Brad,
It was me who posted speculators are 20-30% of the market. This was a conservative estimate. I am afraid, they are more than that
You don’t dig the market enough to find out what is going on regarding speculators. I tried to find out the occupancy ratio of a condo complex in the city of Banning, Riverside. I am sure you are familiar with that city and the income level of its residents. It is a low income community. The complex has 96 units. 51 of those condos have changed hand since 2003. One buyer purchased 25 of those 51 units. The price per unit at 2003 was low 30k, to day. it is mid 90k and this owner bought 50% of them within last 3 years. That owner last purchase was in Jan. 2006. According to my data, only 8 of 51 sales in that project since 2003 were bought by owners who were intended to live in that project . Speculators bought the rest of them. All of them are vacant. The speculators pay $170 per unit per month for HOA and pay property tax every year without any rent and just keeping them for appreciation. If speculators purchasing increased the price of 43 of them from low 30k to mid 90k, who do you think is going to buy those condos from them when the market slows down? They have created their own market and they are going to be punished by their own creation but there are some innocent homeownerws who are going to be their victims not because they bought their properties from speculators but because they bought or refinanced their properties in the market that was created by speculators. Finanicng a mortgage for refinancing or purchase in a speculator market is like giving credit card and lending money to a person who has no income. If the borrower didn't pay whose fault is it? the bank or the borrower? I think, it is the lender's responsibility to find out about the market and not to lend in a speculative market the same way that the bank should not send the credit card to kids and people with no income and then complain that they are not paying back.
Out of curiosity, I searched by the owner’s name in my data source and found out that the owner who has 25 of those low price condos, also owns anther 15 properties in other cities in Riverside, 9 properties in San Bernardino County Cities and 8 residential properties in Orange County cities such as New port Beach, Coto De Caza and Laguna Niguel.
I was not playing an investigator to do this search but out of curiosity to find out who are these speculators and how they have changed the normal trend of the market. These informations are public records and available to anyone who is interested to find out.
I can give you the tract number of that condo complex in the city of Banning if you have a good data source and time to find out that owner’s name that comes up 25 times on your search when you search for sold condos after 2003 in that project. This is only one example and there are thousands of them out there.
