Yesterday Vancouver Banker left a comment about a local developer having trouble selling a condo conversion and opting to rent it out as a temporary backup option. Hot on the heels of that tidbit Pani Pani sent in this link to a story on the Seattle Bubble blog about a project where the ‘vast majority of buyers’ bailed on their presales and that developers decision to convert to rental units.
Some buyers found they could no longer get a loan, particularly for second homes or investment units, while others just got cold feet, Hoy said. “Because the vast majority have bailed out on us, we have no choice now but to turn it into a rental.”
Will we see more of this in a declining market? I guess each developer has to do the math based on their margins to determine if its worth selling at market price in a dropping market or renting out at a loss while you wait for buyer demand to return.