We NEED Real Estate Speculators in Canada

Without them Prices would be worse

The sad truth of the matter is

We need speculators

We need speculators in order to build new rental stock into inventory. Believe what you’d like but without them ABSOLUTELY NO new rental stock would get built. There are a few reasons for this that we can explore together.

1) There are very few people able and stupid enough to buy something that won't be built for 5 to 7 years with a plan to actually move in the unit once its built. Most people want what they want and they want it now. Patience is not a virtue most these days have got the hang of. Let’s be honest. When you think its time to fly the coop, its time to fly the coop. You need a place of your own and you need it now.

2) Most people think that they are Real Estate Investor Geniuses and plan to sell or assign the unit before it ever closes. They have been convinced that this is a CANT LOSE INVESTMENT. Most of these idiots can barely afford the home they currently live in, let alone the 2 or 3 that they have deposits on. Imagine the sleepless night hoping that the market moons again soon so that they don’t end up with their dicks out when its time to close or there is no one who wants their assignment.

3) We had more money than brains chasing around too few opportunities while the governments of the world were squirting gasoline on an already intense fire with Quantatative Easing and simultaneously inviting every TOM, DICK, ALI and QUONG DO into the country at the fastest pace of any other country on the planet.

4) Going into the mess described in point 3 above, things were already totally fucked up and the demand far outweighed the supply for a multitude of reasons. Most of which are unfair, corrupt and only benefit the few and bla bla bla bla bla

There are far more factors than this that we can explore in another post.

Whether it's the greedy developer speculating or it's the greedy Genius Investors that plans to assign it or it is just the last person in the chain who actually plans to live there, the incentives have driven this system in this direction.

Like it or not We currently need speculators in order to get new stock into inventory.

The developer needs to sell 65-70% of the units

in the building in order to get their construction financing. There is no developer out there sitting on to $300 million cash that they want to use in order to build these buildings. They need to borrow the money from somewhere and the lenders will only give them the construction financing if they show a minimum profit of 15 to 20% AND they have sold 60 to 70% of the units

So the incentive is to get as many units sold as quickly as possible.

If we don't hit both these targets then guess what?

Project canceled

Bye-Bye

Finito