Wary of realty speculators

This article talks about how developers working in the Vancouver, BC real estate market are refusing to sign pre-sale deals to suspected speculators.

The developers are concerned that if the market flattens speculators will just walk away from the deal before the building is finished complicating financing which is dependant upon the number of units pre-sold in the building.

In this particular story the developer blames the marketing company for attracting speculators, however speculators are and will always be a part of a booming market.

Final thoughts: A quick search of Craigslist shows 421 assignments offered in the Vancouver area. What is not known are the number of assignments that are unknowingly transferred from speculator to speculator.

There are plenty of quasi-investors out there who think this market has another 3 plus years to run. I am not saying they are wrong, however the evidence to the contrary is starting to build.

This storey of the developer being concerned about speculators buying in their building tells me they are concerned about the strength of the real estate market over the next couple of years. The financing aspect is just the fallout of a declining market. When real estate values decline, speculators and would-be owners alike will walk away from these assignments.