Tuesday, April 05, 2005

When A Second Home Is Like An Oil Rig

"No one has to have a vacation home," the Philadelphia Inquirer says, cautioning shoppers about a possible slump should interest rates rise. It makes the point with an oil analogy. Big companies that "pump, transport and refine oil do better when prices are high," but they tend to do OK even when prices drop because there's always a demand for their product. "It's different for suppliers of oil-industry equipment such as drilling rigs. They boom when prices are high. But when prices fall, demand for drilling rigs collapses, and lots of rig suppliers go belly-up." Owner-occupied homes are "like the big-oil industry; the vacation housing market is like the rig suppliers."

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