Quote:
Originally Posted by cdutka
Pre-sales doesn't really matter all this means is someone has put a deposit down. So that 30-60%, can end up being an empty building if sales fall through.
Also quoting November inventories when we are discussing spikes in January inventories is really miss-leading.
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Pre-sales are firm contracts and developers actually CAN legally enforce them if purchasers don't want to complete. In reality, it doesn't happen too often.
Your post stated that there are many projects in construction. There are not. The point was, a project in pre-sale stage (what you often see in advertising) does not mean construction stage. A developer can stop the project in a pre-sale stage and return the deposits, if the market is weak. A project in construction stage must go on and get built; thus, contributing to completed inventory. Then it faces the risk of buyers not willing to close, if they can't get a mortgage, lost a job etc.