Pre-sale buyers who are not able or willing to complete their contracts can be sued by the developers. Some of these buyers are leaving large deposits and walking away from sums as high as $40,000.
There is no accurate figure as what proportion of these pre-sale buyers are speculators. Some people in the industry estimate that as high as 70% of these pre-sale condo buyers could be speculators. With banks tightening on lending, some buyers are not able to get financing, while others simply no longer want to complete the deals.
"There's a lot people there to make a quick profit, and it backfired on them," said Mario Mainella, a vice-president at Bowra, whose firm is now contemplating legal action against some of those owners.
"The way most contacts are written, the developers can pursue a damages claim if the unit is sold for less than what it was sold for originally," Mr. Mainella said.
Read the full article here on "Cracks appearing in condo land".
Another recent report by Merrill Lynch & Co "Housing market ‘alarms' Merrill" quoted:
"Falling prices, overbuilding and too much unsold inventory in Canada are creating a trend similar to that in the United States a couple of years ago, Merrill economists David Wolf and Carolyn Kwan said in a research note.
Merrill made headlines recently with a report suggesting Canada's high household deficit level could make it vulnerable to a U.S.-style housing collapse".
Analysts agree that B.C.'s housing market is taking a beating, with sales slowing and inventory rising in the wake of global economic upheavals.
The extend of the price correction is opened to debate. Some are predicting a 30% or more price correction. The tight credit situation, cautious lending by the banks, over-extended borrowers, slumping stock market and over supply of housing units all will exacerbate the housing market.
If you are thinking of selling or buying, you need to know how best to deal with your situation. Not selling now could result in further erosion in the price you can get for your home. If you are buying, you need to know if you should wait a little longer or get ready and look out for a great deal coming your way.
For more insights on the current real estate market in Greater Vancouver, you an email me or call me at 604-721-4817 for a discussion.
