The National Association of Homebuilders holds a meeting once a year to discuss the housing market and how builders are doing. For the past few years, it’s been a very joyous occasion. But the tide is shifting. Builders take on a large risk when they build on spec, hoping that someone comes along and buys a house. And, right now, one in five homes is owned by speculators. In markets such as Las Vegas, Orlando, Phoenix, Miami and San Diego, one in four homes is owned by speculators. Normally, it would be about one in 25. Basically, a spec house means the person who purchased it, didn’t need it to live in. The reason for buying is instead to ride the wave of increasing home prices and sell the home for a higher price than it cost you. But with home prices going down in these markets, spec buying could land you in financial trouble. Spec buyers have as little money as possible invested in the deal. So, with commissions and closing costs, there is no viable exist strategy and spec buyers just hand the keys over to the bank. When it’s just an investment, people are more likely to walk away. If you own the home, you will do what you can to keep the home afloat, despite the dwindling value. So, as long as you plan to own for at least five years (seven years in a bubble market), you should be fine. If you’d like to buy a condominium, look for distressed sales or foreclosures only. Buying a condo in a coastal market could really hurt you.