May 7, 2017

Hot Spots For Unsavoury, Tax-Evading Speculators

A report from Global News in Canada. “Many on the ground are feeling it, the real estate market in Montreal is in an upswing. ‘I’ve been very busy, I’m about to learn Chinese because I’m getting a lot of people outside of the country calling me,’ said Alexander Sabouri, a realtor with the Londono Group.”

From CBC News. “Real estate prices in the Fraser Valley have jumped significantly over the last year, making it a challenge to break into the market. The biggest price increases were for townhouses and apartments, the prices for those increased nearly 30 per cent since last year. ‘Townhouses are selling up into the $500,000’s now. If I told someone that a year ago, they would’ve thought I was crazy,’ said Kevin Rolland, a realtor based out of Abbotsford.”

From CHNW AM 980. “A Vancouver man whose company helps foreign buyers avoid the 15 per cent property tax is firing back at claims that what he is doing is illegal. Zheng Zhao has advertised a business that would allow foreign buyers to purchase property without paying the foreign buyer tax. Zhao says because the foreign buyers tax only applies to ‘foreign individuals, foreign corporations and taxable trusts,’ he is able to skirt the 15 per cent fee. ‘It doesn’t apply to partnerships. It doesn’t apply to Canadian persons. A partnership is a legal structure.’”

From News 1130. “Whether you’re at a dinner party, work or at the coffee shop it won’t take long before the topic of the cost of housing in Vancouver comes up. A new film at the DOXA Documentary Film Festival tackles that subject from several perspectives. Charles Wilkinson is the director of ‘Vancouver: No Fixed Address’ and has been examining the housing situation for years. He says while commercial exploitation plays a certain role, ‘it’s more than that, it’s that our system is somehow being ‘gamed’ that housing has been turned from a basic human need into a commodity.’”

“Wilkinson claims proof of that at is when 90 per cent of the condos being built are not being bought by people who want to live here and raise a family. ‘When you hear that, you know it’s not just the people who live here, it’s that you can make 30 to 40 per cent on real estate,’ he says.”

The Vancouver Sun. “Canada has had a reputation as an open, transparent, trustworthy society, which operates on the principles of ‘peace, order and good government.’ But when it comes to stopping billions of dollars of illicit money funnelling into Canadian real estate, our elected officials don’t deserve their status. The governments of Canada and B.C. have consistently failed to protect Canadians from unsavoury, tax-evading speculators in real estate, who have made Metro Vancouver and Toronto housing unaffordable.”

“Vancouver-based financial researcher Adam Ross makes clear Metro Vancouver and Toronto have become hot spots for shady global real-estate deals. Because of lax rules in Canada and B.C. it is easy for rich investors in real estate to hire accountants and lawyers to hide their identities. Even though the illicit money transfers could be greatly reduced, elected officials have turned a blind eye. The problem is worse than most think, suggests Ross, who consults for Transparency International, a renowned anti-corruption organization.”

“Attempts by police or immigration authorities to track down illicit financial transactions in Vancouver, Toronto and other parts of Canada consistently lead to ‘dead ends,’ says Ross. This week more evidence of hidden wealth emerged when it was revealed the B.C. Liberals have for years handed mysterious tax breaks to foreign investors in the province, including in real estate. ‘We know it is dead easy to bring dirty money into Canada. Canada is being touted abroad as a great destination to park money out of the reach of the taxman and local authorities,’ he says.”

From Macleans. “In February 2016, Gerald Soloway announced he was stepping down as CEO of Home Capital Group, a mortgage provider he co-founded 30 years ago. Home Capital, based in Toronto, is an alternative or non-prime lender, issuing mortgages to people generally turned away by traditional banks, such as the self-employed or new Canadians with a limited credit history.”

“Since then, the company’s share price has plummeted 78 per cent, the deposits it relies on for funding are quickly evaporating and Home Capital’s future is in doubt. The problems started in July 2015, when the firm disclosed it had cut ties with 45 mortgage brokers after an internal investigation revealed that borrower income and employment information had been falsified in order to obtain loans. In April, the Ontario Securities Commission accused the company and three executives, including Soloway, of misleading investors for failing to disclose the impact of the investigation for months.”

“The upshot is the improper conduct of the 45 brokers disqualified them from working with Home Capital—but apparently not with other institutions. ‘I’m disappointed, but not surprised,’ says Bruce Joseph, principal broker at Anthem Mortgage Group in Barrie, Ont. ‘There’s not enough punishment or enforcement to scare people out of engaging in this,’ he says.”

“Goosing incomes or fudging employment details to secure a mortgage is often seen as a victimless crime, which Joseph says is a false assumption. For one thing, the practice can artificially inflate home prices, making the affordability problem worse in some markets.”

“This kind of behaviour is not limited to Home Capital. ‘It’s an industry-wide problem,’ says Mike Rizvanovic, a financial services analyst at Veritas Investment Research. ‘When you have a hot market where people are reaching more and more just to get that home that next month they can’t afford, then they’re going to get more creative.’”

“A recent notice of action issued by the Financial Institutions Commission in B.C., which regulates mortgage professionals in the province, shows how creative people can be. The commission accused one broker of submitting false financial information for six different borrowers, and failing to verify the accuracy of documents for 22 other mortgage applications. In one case, the broker is alleged to have submitted altered Canada Revenue Agency documents to show a borrower was a self-employed fish ‘trader’ with an annual income of more than $75,000. In reality, the borrower worked as a fish filleter and earned just $30,000 per year.”

From Blackburn News. “Fewer houses were on the market and fewer sold for not as much money. That describes April, according to statistics from the Windsor-Essex County Association of Realtors. When comparing April 2017 with the same month in 2016, the association says there were 814 listings, a drop of 14%. WECAR does say, however, that listings have recently spiked to 1,096. The Association says it saw a 10% drop in houses sold year-over-year, from 679 in 2016 to 607. The average sale price was around $227,000 in April, while in 2016 that number was $283,000.”




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133 Comments »

Comment by Ben Jones
2017-05-07 08:06:41

BTW, I have a new video up today:

https://www.youtube.com/watch?v=U4TMMLkTyzw&t=0s

Comment by Raymond K Hessel
2017-05-07 17:41:17

Looks like Mosul.

 
Comment by Blue Skye
2017-05-07 18:33:53

I visited the ruins of the “big house” long ago. Impressive, and they thrived there for a very long time. All we are leaving there is unloved paths. I doubt they will be a treasure in 500 years.

 
Comment by rms
2017-05-07 21:27:40

I thought an electric automobile plant was going to open shop in Casa Grande this year or next? Where’s the speculation?

 
Comment by taxpayer
2017-05-08 05:56:23

I see some utilities,after spending all that $ isn’t cheaper to continue?

 
 
Comment by Ben Jones
2017-05-07 08:07:07

The Macleans article is worth reading in full.

Comment by scdave
2017-05-07 09:21:48

I read it Ben…Mirror image of what was happening around here between 2013-2017 and as time went on the fraudulent loan applications and underwriting went systemic…

 
 
Comment by Raymond K Hessel
2017-05-07 08:09:40

‘I’ve been very busy, I’m about to learn Chinese because I’m getting a lot of people outside of the country calling me,’ said Alexander Sabouri, a realtor with the Londono Group.”</i.

By the time you learn Chinese, Realtor Boy, the calls from your embezzler and money-laundering clients will have long since dried up.

Comment by Albuquerquedan
2017-05-08 09:03:04

Circumstantial evidence that it is occurring, the link says it all without even clicking on it:

http://www.shanghaidaily.com/business/finance/Chinas-forex-reserves-rise-for-3rd-consecutive-month/shdaily.shtml

 
 
Comment by Ben Jones
2017-05-07 08:12:05

‘This week more evidence of hidden wealth emerged when it was revealed the B.C. Liberals have for years handed mysterious tax breaks to foreign investors in the province, including in real estate.’

‘An upcoming performance by singer Solange Knowles has become the target of some unexpected pushback in Vancouver. Some have questioned the “Cranes in the Sky” artist’s decision to perform at Rennie Museum, a venue owned by condo marketer Bob Rennie.’

‘An online petition has even been launched accusing Rennie of helping to gentrify Vancouver’s poorest neighbourhoods and urging Knowles to find an alternative location. The petition also criticizes Rennie over his support for the B.C. Liberal Party. “Rennie is an active participant in the displacement of communities, particularly in the Downtown Eastside,” it reads.’

“Cancel your show with Rennie Collections in solidarity with the homeless, poor, and low-income community of the DTES and beyond. Do not encourage, endorse, and condone greedy capitalist Condo Kings like Bob Rennie!”

Comment by Neuromance
2017-05-07 17:56:32

Politicians love their property taxes. It’s the only one where citizens are happy to pay more. Win-win I suppose.

 
 
Comment by Raymond K Hessel
2017-05-07 08:12:55

“Attempts by police or immigration authorities to track down illicit financial transactions in Vancouver, Toronto and other parts of Canada consistently lead to ‘dead ends,’ says Ross. This week more evidence of hidden wealth emerged when it was revealed the B.C. Liberals have for years handed mysterious tax breaks to foreign investors in the province, including in real estate.

Liberals are remarkably consistent when it comes to benefiting themselves with corruption, patronage, and graft, taxpayers and the country be damned.

 
Comment by Senior Housing Analyst
2017-05-07 08:13:43

Westborough, MA Housing Prices Crater 12% YOY

https://www.zillow.com/westborough-ma/home-values/

 
Comment by Raymond K Hessel
2017-05-07 08:20:21

He says while commercial exploitation plays a certain role, ‘it’s more than that, it’s that our system is somehow being ‘gamed’ that housing has been turned from a basic human need into a commodity.’”

This is the essence of globalism. Everything and everybody is a commodity to be bought and sold. Including “our” elected officials and the complicit regulators and enforcers who provide a veneer of legitimacy while enabling and abetting endemic corruption and fraud. The law protects and serves well-connected wrongdoers while persecuting the proles who try to defend themselves from endless ripoffs and swindles.

Comment by Blue Skye
2017-05-07 13:14:10

“globalism”

Just the modern name for an age old problem. The Acquisitor class has always lived by taking from others.

 
Comment by Karen
2017-05-07 17:10:56

Everything bought and sold has to have a price. That has nothing to do with the problem.

The problem is money printing and criminality.

 
 
Comment by Larry Littlefield
2017-05-07 08:26:32

You read articles saying the price of housing is going up, and that’s good for the economy!

And you read articles saying the cost of housing is going up, and that’s bad for the economy!

It’s the same thing, dummy, and it is good for some people, and bad for others. Rising housing prices/costs redistribute money from poorer younger generations (buyers/renters) to richer older generations (sellers), and those who hold their mortgages.

What is worse, it isn’t just the suckers who buy who are affected if the rising paper prices lead to cash out refis with government-backed loans.

Comment by Raymond K Hessel
2017-05-07 08:29:07

What about the good of society?

When young couples are being shut out of the hope of ever owning their own home, and both HAVE to work to make ends meet, while having their children raised by minimum-wage “caregivers” in kiddie kennels, aka daycare, what are the long-term costs to society?

Globalism sucks.

Comment by Mr. Banker
2017-05-07 09:07:14

“When young couples are being shut out of the hope of ever owning their own home, and both HAVE to work to make ends meet, while having their children raised by minimum-wage “caregivers” in kiddie kennels, aka daycare, what are the long-term costs to society?”

The idea is not to shut out hope, the idea is to keep the hope alive - alive enough for young couples to willingly indenture themselves to becoming homeowners themselves (not actually homeowners but the illusion of becoming homeowners).

Debts slavery is not performed by coercion, it is performed by persuasion - persuasion performed on a totally dumbed-down society.

Comment by oxide
2017-05-07 13:42:38

You’re out of character, Banker. :razz:

I would venture that a huge part of the problem is the gig economy, or the uncertain economy. The idea of having a job that lasts longer than 5-7 years is foreign to any Millenial. Even if they had the money, it’s almost not worth it to buy a house. It’s especially bad in areas where both incomes are absolutely needed.

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Comment by Race Bannon
2017-05-07 08:30:30

Nonsense.

Fixed prices at grossly inflated levels and rigged markets destroy the economy.

Comment by Blue Skye
2017-05-07 13:23:59

Obviously correct. Manipulated prices cause tremendous inefficiency and malinvestment. Waste isn’t neutral.

 
 
Comment by Mr. Banker
2017-05-07 08:38:49

The price of housing can go up (a wonderful thing as well as a miracle!) at the same the cost of housing can go down (another wonderful thing and another miracle) BECAUSE …

(ta da. and aprolonged drum roll) …

While the price of the house is high the buyer does not have to pay it, he does not have to pay the price, he only has to promise to pay it, promise to pay the price.

Hence the wonder and hence the miracles.

Comment by Mr. Banker
2017-05-07 08:44:15

As prices of houses go up then wealth is created out of the rise of equity that is attached to the price of the house.

This price rise can only occur if it is financed, which means it can only occur if the price is broken down into parts and each part of this broken down price is paid for one at a time.

Comment by Mr. Banker
2017-05-07 08:50:50

A schmuck does not need to be able to buy the house, he only needs to be able to pay the monthly payments.

If the schmuck had to actually buy the house - meaning to actually pay for it - then he couldn’t, and if he couldn’t then the house could never be priced at what it is.

And since the price creates the equity the equity could not be what it is. And since equity translates to wealth then the wealth could not be what it is.

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Comment by Mr. Banker
2017-05-07 08:56:42

So, in essence, the creation (or destruction) of our housing-based miracle economy is directly tied to the (choke) affordability of month payments.

(Note: I did not say the affordability of the house, I said the affordability of the monthly payments).

 
Comment by Larry Littlefield
2017-05-07 08:59:19

This is why Fannie an Freddie now securitize loans up to 45 or even 50 percent of the borrower’s income, rather than the traditional 25 or 30 percent.

So they can bid against each other by selling their futures into permanent slavery.

 
Comment by Mr. Banker
2017-05-07 09:09:05

“So they can bid against each other by selling their futures into permanent slavery.”

And create wealth in the process, hence the miracle.

 
Comment by Professor Bear
2017-05-07 09:24:10

Could Fannie and Freddie continue to work their miracles without Fed purchases of GSE debt?

 
Comment by Mr. Banker
2017-05-07 09:24:24

When one schmuck enters into a contract to buy a house for, say, ten-thousand dollars above comparable houses in a neighborhood then - presto! - he immediately increases the VALUES of all of these comparable houses by ten thousand dollars each.

If the number of these comparable houses in the neighborhood is, say, one hundred then each one of these hundred houses has its value increased by ten-thousand dollars.

Doing some math will reveal that the actions of this schmuck created one million dollars of equity wealth spread out over the neighborhood.

A true miracle.

 
Comment by Mr. Banker
2017-05-07 09:38:06

This true miracle is composed of two parts:

Part 1:

The commitment to purchase at a higher price by one buyer creates equity wealth for all comparable houses.

Part 2:

This same commitment to purchase at a higher price creates demand; The rise in price creates the perception that prices will continue to rise. This perception will feed on itself as long as the perception feeds on itself, meaning prices will continue to rise as long as prices continue to rise.

There are a lot of people who want to keep the perception alive and few who want to end it hence the perception endures.

 
Comment by Neuromance
2017-05-07 18:03:15

Professor Bear: Could Fannie and Freddie continue to work their miracles without Fed purchases of GSE debt?

The Fed extracted 3.5 trillion of wealth to funnel to their desired recipients, via money printing: https://fred.stlouisfed.org/series/WALCL

That’s a healthy chunk of change, all extracted covertly, without making politicians vote on raising those messy taxes.

So the answer is, ‘Probably not.’

 
Comment by rms
2017-05-07 21:32:50

“Could Fannie and Freddie continue to work their miracles without Fed purchases of GSE debt?”

Hehe… nobody invites you to their star-belly parties.

 
 
 
 
 
Comment by Vancouver Guy
2017-05-07 08:56:30

Once again the realtors are plying their trade. They hide the data and cherry pick what they need to panic the locals into forfeiting their future incomes for a massive payday. The number of transactions is down but the number of realtors is still at peak. Because realestate is slow, everything can be said to be non material in the short term, like HCG taking its last few gasps. When the mania ends hopefully the panic and snobbery will as well.

 
Comment by Sean
2017-05-07 09:04:16

“Vancouver: No Fixed Address” has a trailer on YouTube. Actually looks pretty good! If only someone would make an American documentary about the housing bubble. (Hint, hint)

 
Comment by Professor Bear
2017-05-07 09:08:34

The subprime hangover from the Obama years seems likely to bedevil the Trump presidency.

Note the massive incentives being offered to move new cars at a time of peak employment. Makes you wonder what kind of price slashing these dealers will do in the next downturn.

As auto sales cool, there are worries of a lending bubble
Sunday
Posted Apr 30, 2017 at 7:00 AM
By James Rufus Koren / Los Angeles Times

LOS ANGELES — Heather Milne Barger and her husband knew it was about time to replace their 12-year-old Honda Civic hybrid this year — not only because it was showing its age, but because they knew there were bargains to be had.

“There were a lot of deals that dealerships were having, and cheap financing,” said Milne Barger, 44.

Sure enough, when the Southern California couple bought their new Subaru Outback in February, the dealership knocked $2,300 off the $29,400 list price — and offered them a no-interest loan.

Indeed, there’s rarely been a better time to buy a car or truck.

New-vehicle sales have set records in each of the last two years — juiced by continuing low interest rates, incentives and generous lending practices.

Now, America is awash in cars and trucks, and sales are on track to decline this year for the first time since the recession.

That means manufacturers and lenders will have to make sales and loan terms even more attractive than they have been if they want to maintain volume.

Carlos Badosa has sold cars at Toyota dealerships for almost 40 years, through boom times and lean years, but he’s never quite seen deals like he has lately.

Over the last few months, the Japanese carmaker has begun offering rebates of at least $2,000 on every model — and twice that amount for some slower selling sedans.

“That’s unheard of,” said Badosa, 62, finance director at Toyota of Downtown LA, who expects the deals might get even sweeter.

“I think inventories are very, very high. They have a whole lot of cars,” he said. “They need to get somebody to buy them. ”

Comment by scdave
2017-05-07 09:33:56

Makes you wonder what kind of price slashing these dealers will do ??

With current inventory yes but the next shoe to drop will be production cut-back and layoffs…

Comment by Professor Bear
2017-05-07 09:37:29

“With current inventory yes but the next shoe to drop will be production cut-back and layoffs…”

…which in turn feeds into a drop in demand for cars and a need for dealers to cut prices even further to move inventory.

Plus there will be a lot of subprime-funded used car loans going into default, which will send a flood of used car inventory onto the market to compete with the new cars that won’t sell.

Generally speaking, the end of this subprime-lending fueled car sales boom could get pretty ugly through a lot of channels.

Comment by Raymond K Hessel
2017-05-07 10:07:36

Our corporate media border collies at the Washington Post acknowledge subprime auto defaults are rising, but assure us that this is no cause for alarm or an indicator of an incipient financial crisis. Just keep buying stawks and consuming using debt…all is well.

https://www.washingtonpost.com/business/economy/people-are-starting-to-default-on-their-risky-auto-loans-but-this-isnt-the-next-housing-bubble/2017/03/29/3ff055e4-1498-11e7-9e4f-09aa75d3ec57_story.html?utm_term=.7198da872639

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Comment by Bubblebot
2017-05-07 21:06:34

“People are starting to default on their risky auto loans, but this isn’t the next housing bubble”

Right! Actually, the housing bubble is the next housing bubble.

 
 
 
Comment by Albuquerquedan
2017-05-07 13:47:29

GM just increased my car earnings on my GM credit card 1000 which meant over $3000 then they added $1500 in rebates so I bought through Costco so received $200 under invoice finishing the paperwork now. Have to help out the trump economy

 
 
Comment by Ol'Bubba
2017-05-07 10:10:20

I pulled the trigger and bought a Camry in March. The dealer offered a deep discount (26% off sticker) and overpaid me for my trade-in.

Probably could have gotten a better deal by shopping around a bit more and waiting until the last day of the month/quarter, but I wanted to end the exercise.

Comment by new attitude
2017-05-07 12:39:30

last day of the month

is a myth

Comment by Rental Watch
2017-05-08 09:24:35

My understanding is that 1) dealers have very low margins on new vehicles, and 2) they can earn big bonuses if they hit sales numbers, equal to their margins on many, many vehicles.

So, the end of month thing is only NOT a myth if the dealer happens to need one more sale to hit their sales numbers for that month.

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Comment by Puggs
2017-05-08 09:35:26

in my experience, I’ve found the end of the month thing really only applies to older used cars. (4 - 7 year range).

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Comment by Professor Bear
2017-05-07 15:48:32

That’s great news.

I’m going to wait until the next recession before replacing my old Camry (100K miles) with a new one.

 
Comment by GreenEggsAndSpam
2017-05-07 17:03:16

Seeing lots more people driving big expensive trucks fresh off the lot in my hood. I assume they got them on credit. Seeing a few for sale in the front yard, maybe some are having a cash crunch, not surprising since the main mall in my county is down to about 50% occupancy - whole bunch of places just up and bailed lately - lost McDonalds just a few months ago! Rest are likely bleeding cash (Macys, vitamin world) and the new mall built a few years ago still hasnt been able to find businesses, offering big incentives from the main mall which got just a few takes. Economy is dying, I get regular job listings still since I was looking and changed jobs about 6 months ago, havent seen it this dead in many years and I’m in tech but in a very non-tech location.

Thanks Yellen!

Comment by PitchforkPurveyor
2017-05-07 21:38:16

What city?

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Comment by Ol'Bubba
2017-05-08 09:35:34

Charlotte, NC

 
 
 
 
Comment by Aqius
2017-05-07 10:32:52

well, that explains why I see so many newer Subaru Outback’s in the Sacramento area lately . . .

Comment by Raymond K Hessel
2017-05-07 11:20:48

Be careful with Subarus. The Boxer engine has an unaddressed design flaw that is causing excessive oil consumption and premature engine wear. Do your research before you buy.

Comment by Albuquerquedan
2017-05-07 17:38:45

My cousin who loved them for decades ditch the brand recently because she had trouble with two transmissions

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Comment by PitchforkPurveyor
2017-05-07 21:43:12

Subarus have always had major engine problems - blown head gaskets leading to catastrophic engine failure being the most common.

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Comment by Puggs
2017-05-08 09:05:03

Bad head gaskets!!

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Comment by Race Bannon
2017-05-07 11:21:35

Not to mention the enragement inducing for sale signs growing like weeds in front of all the houses

 
Comment by In Colorado
2017-05-07 13:30:06

Why would you want a Subaru Outback in Sacramento? It never snows there. Plus they are pricey and get poor fuel economy.

Comment by Aqius
2017-05-07 14:31:40

why a Subaru Outback in Sac?

so you fit the rugged but trendy upper-class floppy-hat sandal-wearing bike/ski rack/Spock-coffined liberal who drives up to their Tahoe cabin/Napa winery tasting on the weekends ?!?

(disclaimer: not me at all. hell, I still have greasy fingernails from recently changing the oil on my 1991 325k mile Previa. got it down to 45 minutes flat! ha ha)

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Comment by new attitude
2017-05-07 16:58:09

sour grapes. nothing wrong with having money and taking vacations

 
Comment by Aqius
2017-05-08 00:39:45

the only sour grapes are the ones between your legs.

 
Comment by Young Deezy
2017-05-08 07:49:13

Aquis is right about the NuYuppie pretensions though.

 
Comment by Race Bannon
2017-05-08 08:03:46

:mrgreen:

 
 
 
 
Comment by taxpayer
2017-05-08 06:02:04

I was buying a 2013
now I’ll go w a 2015
inventory is zooming

 
Comment by Puggs
2017-05-08 09:02:15

“A 12 year old Civic showing it’s age.”

Heck, that’s about the year range I’m looking for. Given the incredible deal you got on that Outback (why do you need a AWD in L.A.??) I’d be happy to take that “spent” Civic off yer hands for a couple grand. Wait another two weeks and I’ll offer you $1,000 for it…

 
Comment by Puggs
2017-05-08 09:24:04

“Indeed, there’s rarely been a better time to buy a car or truck.”

They stole that from NAR!

However, they deleted the line just after that sentence…

“Until next year when inventory has ballooned to 120 days and used cars have cratered 50%!”

 
Comment by Puggs
2017-05-08 09:32:01

I think Milne got taken.

For a little over $27K and not get leather or sunroof she’s the one being taken for a ride.

 
 
Comment by phony scandals
2017-05-07 09:10:59

The time draws nigh.

 
Comment by Professor Bear
2017-05-07 09:15:47

“The upshot is the improper conduct of the 45 brokers disqualified them from working with Home Capital—but apparently not with other institutions. ‘I’m disappointed, but not surprised,’ says Bruce Joseph, principal broker at Anthem Mortgage Group in Barrie, Ont. ‘There’s not enough punishment or enforcement to scare people out of engaging in this,’ he says.”

“Goosing incomes or fudging employment details to secure a mortgage is often seen as a victimless crime, which Joseph says is a false assumption. For one thing, the practice can artificially inflate home prices, making the affordability problem worse in some markets.”

Cockroach Theory suggests a massive reckoning lies in store.

Comment by Raymond K Hessel
2017-05-07 12:05:57

The financial reckoning day is years overdue.

 
Comment by In Colorado
2017-05-07 13:31:08

Don’t lenders ask to see W2’s and recent paycheck stubs?

 
 
Comment by Raymond K Hessel
2017-05-07 09:28:42

“Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve… But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn’t belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish that law without delay - No legal plunder; this is the principle of justice, peace, order, stability, harmony and logic.”

― Frédéric Bastiat, The Law

Comment by 2banana
2017-05-07 10:15:36

The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.
– - Ayn Rand

Comment by scdave
2017-05-07 10:52:53

It has little to do with keeping us safe…Its all about jobs & money….

Comment by taxpayer
2017-05-08 06:03:36

like the housing inspector
not for codes,it’s for cash

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Comment by Professor Bear
2017-05-07 09:29:53

Are you over age 60 and drowning in student loan debt?

Don’t feel bad: You are not alone!

Don’t miss the fact that this massive debt buildup has played out during one of the longest periods of economic expansion since WWII.

Older people assuming more debt; student loans a major factor
The Savings Game April 25, 2017

Older Americans are shouldering far more of the nation’s debt than in years past.

The Federal Reserve Bank of New York released numbers recently showing that the share of all household debt held by people aged 60 and older has almost doubled: from 12.6 percent in 2003, to 22.5 percent in 2016.

That’s nearly $3 trillion!

Mortgages, auto loans, credit cards and even student loan balances have all grown significantly for older Americans — and only older Americans. Borrowers under 60 reduced their mortgages and credit card balances relative to the peak during the 2008 financial crisis.

It’s one thing to run up a big student loan balance when you are in your 20s going through graduate school and anticipating big salary increases. Or even in your 30s and 40s, putting a down payment on a house, with room to grow and time to pay it off as it appreciates.

For people facing retirement, however, this growing debt is a far more serious proposition.

Take student loans as an example. We usually think of these as a young person’s problem. But seniors are holding 67 billion dollars in student loans, and the number of seniors holding such loans has quadrupled since 2005. That makes older folks the fastest-growing segment of the student loan borrower population, according to a January report by the Consumer Financial Protection Bureau.

Some of these loans are decades old. These include loans older people took out for their own education and did not pay off. But the majority are loans taken out or cosigned for children and grandchildren, both federal PLUS loans and private student loans.

The bad news is that, as people get older, their student loans are more likely to go into default, triggering ballooning penalties and fees. The CFPB found that default rates among borrowers 65 and older were almost 40 percent — more than twice the rates of younger borrowers.

Defaulted student loan can ruin your credit, meaning larger interest rates on other resources like credit cards. And, worst of all, if you have a federal student loan in default, the government can seize part of your Social Security and disability payments to pay it.

What is to be done?

Comment by Mr. Banker
2017-05-07 10:00:33

“The bad news is that, as people get older, their student loans are more likely to go into default, triggering ballooning penalties and fees. The CFPB found that default rates among borrowers 65 and older were almost 40 percent — more than twice the rates of younger borrowers.”

So they go to school to get smarter but in doing so they end up making some really stupid decisions.

Comment by aNYCdj
2017-05-07 13:33:08

NO its for the kids and grandkids they co-signed for…….most states have some sort of FREE or low cost tuition for seniors..

https://www.thepennyhoarder.com/life/college/free-college-courses-for-senior-citizens/

Comment by taxpayer
2017-05-08 06:05:39

in NY it’s a free for all !
We are busing poors to NY for free college

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Comment by aNYCdj
2017-05-08 06:49:37

i posted this the other day…its what i’ve been saying about NYC for years…have people better themselves in exchange for their EBT card

http://patriotjournal.com/muslim-refugees-are-fleeing-arizona-like-the-plague-all-it-took-was-one-genius-change/

 
 
 
 
Comment by 2banana
2017-05-07 10:22:55

But, but…diversity

—-

Obama Administration Plans Changes to Parent PLUS Loans
August 15, 2013 - Dianne Hayes - http://diverseeducation.com/article/55297/

The Obama administration is making changes to Parent PLUS Loan regulations.

In response to outcries from congressional leaders, organizations, parents and students, the U.S. Department of Education plans to make changes to the PLUS loan programs to address the growing crisis in higher education that has blocked as many as 400,000 students nationwide from enrolling in college, according to figures from the United Negro College Fund.

Under pressure from groups such as the Congressional Black Caucus, NAFEO, UNCF, the Thurgood Marshall College Fund (TMCF), and frustrated parents and students, the U.S. Department of Education now says families that have recent but small-scale debt may now become eligible for PLUS loans through appeals.

Under the newly announced change, parents whose loan applications are denied may ask for reconsideration under the new policy. The Education Department said students whose parents are denied PLUS loans automatically become eligible for an extra $4,000 in loans that are more flexible and carry lower interest rates.

 
Comment by Albuquerquedan
2017-05-08 15:18:26

Looks like the seniors will not be leaving inheritances. The kids and the grandkids spent their inheritances prior to even receiving them. Now that is an education.

 
 
Comment by Raymond K Hessel
2017-05-07 11:50:56

Oh dear. Commercial real estate loan delinquencies are on the rise again.

http://www.zerohedge.com/news/2017-05-07/commercial-real-estate-loan-delinquencies-rise-again

Comment by Ben Jones
2017-05-07 12:13:39

That article mentions special servicers, so I looked it up and found this from 2011:

‘Special servicers: The back -office power brokers of commercial real estate’

‘The third possible reason is a blockbuster: Servicers might not be actingin good faith to facilitate workouts, according to industry sources, so the servicers themselves — armed with information about the properties and the loans — can scoop up real estate on the cheap, according to industry sources. Although they are bound by the contracts governing each loan they service, in most cases servicers also have an option to buy properties they help liquidate.’

‘This theory is given ammunition by the entrance of high-profile investors into the special-servicing field since the recession.’

“I think there’s absolutely incentive on the part of some of the buyers of these pieces to be in a position to get a hold of some of these properties,” said Steve Miller, director of U.S. debt and risk research for CoStar Group, a real estate data firm.’

‘But Miller cautioned that the servicers’ position is valuable only if the properties can be had at an attractive price. “They bought an option to acquire properties,” he said. “If the market clearing level is pretty low, that’s worth something. If the market clearing level is rich for their blood, their option is useless.”

Comment by Ben Jones
2017-05-07 12:15:01

From the first article:

‘The shrinking CMBS universe, which has long contributed to a steady rise in both rates, had a far more substantial impact on Trepp’s tally,” the Commercial Mortgage Alert analysis pointed out.’

‘Special services loan volume dropped by $438.4 million, to $27.2 billion, a drop that was “overshadowed by a $9.5 billion plunge in the aggregate balance of outstanding CMBS.” This plunge, as a result, reduced the denominator in Trepp’s calculation to $411.9 billion as of April 30.’

 
 
Comment by taxpayer
2017-05-08 06:06:52

in fairfax va a clean 1980’s office building went for $65 a sq ft
last sold for 265 sqft in 2011
=wow

 
 
Comment by Senior Housing Analyst
2017-05-07 12:08:52

Mountain View, CA Rental Rates Crater 5% YOY On Plunging Demand

https://www.zillow.com/mountain-view-ca/home-values/

Comment by azdude
2017-05-07 13:18:14

you have said things have been plunging for 8 years as prices went up.

Comment by Race Bannon
2017-05-07 13:52:10

Boots on the ground data Az_Donk…..

Cave Creek, AZ Housing Prices Crater 5%YOY On Record High Inventory

https://www.zillow.com/cave-creek-az/home-values/

Comment by azdude
2017-05-07 16:41:48

its getting kind of useless talking to u

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Comment by Race Bannon
2017-05-07 16:57:32

Housing az_donk….. housing.

Spirit Lake, ID Housing Prices Crater 8%YOY

https://www.zillow.com/spirit-lake-id/home-values/

 
Comment by In Colorado
2017-05-07 21:46:54

its getting kind of useless talking to u

You only just figured that out? ;-)

 
 
 
 
 
Comment by Apartment 401
2017-05-07 16:55:55

Aneceotal: I bought a new bed today, and did an in-store credit app just to see if the 12 months no-interest deal would save me versus paying cash. They approved me instantly for $6,500. Who the f* spends $6,500 on mattresses, unless your house just burned down and you have 5 kids?

Comment by Race Bannon
2017-05-07 16:58:40

DebtDonkeys just can’t say no.

 
Comment by Apartment 401
2017-05-07 17:18:10

And if you haven’t listened to it yet, here Thundercat presents the LP “Drunk”.

Some people were born with something special inside of them, and some of them were kind enough to learn how to play the bass, sing, and write and produce all their own songs:

https://m.youtube.com/watch?v=llQ31DRgyx4

This album was released in February 2017, it gives me a shred of hope for humanity that albums like this are still being recorded and released, in #CurrentYear

 
Comment by new attitude
2017-05-07 17:29:49

We got a KubotaB series tractor over the weekend, ) down, 0% for 60 mos. I can dig the dogs a pond now.

Comment by Race Bannon
2017-05-07 17:53:57

lol@nattyiceboi

 
Comment by phony scandals
2017-05-07 19:15:54

“I can dig the dogs a pond now.”

EPA Fines Wyoming Man $16 Million for Building a Pond on His Property

By S. Noble - September 18, 2015

http://www.independentsentinel.com/epa-fines-wyoming-man-16-million-for-building-a-pond-on-his-property/

 
 
Comment by Blue Skye
2017-05-07 17:48:55

I sold some of my art today for a sweet piece of change. Put the roll of Benjamins in a billfold, in case I want something later. Not needing to buy anything at the moment.

I bet you guys have an awesome credit rating.

Comment by Race Bannon
2017-05-07 19:24:23

There’s nothing like the feeling you get with a pile of cash and no debt. Nothing.

 
 
Comment by SLynsns
2017-05-08 02:48:44

Ha. That’s the right amount if you’re in the market for two temper-pedic mattresses. Or, maybe one with a really tricked out moving bedframe and accessories. Be pleased they think you can pay it back. :)

 
Comment by phony scandals
2017-05-08 08:28:20

This is how they sold mattresses in the 70s.

https://www.youtube.com/watch?v=R7T__NOpOZQ

Comment by rms
2017-05-08 15:47:50

“This is how they sold mattresses in the 70s.”

Haha… back when she and he removed their clothes before getting into bed. Today’s gamer teletubbies are too deep in debt to enjoy the simple pleasures of each-other.

 
 
Comment by Albuquerquedan
2017-05-08 13:30:55

It is so you can throw away the mattress after your tinder “date”.

 
 
Comment by Raymond K Hessel
2017-05-07 18:18:41

Well this is odd. The globalist candidate won in France, yet gold is rising and market futures are red. Would’ve expected a market surge based on the expectation of another celebratory binge of central bank money printing for its .1% cohorts.

Comment by Albuquerquedan
2017-05-08 10:36:42

The people spoiled 1/3 of ballots, it was not a vote for globalism it was a vote against Le Pen

 
 
Comment by aNYCdj
2017-05-07 18:39:35

Guaranty Bank couldn’t recover from the housing crisis. 107 Branches are closing nationwide. Here’s what you need to know about your money:

https://patch.com/wisconsin/foxpoint/guaranty-bank-fails-38-wisconsin-branches-closing

 
Comment by Raymond K Hessel
2017-05-08 05:23:21

Oh dear - Canadian subprime lender Home Capital Group will soon be burning the furniture, as they’ve drawn down $1.4 billion of their $2 billion lifeline from HOOPP (pension fund for 321,000 retired Canadian medical professionals, soon to be the involuntary custodians of Home Capital’s mortgage portfolio) while depositors have withdrawn all but $167 million of their money from Home Capital’s high interest savings accounts.

Cue contagion in 3-2-1….

http://www.theglobeandmail.com/report-on-business/home-capital-bleeding-deposits-sink-below-200-million/article34916621/

 
Comment by Raymond K Hessel
2017-05-08 05:27:45

Home Capital is toast as depositor bank runs will halt the subprime mortgage lender’s ability to originate mortgages. But I’m sure the problems are isolated to this one “lender of last resort” that underwrites less than 1% of Canadian mortgages.

http://www.zerohedge.com/news/2017-05-08/home-capitals-bank-run-accelerates-company-scrambles-find-additional-liquidity

Comment by Albuquerquedan
2017-05-08 10:23:30

“But I’m sure the problems are isolated to this one “lender of last resort” that underwrites less than 1% of Canadian mortgages.”

It is contained. LOL

 
Comment by Albuquerquedan
 
 
Comment by Mr. Banker
2017-05-08 05:37:34

So here’s Monday’s Moan …

“‘The Crisis Has Become Pandemic’ - System to collect Defaulted Student Loans Is No Longer Functioning”

Bla bla bla …

After enduring a bunch of words we finally get to the heart of the matter …

“‘Meanwhile, they’re going to rack up a ton of charges as more interest accrues on ther loans’, she adds.”

A reminder to all: No dollar escapes.

http://www.zerohedge.com/news/2017-05-07/crisis-has-become-pandemic-system-collect-defaulted-student-loans-no-longer-function

Comment by phony scandals
2017-05-08 08:13:25

“There’s no fix in sight.”

 
Comment by Puggs
2017-05-08 09:27:53

it’s truly a “FEE” economy. That’s all you’re left with when productivity has left the building.

Comment by new attitude
2017-05-08 10:08:15

minimalism is not helping. “all i need is my tablet and a good pair of shoes.”

 
 
 
Comment by Raymond K Hessel
2017-05-08 05:46:10

I’m sure there is no cause for concern at the rapid drawdown of Home Capital’s deposits and $1.4 billion of their $2 billion lifeline from the pension fund of future Canadian bag holders, er, medical retirees. Surely our financial media border collies would alert the flock if there was any real risk of insolvency and contagion…unless, of course, their oligarch owners are stealthily joining Da Boyz in exiting the Wall Street-Federal Reserve pump & dump before the bottom drops out.

http://www.homecapital.com/press_releases/2017/HCG%20Liquidity%20Update%20May%208%202017.pdf

 
Comment by phony scandals
2017-05-08 06:17:41

Been seeing these high end refugees for the past couple of years in this part of SE Region IV.

Connecticut Feels Effect of Drop in Super-Rich Tax Payments

Connecticut’s state budget is feeling the effects of a decline in income tax payments from the super-rich.

| May 7, 2017, at 1:47 p.m.

By SUSAN HAIGH, Associated Press

HARTFORD, Conn. (AP) — Connecticut’s coffers are feeling the pinch of the state’s super-rich no longer paying what they used to in personal income taxes.

New figures released last week show tax revenue from the state’s top 100 highest-paying taxpayers declined 45 percent from 2015 to 2016. The drop adds up to a $200 million revenue loss for the state.

Sullivan acknowledged part of revenue decline can also be attributed to “a handful” of wealthy individuals who moved to more tax-friendly states — an issue frequently raised by legislative Republicans, who argue Connecticut’s tax policies encourage the state’s super-rich to move out.

https://www.usnews.com/news/best-states/connecticut/articles/2017-05-07/connecticut-feels-effect-of-drop-in-super-rich-tax-payments

Comment by 2banana
2017-05-08 06:57:29

Higher taxes = less revenue = bigger budget deficits

The only solution has to be raise taxes even higher…

The liberal way to prosperity

 
 
Comment by Financial Moralizer
2017-05-08 07:10:19

It would be a lot of fun to be employed as a trader for a central bank. Think about it.. every day, you’d get billions of dollars of play money to go around buying up anything you wanted. I imagine them laughing and having a great time in the office. They probably get good catered lunches too, or maybe on-site chef.

 
Comment by frankie
2017-05-08 07:21:35

UK house prices are “stagnating” and have actually fallen in the last three months, according to the Halifax.

In the three months to April, prices fell by 0.2% - the first quarterly fall since November 2012.

Over the past month alone, prices fell by 0.1%, the Halifax said.

However, for the year to April, prices rose by 3.8%, the same figure as in March. It leaves the average cost of a house or flat at £219,649.

Martin Ellis, Halifax housing economist, said one reason why prices were slowing was that property had become too expensive for many people.

“Housing demand appears to have been curbed in recent months due to the deterioration in housing affordability caused by a sustained period of rapid house price growth during 2014-16,” he said.

http://www.bbc.co.uk/news/business-39842715

Timber.

 
Comment by AbsoluteBeginner
Comment by Financial Moralizer
2017-05-08 08:25:57

Starbucks should start charging for the bathroom. $5 per dump. They are missing out on revenue.

Comment by AbsoluteBeginner
2017-05-08 08:31:43

Everything I read about the Silicon Valley area tells me that it should be under a dome.

 
Comment by In Colorado
2017-05-08 10:14:42

Starbucks should start charging for the bathroom.

In Europe it is common for places like Starbucks, MickeyD’s, gas stations, etc. to charge to use the toilet.

Comment by Albuquerquedan
2017-05-08 10:55:08

Soon Starbucks will be charging for what they were charging for in the movie “Idiotocracy”.

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Comment by Albuquerquedan
2017-05-08 10:57:47

Correction: movie “Idiocracy”.

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Comment by aNYCdj
2017-05-08 08:05:11

If you think we are going to crash should we be buying 3x bear etf’s like FAZ?

https://finance.yahoo.com/quote/FAZ

Comment by AbsoluteBeginner
2017-05-08 08:29:14

Short the leveraged ETFs after they have a run-up. In this case, shorting FAS is a better argument than going long FAZ. Reason is daily decay in price. Or wait until market gets sold off and go long QLD or UPRO. Market tends to go up over the long run.

 
Comment by Financial Moralizer
2017-05-08 08:37:35

What is this ‘3x’ etf thing? Is that like having a triple-shot of expresso in your morning latte? Can we do more, 5x or 10x etfs?

 
 
Comment by aNYCdj
2017-05-08 09:08:27

The meaning of life in a world without work

The crucial problem isn’t creating new jobs. The crucial problem is creating new jobs that humans perform better than algorithms. Consequently, by 2050 a new class of people might emerge – the useless class. People who are not just unemployed, but unemployable

What is a religion if not a big virtual reality game played by millions of people together?

https://www.theguardian.com/technology/2017/may/08/virtual-reality-religion-robots-sapiens-book

Comment by In Colorado
2017-05-08 10:12:25

I think it will arrive well before 2050. We should be seeing the first signs in just a few years as bricks and mortar retail continues to collapse and food service is automated. Hence all the chatter about “basic guaranteed income”, the PTB can see the handwriting on the wall. And as the years roll by, the bar to get a job will be raised higher and higher. By 2050 you will need to be rather brainy to get a job.

Comment by Carl Morris
2017-05-08 10:49:17

Yeah, I was gonna say…”way ahead of you” on that prediction.

One interesting thing is how India appears to have gone full cargo cult on engineering careers for everyone and has now “educated” thousands or maybe even millions of “engineers” that have been trained to talk and act like software or IT people but are unemployable. I wonder how that will turn out?

 
Comment by new attitude
2017-05-08 11:08:04

and college is not getting any cheaper.

looks like the divide between the haves and the have-nots widens.

this will get expensive to keep the revolution contained. too many poor folks and no religion to save us.

Comment by rms
2017-05-08 15:53:07

“too many poor folks and no religion to save us.”

There’s always opium… the religion of the masses. :)

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