February 9, 2016

One Of The Big Bads Is Starting To Emerge Again

The Globe and Mail reports on Canada. “A Vancouver MLA is demanding that the B.C. government appoint an independent investigator to hold an inquiry into how the real estate industry is regulated after a Globe and Mail report outlined a technique in which Vancouver-area properties flip one or more times before a deal closes. The technique, which brings profits for speculators but higher prices for buyers, has sparked a torrent of criticism in the province. ‘The investigation needs to be independent because the government has already said it doesn’t think there is a problem,’ said MLA David Eby.”

“In one example before the courts, a West Vancouver homeowner alleges that a real estate agent and a buyer devised a scheme to buy his home for $5-million, then sold that contract to other speculators – during the six-month closing period – until an end buyer agreed to pay $7-million for the property. The $2-million ‘lift’ would be shared between the middlemen.”

“‘There is a lot of speculation in this market – but lack of government intervention is as responsible as the speculators themselves,’ said Vancouver real estate agent Allyson Brooke of Macdonald Realty. Ms. Brooke said Vancouver homeowners should reverse the saying ‘buyer beware’ to ’seller beware.’ She said agents should not be allowed to act for both sellers and buyers, as was the case with some of the deals in question. ‘Lawyers and notaries do not act for a buyer and seller in the same transaction; neither should realtors. The scenario is fraught with potential for unprofessional behaviour, I am very sorry to say.’”

The Canadian Press. “Allegations of fraudulent practices and insider trading by some Metro Vancouver real estate agents have prompted the provincial New Democrats to call on the British Columbia government to investigate. NDP housing critic David Eby alleges some realtors have been avoiding property transfer and capital gains taxes while exploiting a clause in contracts that allows for a series of home flips.”

“He also alleges real estate agents have been assisting clients to hide foreign origins of money used in transactions by putting the broker’s address instead of the purchaser’s address on federal anti-money laundering forms.”

The Ottawa Citizen. “When the National Capital Commission set out its vision for LeBreton Flats in 2014, it said it wanted to see the vacant lands developed ‘for primarily non-residential animating uses, such as museums, galleries, special attractions hospitality and office space.’ Even so, residential uses are significant in the two proposals submitted by the Devcore Canderel DLS Group and the RendezVous LeBreton Group. The latter’s plan calls for nearly 4,400 housing units, while DCDLS envisions at least 2,500 units and possibly as many as 4,000.”

“DCDLS’s plan calls for 2,500 units, ‘based on how we see the market right now,’ says Daniel Peritz, a senior VP at Canderel. All but 200 of the 1,100 units planned for DCDLS’s first phase would be rental. That’s largely because there’s a glut of condos in Ottawa at present, Peritz says. ‘If the condo market comes back, it’s certainly something we would consider.’”

The Calgary Herald. “Single-family home buyers saw a downtick in selection and the lowest prices in 16 months through Calgary’s resale market last month. The benchmark price for single-family homes in Calgary was $509,300 in January, sinking 2.6 per cent from $522,900 a year earlier, says the Calgary Real Estate Board. A $505,600 benchmark in April 2014 was the last time the price was lower.”

“The market for single-family homes expanded by 1,488 listings in January. Single-family home sales also cooled off in January. There were 465 transactions last month in Calgary, easing 67 sales from activity a month earlier. Year-over-year, sales dipped 13 per cent from 534 in January 2015. ‘The recent slide in energy prices has raised concerns about near-term recovery prospects for the city,’ says CREB chief economist Ann-Marie Lurie. ‘Energy market uncertainty and a soft labour market are weighing on many aspects of our economy, including the housing sector.’”

From Metronews. “The word among oil executives who pass through town on their way to the mine sites is the slump could last until late 2017, early 2018, she says. The plunge in the world price of oil, from a high of $100 (U.S.) a barrel to $30 in just 18 months, has already taken a huge toll on the country. It has wiped out 40,000 direct industry jobs and an estimated 150,000 indirect ones. Canada’s economy has lost $50 billion in national income — roughly $1,500 per person, according to the Bank of Canada.”

“It has taken a big toll on Alberta, which is now in recession and it is magnified in communities like Fort McMurray. Hotel worker Mary Anne Guray’s husband lost his job as a janitor in May 2015. He worked cleaning executive offices at the oil industry sites outside the city, she explained. As the price of oil plummeted, those companies slashed expansion plans, and some of the work camps closed.”

“Now she’s worried they won’t be able to hang on to the home they bought last year. A modest row house built in the ’70s costs $500,000 in Fort McMurray, where sky-high wages also brought sky high inflation during the boom. Average house prices, at $560,000, are the highest in the province, higher even than Calgary, where the oil industry is headquartered. ‘Maybe we’ll just have to surrender the keys,’ Guray says, echoing a popular phrase in town that refers to handing the house back to the bank for resale and sucking up the loss on your down payment. ‘A lot of people already did that.’”

From CBC News. “One of the big bads from the 1980s is starting to emerge again in Alberta. Jingle mail — the act of walking away from an underwater mortgage by mailing your keys back to the bank — is a peculiarity of the Alberta residential market and an act of desperation. However, a combination of high debt and lost jobs make it an option in a province going through a significant economic reckoning.”

“‘We’re slowly starting to see it in Grande Prairie and Fort Mac,’ said Don Campbell, senior analyst with the Real Estate Investment Network. ‘People saying that we can’t make a go of it and mail the keys to the bank. In the big cities, not so much because the average sale prices haven’t really dropped much, we haven’t seen the pain yet. But Calgary is getting pretty tight.’”

“Bruce Alger, an insolvency trustee at Grant Thornton in Calgary, said he is dealing with one such case and has heard of more. ‘It’s when you see high-end home prices drop 20 per cent below the peak,’ said Alger. ‘I think there are people considering walking away and I’ve talked to one or two myself.’”

“Alberta is the only Canadian province to broadly offer non-recourse residential mortgages. Those are loans with at least a 20 per cent down payment and thus are not insured by the Canada Mortgage and Housing Corporation (CMHC). If you walk away, you lose your home, but otherwise have no personal liability. Elsewhere in Canada, your lender can take you to court and seize other assets, such as RRSPs, vehicles, and even garnishee your wages. ‘These non-recourse mortgages could create incentives for some homeowners facing an income shock to pursue a strategic default and thus place further downward pressure on prices,’ read one of the reports obtained by CBC News.”

“Joel Semmons, a realtor in Calgary with Re/Max, said that while the average home price in Calgary is only down by a few per cent, homes worth more than $1 million have seen their value drop by much more. ‘In the million-dollar plus markets, I was quite active in January,’ said Semmons. ‘I had four higher end sales last month, all four transactions, the values were off 20 per cent to get a buyer to the table, in order to get a deal to stick. If you took out your mortgage say the summer of 2014, just before everything started to come unglued, you would have purchased right at the peak,’ said Alger.”

“He uses the example of a home bought for $1.8 million, with 20 per cent down and a roughly $1.4-million mortgage. ‘There are lots of houses in that price range in the newer, higher end suburbs and the appraisals have been coming in at less than the $1.4 million on the mortgage.’”




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59 Comments »

Comment by Jingle Male
2016-02-09 04:46:28

“One of the big bads from the 1980s is starting to emerge again in Alberta. Jingle mail….”

How endearing: I was named after that final act of desperation.

It hardly seems right that we may be headed into another recession, ’cause things never really got that good in the recovery…..except in Ft. McMurray where a modest 70’s row house cost half a mil!

Comment by Ben Jones
2016-02-09 05:21:05

‘Now she’s worried they won’t be able to hang on to the home they bought last year. A modest row house built in the ’70s costs $500,000 in Fort McMurray’

She’s a hotel desk clerk and her husband is a janitor.

’cause things never really got that good in the recovery’

Oh come now, I’ve read you bragging about outstanding profits! The stock market has gone up 20% a year, for years! Remember flippers selling to flippers in LA? $30, no $100 million dollar condos in Miami and New York. Jeebus, this has been salad and cream stuff Matey.

Recessions are the natural pullback to booms. The strange thing about Canada, Australia and New Zealand is, they will say they’ve never had a housing bubble. They never had a bubble pop. No recession for 20 years or more. The turbulence a few years ago was the GFC, great financial crisis, brought about by the US housing bubble. Never mind that house prices are higher in all these places than it ever was in the US.

Comment by Jingle Male
2016-02-09 07:41:15

Yes, I agree the economy has recovered from the recession and the moves I made have worked out (so far), but it still seems that so many are still struggling to obtain some prosperity. I guess you’re point is on target: If you work as a custodian and spend $500k for a house, not much good will come from that scenario.

Comment by Ben Jones
2016-02-09 07:59:26

Maybe he went large for a double-wide and borrowed $650k. The loan will be the big mistake. And notice how Calgary prices are reported down just a smidge, but off 20% for the big dogs. Oh well, easy come easy go, eh?

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Comment by In Colorado
2016-02-09 10:32:20

Never mind that house prices are higher in all these places than it ever was in the US.

And the wages are lower and the taxes are higher (20% VAT, etc). And EVERYTHING is a lot more expensive in those places.

Comment by Mafia Blocks
2016-02-09 10:38:21

Sounds like prices have even further to fall there.

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Comment by GuillotineRenovator
2016-02-09 12:57:12

An 80% drop in house prices doesn’t seem out of the question.

 
 
 
Comment by Sacks of Dong
2016-02-09 16:13:23

An unemployed janitor.

 
 
 
Comment by taxpayers
Comment by oxide
Comment by Jingle Male
2016-02-09 07:46:14

Oxy, so it Zestmates at $1.9m and she wants $2.5m? Wishful thinking?

 
Comment by scdave
2016-02-09 07:52:42

This is the house that Sarah built ??

That Sarah bought in 2011….$1,695. mil….No loan….Gee’s, did this simpleton Grizzly mom from Wasilla Alaska hit the lotto ?? Know wonder Trump loves her…Same mold different gender…

Comment by Blue Skye
2016-02-09 09:55:36

Seems to me Dave you claim to own a house as well. Isn’t your condemnation of Sarah the pot calling the kettle black? Perhaps you are just doing the little tea pot calling the kettle…

Same mold, different stature.

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Comment by Mafia Blocks
2016-02-09 05:45:45

25 million excess empty and defaulted houses and you want me to build more?

Silly DebtDonkeys.

Comment by Jingle Male
2016-02-09 09:30:04

….but taxpayers said you would be happy!

Comment by Mafia Blocks
2016-02-09 09:53:07

Stay on topic Jingle_Fraud.

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Comment by oxide
2016-02-09 05:07:36

“it wanted to see the vacant lands developed ‘for primarily non-residential animating uses, such as museums, galleries, special attractions hospitality and office space.’… Even so, residential uses are significant in the two proposals.”

Evidently, the skimming of government funds is as popular of a business model in Canada as it is in the US.

 
Comment by Ben Jones
2016-02-09 05:29:33

‘Wood glut blamed for drop in province’s forestry royalty revenues’

‘The province is blaming an expected drop in forestry royalty revenues in the coming year on an unforeseen glut of wood on the market. Natural Resources Minister Denis Landry says that means companies will log less in the coming year, which will translate into less revenue for the government.’

‘Landry says sawmill yards are full of cut boards they can’t sell, and logs they don’t want to cut, until there’s some movement. The Canadian dollar is low and the U.S. housing market is rebounding, which normally would make New Brunswick wood easier to sell across the border.’

‘But Mike Legere of the industry association Forest NB says a slump in the Chinese market means wood normally sold there from the west coast of the United States is instead flooding the domestic market, meaning less demand for New Brunswick lumber.’

“It’s nothing to be panicked about,” he said, because the forecast for construction permits in the U.S. suggests the market will pick up even more in the coming year.’

Comment by Combotechie
2016-02-09 06:19:32

Lumber prices, 5 year chart …

http://finviz.com/futures_charts.ashx?t=LB&p=d1

Comment by scdave
2016-02-09 07:55:39

But up 25% off the October low of $200.

Comment by Mafia Blocks
2016-02-09 08:12:10

But down 22% YoY.

http://quotes.ino.com/exchanges/contracts.html?r=CME_LBS

Remember…. Nothing accelerates the economy and increase employment like falling prices to dramatically lower and more affordable levels. Nothing.

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Comment by GuillotineRenovator
2016-02-09 13:00:16

Great link. Thank you. Why am I still paying an arm and a leg for whole bean coffee when its price has steadily fallen? Maybe I should stop drinking it.

 
 
 
Comment by Ben Jones
2016-02-09 05:33:55

‘a real estate agent and a buyer devised a scheme to buy his home for $5-million, then sold that contract to other speculators – during the six-month closing period – until an end buyer agreed to pay $7-million for the property. The $2-million ‘lift’ would be shared between the middlemen’

And the government isn’t interested in investigating. Oh, those Chinese just loooove Vancouver! They can’t get enough of that stuff!

It’s money laundering dummies. You are just making it easy for them. Now the UHS are fleecing the Chicoms.

Comment by Professor Bear
2016-02-09 05:47:32

Is it safe to assume that nobody put a gun to the Chinese money launderer’s head and forced them to pay $7 million?

 
Comment by Mafia Blocks
2016-02-09 05:49:38

They took that right out of the Housing Crime Syndicate playbook here in the US.

How many phoney toxic mortgage were made here in the last 5 years? 10 million? 20 million?

Comment by Ben Jones
2016-02-09 05:51:40

‘Everything that’s wrong with the Super Bowl’s worst ad- Where to begin with the above Super Bowl ad from Quicken Loans? In it, the lender touts a new “rocket mortgage” — a mortgage so easy to obtain it’ll feel like you’re ordering a Beyoncé single on iTunes! Just push a button, get a giant loan. The app promises a massive, complex financial transaction and life decision “shrunk to fit the hands of a child.” Consider the possibilities! “What if we did for buying mortgages,” the voiceover asks over guitar riffs, “what the Internet did for buying music and plane tickets and shoes?” There are so, so many problems with this concept, the first of which is that lack of an app isn’t what’s keeping 36 percent of American households from owning a home. The bigger obstacles tend to be thorny things like poor credit, the high cost of housing, steep down payments, lender discrimination, multi-generational inequality. By Emily Badger”

https://www.washingtonpost.com/news/wonk/wp/2016/02/08/everything-thats-wrong-with-the-super-bowls-worst-ad/

Comment by In Colorado
2016-02-09 10:36:30

What is the approval rate for these so called “Rocket Loans”? Can you get one (refi) if you’re underwater? Is there a minimum (however low) credit score needed? Or are they basically no doc, “fog a mirror” NINJA loans?

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Comment by Bluto
2016-02-09 14:54:14
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Comment by Sacks of Dong
2016-02-09 16:21:03

Horrific. More houses = more blenders = more houses = more blenders =…

 
 
Comment by Neuromance
2016-02-09 18:12:41

This reminds me of nothing more than of an angler dangling a hook in front of a fish. Just a harmless morsel of food, no consequences to having a bite.

However, for the borrower, as well as for the fish, there are vast implications, which are attempting to be minimized by the sales pitch.

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Comment by David Lereah
2016-02-09 06:31:50

“The $2-million ‘lift’ would be shared between the middlemen”

And shared by everyone else who previously and wisely committed themselves to buying into The Dream, shared in the form of a magically and lucrative equity lift that filled everyone’s mattresses with hundreds of thousands of dollar bills.

 
Comment by snake charmer
2016-02-09 08:05:47

I’ve written this several times, but I suspect one of the reasons why the provincial government is refusing to investigate this situation is because government officials are in on it, buying multiple properties and flipping them themselves. Last decade, there were more than a few public servants in the U.S. who did that.

And because Chinese money is involved, it would not surprise me if rather large bribes were paid. It’s all good!

 
 
Comment by Ben Jones
2016-02-09 05:54:50

“How a huge Chinese ‘Ponzi scheme’ lured investors- Kang Weiwei considers herself cautious. When China’s stock market took off, she stood on the sidelines. She steered clear of financial products that she couldn’t really understand. But the 32-year-old Beijinger needed somewhere to park the $76,000 that her family received from selling an apartment they got as part of a government relocation program. What, she wondered, could beat inflation but keep them safe? The answer came on the 7 o’clock news. An ad running moments before Chinese state television’s flagship CCTV news broadcast touted a peer-to-peer online lending company called Ezubo that said it matched borrowers and lenders online, potentially making credit available to more people and businesses.”

https://www.washingtonpost.com/world/asia_pacific/how-a-huge-chinese-ponzi-scheme-lured-investors/2016/02/08/fcbae776-ca9c-11e5-b9ab-26591104bb19_story.html

Comment by snake charmer
2016-02-09 08:27:13

Ahh, Chinese state television, where every ad is the equivalent of a 2:00 a.m. infomercial. Look at the picture of the protesters, some of them are wearing masks because of the pollution in Beijing.

And more from the article, which is sickeningly hilarious: “The firm advertised on China’s government-built bullet trains, and its executives schmoozed with state media big shots and Communist Party cadres. But it was the spot on CCTV’s sober nightly newscast that sold her. ‘The government is behind it,’ she thought.

Kang is now one of 900,000 investors caught up in what’s being billed as China’s largest-ever online scam, a scandal that has robbed them of $7.6 billion and renewed questions about the role the state plays in the country’s markets.”

The role the state plays? It’s becoming a core tenet of 21st century political philosophy that the state is simply a prize to be captured by one of competing groups of venal, amoral people, with the winning group using the power and credibility of the state to scam the individual and enrich itself.

 
Comment by snake charmer
2016-02-09 08:29:16

Nor is the young woman blameless. “Selling an apartment they got as part of a government relocation program”? Hmmm. Sounds like somebody’s family likes to gamble and needed some liquid assets.

 
Comment by oxide
2016-02-09 11:59:18

“peer-to-peer”

She should have stopped right there.

 
 
Comment by Mafia Blocks
2016-02-09 06:19:46

“99 Cent Gas May Be on Its Way”

http://247wallst.com/energy-economy/2016/02/09/99-cent-gas-may-be-on-its-way/?link=mktw

Remember…. Nothing cures poverty and accelerates the economy like falling prices to dramatically lower and more affordable levels. Nothing.

Comment by Combotechie
2016-02-09 06:35:18

A long-term price chart of gasoline …

http://finviz.com/futures_charts.ashx?t=RB&p=m1

 
 
Comment by Karen
2016-02-09 09:48:32

I saw $1.49 gas in DFW yesterday

 
 
 
Comment by Senior Housing Analyst
2016-02-09 06:34:11

Houston, TX Homes for Sale-8,672 Homes

http://www.realtor.com/realestateandhomes-search/Houston_TX/radius-20/show-price-reduced

Houston, TX Price Reduced Homes for Sale-3,823 Homes

http://www.realtor.com/realestateandhomes-search/Houston_TX/show-price-reduced

A stunning 45% of Houston area sellers slashed their price at least once

Comment by Sean
2016-02-09 07:37:02

Spoke to a friend of mine who lives in the northern Houston burbs. He wants to take a job in Boston but can’t sell his house unless he takes a huge loss. He also wants to get his daughter in a better school but….can’t sell his house. He wanted his wife to go from full time to part time but can’t because they need the money for their house. They wanted to go on vacation for the first time in years, but the AC broke. There goes the vacation fund.

Amazing how everything in life revolves around a house.

Comment by Mafia Blocks
2016-02-09 07:40:17

It’s a strange, relatively new trend indeed.

 
Comment by Jingle Male
2016-02-09 07:51:40

The new meaning of a “Staycation”!

 
Comment by Mr. Banker
2016-02-09 07:54:35

“Amazing how everything in life revolves around a house.”

And a mortgage, amazing how everything in life revolves around a mortgage - somebody else’s mortgage.

Bahahahahahahahahaha … others work, bankers reap. God’s Plan.

Bahahahahahahahahahahahahahahahahahahahahahahahahaha

 
Comment by EricP
2016-02-09 12:55:22

nahh… it’s all good. He can probably vacation at his house… what is it? at 3200sq house with a 3 car garage and 3 living rooms… for how many 2 adults and a child? being raised by who knows who…?

 
 
 
Comment by taxpayers
Comment by scdave
2016-02-09 09:01:43

You should have heard him on Bloomberg this morning….He makes Mark Faber sound like a Perma-Bull….

Comment by taxpayers
2016-02-09 10:20:58

yep, the payroll data is pretty
hard to refute

 
 
Comment by Mafia Blocks
2016-02-09 10:06:31

Rampant unemployment is the direct end result of rigged, fixed and grossly inflated prices.

Were you expecting something different?

 
 
Comment by Can_Bubble
2016-02-09 09:26:00

I ran into an old friend who owns a small recruiting firm on Saturday. Over a drink he lectured me that there was never a bad time to buy property in the Toronto GTA market. He himself owned three residential and two commercial properties and was always looking to buy more.

 
Comment by Mafia Blocks
2016-02-09 10:48:26

Update: Crude Oil Craters To $28 As Production Rate Balloons

http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic

 
Comment by Ben Jones
2016-02-09 11:20:35
 
Comment by Ben Jones
2016-02-09 16:34:11

‘There’s now $7 trillion of government debt with yields below zero globally’

http://www.bloomberg.com/news/articles/2016-02-09/treasuries-climb-as-global-market-turmoil-derails-fed-rate-bets

Comment by Puggs
2016-02-09 18:24:27

The crash will be spectacular.

 
 
Comment by Mafia Blocks
2016-02-09 18:13:48

Sound familiar?

“Australia Admits Recent Stellar Job Numbers Were Cooked”

http://www.zerohedge.com/news/2016-02-09/australia-treasury-admits-recent-stellar-job-numbers-were-cooked

 
Comment by Neuromance
2016-02-09 18:20:59

She said agents should not be allowed to act for both sellers and buyers, as was the case with some of the deals in question. ‘Lawyers and notaries do not act for a buyer and seller in the same transaction; neither should realtors. The scenario is fraught with potential for unprofessional behaviour, I am very sorry to say.’”

Despite the lugubriosity at this overt conflict of interest, what people need to realize is there is always a conflict of interest between the buyer and “his” realtor.

The buyer’s realtor and the seller’s realtor’s interests are aligned - they both get paid more the higher the house price. The buyer’s interest is in getting the lowest house price. The buyer’s realtor will never act to further that core buyer interest because it harms his realtor.

It is the very definition of a rigged system. It’s fraudulent to pretend otherwise.

 
Comment by phony scandals
2016-02-14 13:50:25

Plan B: Gun-control groups eye Mike Bloomberg for president …
http://www.ctpost.com/…/Plan-B-Gun-control-groups-eye-Mike-Bloomberg-for-6827663.php - 140k -

 
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