment" on a three part blog series that was dedicated to predicting home sales in the real estate market for 2009 and beyond. Readers have provided great feedback and it has been a good discussion.

Population and Home Sales Correlation

Only time will tell if there truly is a measurable correlation between homes sales and population. Again, we must believe that in most cases, heavily populated areas will have more home sales than less populated areas. By tracking this ratio over time, we can create a graph that is similar to this:

In this graph, we show peaks and valleys that are caused by the "Outside Influencers" discussed in the previous posts about predicting housing supply.The peaks and valleys get worked back towards the expected value as the market adjusts to those new conditions. For example, if interest rates shot up to 15%, home sales would drop immediately. But over time, home values would drop until home sales returned to the activity level that is "expected" for that population.

I appreciate all the feedback we received, both in comments on this blog as well as emails and phone calls. I would encourage all readers to "click through" to the actual blog and leave their comments and suggestions there so as to stimulate even more discussion.

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