July 24, 2016

You Can Hear The Panic In Their Voices

The Cape Breton Post reports from Canada. “Housing sales figures released for the second quarter show little good news for Cape Breton’s economy. So far in 2016, residential sales are down 14 per cent in the Cape Breton region, which covers the Cape Breton Regional Municipality and Victoria County. While sales are down overall for the year to date, the number of properties currently on the market last month was up 14 per cent with 627 active listings over figures from June 2015. Sydney realtor Mary Ann MacCormick said sellers are receiving approximately 83 per cent of the asking price for their home — down from 90 per cent at this point last year.”

“The increased inventory on the market has sellers readjusting sales prices downward, MacCormick said. ‘There are more choices for the buyer looking around,’ she said. ‘People are reducing the prices of their homes even though they’re originally priced, hopefully, at market value.’”

“There’s also been an interest in people looking to buy duplexes or triplexes as income properties, said MacCormick. However, the sluggish economy hasn’t provided the type of return on investment those property owners would have wanted, she said. ‘People who have bought investment properties (and) probably had a five-year plan in mind are not getting the increase now when they’re trying to sell them. They’re not really seeing the profit that they thought they were going to see and that’s because prices are not going up the same way they were in the past.’”

The Dawson Creek Mirror. “Lita Powell doesn’t mince words when she talks about the Fort St. John rental market in 2014. ‘The general feeling was just panic,’ said Powell, who has managed property in Northeast B.C. since the 1980s. That year, rents were among the highest in the province outside the Lower Mainland, driven by promises of a liquefied natural gas boom. Few if any units were available, while investors poured money into new apartments, duplexes and suites.”

“‘I describe the work environment and the rental environment as hysteria,’ Powell recalled. ‘Everybody was responding to the big companies: drill faster, work harder, we need more.’”

“Now, nearly 18 months after the first signs of an economic downturn in Northeast B.C., renters have more choice than ever, and landlords are feeling a sense of whiplash. ‘We went from an absolutely ludicrous landlord’s market to a really generous tenant’s market in a few months,’ said Kevin Kurjata, a Dawson Creek realtor and landlord. ‘I saw the oversupply issues coming,’ he said. ‘I did not see the demand vanishing at the same time.’”

“Powell, who worked for the CMHC before founding Li-Car Property Management Group, said official vacancy rates don’t take into account properties with fewer than three units—leaving out duplexes, homes with suites and other types of rentals. When those properties are accounted for, Fort St. John’s overall vacancy rate is now closer to 30 per cent, she said, with more rental units set to come on the market in the coming months.”

“The weak rental market has left homeowners with few ways out if they lose their jobs. Powell has heard from more than a dozen families this month who faced a stark choice: find a tenant or lose the home. ‘I ask them what their expectation for rent is and they say ‘for $1,800 I could do it.’ I have to tell them ‘I’m really sorry, but that’s not the magic number.’ You can hear the panic in their voices.’”

From The Province. “A Chinese property tycoon linked to a massive banking scandal in China’s industrial north is at the centre of more than $500 million in B.C. property deals, a joint investigation by Postmedia and global due diligence firm IPSA International shows.”

“Chinese real estate magnate Kevin Sun — also known as Hong Sun, Kevin Lin, Hong Wei Sun and Sun Hongwei — founded Sun Commercial Real Estate in 2013. In addition to buying and selling hundreds of millions in B.C. property, the B.C. company, which focuses on immigrant investors, has raised over $200 million from investors.”

“A B.C. Supreme Court civil case connected to a South Vancouver property flip provides insight. Detailed testimony from Bo Jiang, Sun’s friend and first employee in B.C., points to Sun’s fortune in China, his arrival on B.C.’s real estate scene, and complex land investment strategies that preceded Sun Commercial’s incredible growth.”

“Bo Jiang — or Bobo, as Sun affectionately called him — was Sun’s translator and jack-of-all trades in property speculation, Jiang would recall in the 2008 B.C. Supreme Court civil case. It’s not clear how much Jiang knew about his boss’s history in China. But according to Jiang’s testimony, he did know that Sun claimed to be enormously wealthy. Bobo was the worker who asked Richmond bureaucrats for land subdivisions, opened a Marine Drive Royal Bank account to manage Sun’s cash, and took care of all the little things, such as maintaining Kevin Sun’s growing roster of empty homes.”

“‘At that time he said something like, ‘Eventually I would give you more than what you want or what you ask,’ Jiang told the Supreme Court. ‘He said that, ‘Given that I’m so wealthy, I don’t give a damn about this little money.’”

“One associate said that in B.C., Sun seems to be repeating the style of business he started in Jilin. ‘He is an opportunist. You know, in Jilin he bought factories very cheap and he sells it for the real estate value and then leaves,’ the associate said in an interview. ‘Now he moves very fast from buying farmland to flipping houses to flipping commercial property. If a developer from China wants to develop in Vancouver, Sun buys the land first and sells it to them. He is very secretive and smart.’”

“An associate of Sun told Postmedia: ‘In Vancouver, it is not just Kevin, though. There is hundreds of people similar to him.’ The belief that there are hundreds of real estate investors in Vancouver who are under suspicion in China is shared by Canadian law enforcement sources. ‘Sometimes we ask ourselves if we’ve already lost the battle,’ one such source said. ‘I think this guy is just part of a large network.’”

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Comment by Ben Jones
2016-07-24 19:12:39

‘at the centre of more than $500 million in B.C. property deals…the B.C. company, which focuses on immigrant investors, has raised over $200 million from investors’

And please read the Province report. Way too much to go into on this blog.

‘Fort St. John’s overall vacancy rate is now closer to 30 per cent…’I have to tell them ‘I’m really sorry, but that’s not the magic number.’ You can hear the panic in their voices.’

Coming to a housing market near you. The Chinese really did a number on the Canadians. Money laundering their housing market up to a loony-toons level and juicing their commodity markets to a similar level.

Comment by Raymond K Hessel
2016-07-24 19:16:16

The Comrades of Proven Worth in China, like their US counterparts, need to control The Narrative.


Comment by Resistance
2016-07-24 19:58:27

They’re doing it in the US too.

Comment by The Selfish Hoarder
2016-07-24 21:44:13

Particularly in California.

I would not be surprised if this is happening in Irvine.

Comment by CEO Of The Couch
2016-07-25 04:57:34


Comment by Jingle Male
2016-07-25 05:17:32

A Chinese investor bought 27 houses in CA in 2008. He left them all vacant for 3 to 4 years. Eventually in 2012-2013, people chased him down to rent the housing, because there was a shortage of places to live. I never understood the ineptness and poor management until I read here about using real estate in the US to park money. There should be an escalating tax on vacant houses!!

Comment by Jesus Navas is my Lord Savior
2016-07-25 06:16:13

shortage of places to live

Hyperbole of the year.

Comment by 2banana
2016-07-25 07:52:12

4 years of no maintenance?




Cutting the grass?

Comment by Jingle Male
2016-07-25 12:49:43

Yes. He let the lawns die, shut off the water and power and just left the houses idle.

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Comment by CEO Of The Couch
2016-07-25 17:59:30

Was that the first or second shack you walked from…..

Comment by The Selfish Hoarder
2016-07-24 21:43:03

‘Sometimes we ask ourselves if we’ve already lost the battle,’ one such source said.

It’s lost.

Comment by Karen
2016-07-24 21:45:27

I know that many compare this situation to that of the late ’80’s with the Japanese buying North American real estate, but is it really comparable in scale and in the level of corruption involved?

Comment by The Selfish Hoarder
2016-07-25 06:51:23

I think the corruption dwarfs the Japan bubble of the 80s. This is epic.

One would think Vancouver and Australia and the ghost cities of China are the first signs of the peak of the extended propped bubble.

Considering the housing bubble has been happening since the early 2000s, perhaps 2003. There is a lot of air between the height and the ground. The splat is going to be ugly.

I am not certain but it seems the rich communist party Chinese locusts are doing far more to prop the bubble than ZIRP and even negative rates. I don’t call this a communist conspiracy. They who own the political machinery in whatever system are going to be rich when it allows private enterprise. It is unfair, considering the crimes against humanity the Communist party have done to their citizens.

Comment by The Selfish Hoarder
2016-07-25 07:27:13

I remember it was in late 2005 or in 2006. When Ben posted San Diego and Las Vegas price cuts, particularly when Pulte chopped prices in new neighborhoods after some of the houses were already sold.

That was the peak. San Diego and Las Vegas were the bubble centers. Then the rest of the nation caught the illness.

This time there can be no bailout or gold prices will skyrocket.

Comment by 2banana
2016-07-25 07:54:12

The Japanese focused more in trophy commercial properties.

I do not remember them buying residential properties.

Comment by Ben Jones
2016-07-25 08:12:43

‘I do not remember them buying residential properties’

It never occurred to them the houses were worth anything. It was the land. Remember it was the land under the Emperors palace that was worth more than all the land in California, not the palace itself. It goes to show how ridiculous this house business has become.

Comment by azdude
2016-07-25 04:31:57

Are some folks afraid of losing their gravy train meal ticket of borrowed money and indebting future americans?

Seems like some folks have to produce and others are riding this gravy train of money printing and debt.

That’s what this election is coming down to.

Comment by Palm Beach County
2016-07-25 04:36:24

“Although the numbers are by no means earth shattering, they’re a far cry from the market woes in Miami and Miami Beach. A second quarter report from brokerage Douglas Elliman showed sales fell as much as 24 percent, year-over-year in certain areas, signaling a market correction could be on its way.”


Comment by palmetto
2016-07-25 06:34:15

yeah, it’s all good in Broward (for those not familiar, Broward County is home to Ft. Lauderdale). Wait until Debbie Wasserman Shultz gets home!

I spent 20 years of my life in Broward County. For food and nightlife, Ft. Lauderdale couldn’t be beat, back in the day. All those Mafia-run clubs and restaurants, wow! They may have been laundering money like crazy, but whew, they sure knew something about food and entertainment.

The condo scene was weird, though, even back then. Galt Ocean Mile and the towers along the beaches of Pompano. Lots of Canadians, New Yorkers, etc. I wonder what kind of shape those buildings are in now.

Comment by Combotechie
2016-07-25 05:00:24

“Backflip: Antarctic peninsula, poster child of polar disaster, has been cooling, not warming.”


Comment by Jesus Navas is my Lord Savior
2016-07-25 06:27:57

It’s hot in here. We had few 100 degree days in row.

Comment by Combotechie
2016-07-25 06:42:06

Some people call that weather.

Comment by Combotechie
2016-07-25 06:51:02

A difference between climate and weather:

The climate will determines which clothes you will buy. The weather determines which clothes you will wear.

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Comment by palmetto
2016-07-25 06:57:55

In Florida, every once in a while, some of us olds will buy an item of heavy clothing at a thrift store if the price is right, “In case we ever have to go back up North”.

Lots of Florida closets are crammed full of “In case we ever have to go back up North”. The snowbirds, especially, because they really do go back up North. They never get a chance to wear much of it, though. They come back down complaining how it was hotter in the summer “up there” than “down here”.

Comment by palmetto
2016-07-25 06:47:45

Yah, this is one of those things that nature does, compensate for the heat. The thing to be careful of is when it over-compensates.

It has been bloody hot, though. Even for Florida. And it started much earlier this year than it usually does. What’s really weird is when you look at a weather map and see that Florida’s temps are lower than places like St. Louis and New York.

Too many people and too much war. Doesn’t it ever occur to anybody that when weapons are deployed in such a massive fashion, they generate a LOT of heat?

I blame Bush (actually I really do.)

Comment by Combotechie
2016-07-25 06:59:37

From January of last year …

“Avoid the land rush. Move to Antarctica now.”

“Experts say that one billion climate refugees will flee to Antarctica in the next 15 years.”


Comment by palmetto
2016-07-25 07:25:09

“Experts say”

When you’re about to tell a whopper, be sure to preface it with “Experts say”.

Comment by 2banana
2016-07-25 07:57:08

I can still remember articles from the 1970s on how NYS and north were to become arctic wastelands due to global cooling.

And FYI - NONE of Al Gore’s dire predictions in the movie “An Inconvenient Truth” has come true.

Comment by redmondjp
2016-07-25 10:21:34

I remember those days well, when the Algores of that time were lamenting about the end of days due to the growing hole in the ozone layer, and how everything exposed to sunlight was going to spontaneously combust . . . and how we needed to ban all freons and hairspray and spray cans and so on

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Comment by Jesus Navas is my Lord Savior
2016-07-25 06:18:02

How much did Yahoo pay that lady to bring down it’s value to less than 5B?

Amerikka, what a fukushima!

Comment by CEO Of The Couch
Comment by Ben Jones
2016-07-25 07:53:32

‘China’s top internet regulator ordered major online companies including Sina Corp. and Tencent Holdings Ltd. to stop original news reporting, the latest effort by the government to tighten its grip over the country’s web and information industries.’

‘The Cyberspace Administration of China imposed the ban on several major news portals, including Sohu.com Inc. and NetEase Inc., Chinese media reported in identically worded articles citing an unidentified official from the agency’s Beijing office. The companies have “seriously violated” internet regulations by carrying plenty of news content obtained through original reporting, causing “huge negative effects,” according to a report that appeared in The Paper on Sunday.’


Comment by Ben Jones
2016-07-25 07:56:48

‘People are reducing the prices of their homes even though they’re originally priced, hopefully, at market value.’

It’s called free fall. I guess they haven’t figured out it’s absurd for double-wides to be selling for $500,000 Canadian pesos.

Comment by CEO Of The Couch
2016-07-25 09:12:06

Market “value” historically is construction cost(currently $51/sq ft) less depreciation.

Comment by Ben Jones
2016-07-25 08:19:42

From the last link:

‘Just over 10 years ago, Sun and Jiang were in the kitchen of Sun’s home talking about how rich they would get by flipping Vancouver property. Sun nodded at his employee and patted him on the shoulder.’

‘Also in 2004, Chinese media including Sina, an online financial news service, were reporting that a Jilin entrepreneur named Sun Hongwei had left behind “a $2.8 billion (yuan) credit maze, infamy and misappropriation of state assets.”

‘Sun Hongwei had rapidly amassed a conglomerate of state-owned companies in the 1990s, multiple Chinese media outlets reported. In 2003, he was named China’s 388th richest citizen according to a profile in New Fortune magazine. But by that time, according to reporters in China, Sun had already disappeared.’

‘The bottom line is, apart from a few well-informed Mandarin speakers in Richmond’s real estate and political fundraising circles, very few people know that Kevin Sun is the magnate behind the rapid expansion of Sun Commercial and many associated companies in B.C.’

“Kevin Sun has been here for a while,” said one leader in the Chinese community. “He is pretty good at staying out of the spotlight.”

‘Associates, who would be interviewed only on condition of anonymity, say that Sun has claimed he landed in Montreal after leaving China. Sun has permanent resident status in Canada. A photo I.D. copy of Sun’s permanent resident card says his nationality is Chinese, and the card is marked “04 05 2001 Vancouver.”

“He says Montreal was too cold,” one associate said. “I think he came to Vancouver around 2001 or 2002.”

Too cold. That’s how arbitrary it is. People in Vancouver think their houses and sky boxes are worth a fortune, but it’s simply because it’s easy and almost risk free to launder money there. When I did an interview with a Canadian paper in 2010 I mentioned Chinese buying up entire floors of condos and the commenters scoffed. Nobody doubts there’s funny business going on now.

Comment by Ben Jones
2016-07-25 08:21:07

Oh, and like the guy busted a few weeks ago (with no-down, 100% Canadian loans), they don’t even bother to make payments: from that link:

‘Once in Vancouver, Sun and his wife Ling Lin reportedly lived in a small apartment near Langara College where they socialized with Chinese immigrants. Soon they had single-family homes in Vancouver and Richmond. Kevin Sun and Ling Lin were sued by HSBC Bank Canada, which alleges they defaulted on a $3.2-million mortgage on one of Sun’s homes — a $9.5-million gated mansion in Richmond complete with stables and sprawling grounds that served as corporate mailing address for Sun’s companies. SunCom lawyer Carpick said his client would not comment on a case “still pending before the courts.”

Comment by Palm Beach County
2016-07-25 08:26:47

Party like its 2007

David Blitzer
Chairman of the Index Committee

JULY 22, 2016 - 10:42 AMCOMMENTS: 0
House sales and prices are rising. Home sales in June were 5.57 million at annual rates, the highest since February 2007 when national home prices peaked. Currently prices as measured by the S&P/Case-Shiller National Home Price Index are climbing at a 5% annual rate and are a mere 3% from their all-time peak.

What next? The next S&P/Case-Shiller Home Price Index report will be released on Tuesday morning at 9 AM – check to see if the advance continues. The data will be posted at http://www.spdji.com.

Comment by Ben Jones
2016-07-25 08:37:32

‘‘We went from an absolutely ludicrous landlord’s market to a really generous tenant’s market in a few months,’ said Kevin Kurjata, a Dawson Creek realtor and landlord. ‘I saw the oversupply issues coming,’ he said. ‘I did not see the demand vanishing at the same time.’

‘The weak rental market has left homeowners with few ways out if they lose their jobs. Powell has heard from more than a dozen families this month who faced a stark choice: find a tenant or lose the home. ‘I ask them what their expectation for rent is and they say ‘for $1,800 I could do it.’ I have to tell them ‘I’m really sorry, but that’s not the magic number.’ You can hear the panic in their voices.’

Just the other day a poster said I had been falsely calling this a bubble for 7 years. In 2007 I did an interview with a Calgary magazine and was asked if commodities would save them. I told the reporter commodities didn’t save the Texas bubble, it made it worse. So from London to Canada to New York to Miami (the list grows every day), when these people get an ass-pounding, where are the accusations of calling a false bubble?

‘You can hear the panic in their voices’

Comment by 2banana
2016-07-25 09:02:13

Don’t worry - there is always AirBnB…

Comment by redmondjp
2016-07-25 10:40:23

Heh heh heh! You mean this AirBnB, that is now suing San Fran over their attempts to be regulated?


Comment by Professor Bear
2016-07-25 08:54:34

Our Chinese neighbors’ place is normally in some state of pandemonium.

Today it is eerily quiet and deserted, with only a view of some stacked boxes through an open window above a St. Joseph’s statue.

What could it portend?

Comment by Ben Jones
2016-07-25 09:03:58

That’s classic!

Comment by CEO Of The Couch
2016-07-25 09:16:14

Oh my word.

Comment by palmetto
2016-07-25 09:58:38

“an open window above a St. Joseph’s statue.

What could it portend?”

They converted to Catholicism and are going off to be missionaries?

Comment by Professor Bear
2016-07-25 11:04:39

It’s time to bury the statue and move on.

Comment by redmondjp
2016-07-25 12:20:29

You win today’s internets!

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Comment by redmondjp
2016-07-25 10:43:35

That statue was probably made in China. So they are just supporting the home team.

Comment by Professor Bear
2016-07-25 12:36:02

Bear in mind that these folks were duped into paying maybe $100K over the then-recent comps on a home that used to be rented out to a single mom and her young family, before the absentee investor/landlord decided it was time to not renew her lease so he could fix-and-flip the place. I spent the better part of a day a couple of years ago helping the my neighbor’s boyfriend move furniture over to her new apartment when she had to move on short notice.

Comment by In Colorado
2016-07-25 14:29:29

FWIW, I don’t think that is a St. Joseph statue.

Comment by Professor Bear
2016-07-25 19:46:05

I forgot that St Joseph is buried in the yard for good luck the next time the home goes up for sale. My bad.

Comment by CEO Of The Couch
2016-07-25 09:20:10

Nearly 10,000 homes evacuated, 18 destroyed as ferocious California wildfire spreads


Housing fraudsters hoping and praying. …

Comment by Ben Jones
2016-07-25 09:23:32

This just hit the wires:

How Foreign Investors Are Using Drug Cartel Tactics in the Canadian Real Estate Market

‘Canada’s freakshow real estate market has been drawing a lot of international attention as of late. When I asked why he thinks we’re in for a bumpy ride, Marc Cohodes pointed to Chinese capital outflow restrictions, which limit citizens from moving more than $50,000 out of the country per year. He said investors from China are breaking those rules in order to move massive amounts of money into Vancouver real estate, and the Chinese government could choose to crack down on this at any moment.’

‘It turns out Vancouver-based anti-fraud lawyer Christine Duhaime has been keeping a close eye on Chinese millionaires who are maneuvering around those rules when migrating to Canada. Working for clients like the Bank of China, she’s successfully gone after at least one person who defaulted on $10 million in Chinese bank loans, and who also spent $8 million on Lower Mainland property. Last month she tweeted the case was “of global significance for China.”

‘for the Chinese millionaires who do choose to work around capital outflow restrictions, Duhaime says one of the most common and widespread methods is “smurfing.” She says it’s a tactic also used by Colombian drug lords, and court documents show at least one Canadian bank has helped a woman buy a home this way. VICE reached out to Duhaime to learn more about how this all works, and what Chinese authorities are doing about it.’

‘VICE: Can you break down the basics of smurfing for us?
Christine Duhaime: The analogy I use is from the drug trafficking world when they’re dealing with bulky amounts of cash. What smurfing does is take these large amounts of money, and breaks it up to reduce the volume of it in order to avoid being detected. A large transaction would require threshold reporting of cash, whereas many little transactions fall below the reporting requirement for anti-money laundering. In the case of drug lords, instead of taking a gym bag full of money to the bank, what they’ll do is employ many people to go to all sorts of different banks with smaller amounts of bills and change it over so it’s useable to the gang.’

‘How is this tactic used to move money out of China?
In China, each person is limited to moving up to $50,000 out of the country each year. People move money all the time, sometimes legitimately, in order to get around these currency controls. The way I have seen it being used is that a person will hire or use many, many smurfs who will each fill out a bank form to wire $50,000 each on behalf of another person. In these bank forms, they claim to be the owner of the funds, when in reality they are not. One employment law case found a person from China had a large sum of money that was moved to Vancouver this way. A whole number of people each went to a bank, each made deposits so she could buy her house. When you have transaction after transaction of exactly $50,000, that is suspicious.’

‘Is this a widespread thing? How would you know?
It has to be widespread for this reason: you can’t send money out of China with your government identity past the $50,000 point. I have boxes of evidence in my office of wires that Chinese foreign nationals have sent over several years to Canada, all in different names of people and all for the same person. In the situations I have seen, it was employees of the Chinese foreign national that were used to smurf money out of China to Vancouver to buy luxury homes.’


Comment by Rental Watch
2016-07-25 09:36:40

When I see things like this (people going to extreme measures to sell RMB and buy other currency–regardless of whether it ends up in RE or just cash), it makes me wonder what the value of the Chinese currency would be WITHOUT the currency controls.

Comment by palmetto
2016-07-25 10:11:37

Holy Crap, is anyone following what’s going on with Wikileaks (the gift that keeps on giving) and now the FBI probe? I’m not going to post it here, just check out some of the linked posts on ZH.

What’s actually scary is that there seems to b a potential for Obama to go full-on Erdogan, via the FBI. Without even blaming a phony coup. They really, REALLY want that war with Russia in the worst way.

Comment by Rental Watch
2016-07-25 17:00:41

Holy crap indeed. It is worth noting that Rep. Wasserman Schultz was elected chair of the DNC in May 2011, almost 2 full years before HRC resigned as Secretary of State in February 2013.

I’m guessing that HRCs attorneys removed (didn’t release) any e-mails between HRC and DWS that were on HRCs server. Of course there may not have been such e-mails.

HOWEVER, if there were such e-mails, I’ll bet that WikiLeaks has them. DWS didn’t seem to delete much in the way of embarrassing e-mails. Pure conjecture on my part, of course. It should be interesting.

Comment by phony scandals
2016-07-25 15:57:19

Trump bounces into the lead - CNNPolitics.com - CNN.com
http://www.cnn.com/2016/07/25/politics/donald-trump-hillary-clinton-poll/index.html - 193k - Cached - Similar pages
1 hour ago

Comment by Rental Watch
2016-07-25 17:21:55

Nate Silver: “Don’t think people are really grasping how plausible it is that Trump could become president. It’s a close election right now,”

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