September 25, 2016

Now There Is A Slowdown On Everything

A report from the Financial Post in Canada. “Your home may have climbed in value as much as 35 per cent in the past year, so why wouldn’t you want to own another one? Increasing numbers of homeowners keen to take advantage of a booming market for low-rise detached homes are ‘doubling up’ on their investment by holding on to their existing homes, even as they move into larger ones. In essence, their old principal residence becomes an investment property — one they hope will deliver some income but more importantly will lead to massive capital appreciation — especially in two of Canada’s hottest cities for real estate.”

“The phenomenon, though not widespread, has been present in the Vancouver market as it heated up and is beginning to work its way into Toronto transactions. Calum Ross, a Toronto mortgage broker and wealth planner, said if you’re not cash-flow positive, even after factoring in a jump in interest rates, you are playing with fire when it comes to an investment property. And that includes your former principal residence.”

“‘My concern is some people are keeping their home not because it’s part of a sound financial plan; it’s the greed,’ said Ross. ‘You have to be mindful, you don’t want to be overweight in real estate.’”

“For the wary, it is worth considering what is happening in Vancouver. Simon Coutts, an agent with Macdonald Realty, said a lot of people who were holding onto their principal residence with hopes of flipping in the near future may have tough time now realizing a gain. ‘Now there is a slowdown on everything. Deals are in the can that are collapsing,’ Coutts said, adding some of those Vancouver owners are getting nervous. ‘Last month there were lineups of people to buy everything. Those lineups are gone.’”

The Metro News. “The B.C. government’s newly-introduced foreign buyer tax led to a steep drop in both total home sales across Metro Vancouver and the dollar value of residential home sales in the month of August. In Metro Vancouver, there were 1974 home sales involving foreign nationals in the period from June 10 to August 1. That fell to just 60 from August 2 to August 31. Total dollar value of home sales in Metro Vancouver fell from $14 billion to $6.5 billion.”

“B.C.’s Ministry of Finance released data that compared two periods of different duration: 53 days between June 10 and August 1, and 30 days between August 2 and 31. Home sales to foreign buyers dropped 94% between the two periods, when the number of deals in the first period is averaged over a 30-day period. ‘I hope all the people who said (foreign buyers) were just 3 to 5 per cent of the market are hanging their heads,’ said David Eby, MLA for Vancouver-Point Grey and the Opposition NDP’s critic for housing.”

“On July 29, just before the tax took effect, more than $850 million in transactions involving foreign buyers were registered at the B.C. Land Titles office, ‘equal to more than 55 per cent of all transactions registered in Metro Vancouver on that day, and almost 40 per cent of the total foreign investment in Metro Vancouver residential real estate for the entire period after data collection began and before the additional tax took effect (June 10-Aug. 1, 2016),’ according to a government press release.”

“Eby said the numbers are likely much higher because of techniques like assigning properties to permanent residents or Canadian citizens to avoid paying the tax. ‘This is just a small portion of what’s happening,’ he said. ‘We know that in the Trump Tower building, the developer was helping people assign their properties to permanent residents and citizens to avoid the tax.’”

The Global News. “The U.S. Department of Treasury has named a a relatively unknown Vancouver company with offices downtown as a ’significant transnational criminal organization,’ which has helped to defraud Americans of hundreds of millions of dollars. The allegations against PacNet Services Ltd., which have not be proven in court, came during a press conference with U.S. Attorney General Loretta Lynch.”

“The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) said PacNet is an ‘international payments processor and money services business’ with a long history of money laundering by ‘knowingly processing payments on behalf of a wide range of mail fraud schemes’ that targets victims across North America and the world.”

“Vancouver anti-money laundering lawyer Christine Duhaime says the news is ‘unfortunate for Canada.’ ‘We are getting a bit of a reputation for money laundering,’ she told Global News.”

“Peter Ferlow, the husband of Ruth Ferlow who is listed as the director, manager, or company secretary of several PacNet-linked companies, told Global News he was not aware of any evidence proving these allegations are true. According to Ferlow, the company has roughly 100 employees in Vancouver who were surprised to find the competition bureau and Vancouver Police at their office after the news broke.”

“‘The company and all the principles and higher managers in the company are now listed on the U.S. Treasury site with personal home addresses and nobody’s guilty here. Like, what is going on? It’s kind of wrong,’ he added. ‘Everybody is out of work, and they’re just regular people there. From one week to the next you can’t make your mortgage payment.’”

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Comment by Ben Jones
2016-09-25 17:24:33

‘The Conference Board of Canada says the housing markets across the country are, for the most part, cooling. Transactions dropped in 17 of 28 markets between July and August. The big drops were in Vancouver and the Fraser Valley. We are in a buyers’ market according to the board.’

‘In Regina, listings were up a whopping 16 per cent month-to-month while sales were off about 21 per cent. Listings there were up 3.6 per cent year-to-year and, again, sales were off about 21%.’

Comment by MacBeth
2016-09-26 05:20:18

“we’re in a buyer’s market…”

Not even close. A month or two (or three) of declining sales/increasing inventory is hardly a buyer’s market. Not after several years of double-digit increases.

Try knocking 80-90% off each and every increase since the mania began. Then, you’ll have a buyer’s market.

Comment by scdave
2016-09-26 06:06:24

every increase since the mania began ??

When did it begin ??

Comment by taxpayers
2016-09-26 07:10:04

w hitlery coming-no slowdown in 22151 s of central Soviet

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Comment by redmondjp
2016-09-26 10:06:51

In my area of the country, it began in the late 1990s. In 1998, when I bought my house for $160K, it was approximately 3X my gross annual salary (it’s almost paid off now). New houses (much larger) in my neighborhood are now going for $1.5M.

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Comment by Anon
2016-09-26 10:01:37

Exactly! The only people who say we are in a buyers market are real estate agents and foreign buyers or just ignorant.

Comment by Ben Jones
2016-09-25 17:27:03

‘People looking for a quick move to a duplex, apartment or townhome had more to pick from in the Calgary area last month than the same time a year ago. The most significant increase in completed but unabsorbed units in multi-family development came from apartments. There were 624 on the market last month compared to 146 a year earlier, says CMHC.’

‘The increase was largely driven by the Fish Creek area and northeast quadrant, which had 198 and 163 units available, respectively. During the same time last year, Fish Creek had four and the northeast had none. Inventory in Airdrie also recorded a notable jump, climbing to 38 from one a year earlier, says CMHC.’

‘For townhomes, northwest Calgary had the highest count on available units in August with 45. In fact, it was the only quadrant with more than 13 on the books. A year earlier, there were 18 townhomes available in Calgary’s northwest. Overall, townhome inventory for the Calgary area last month increased to 140 from 66 year over year. Like apartments, Airdrie played a role in the townhome increase, as well. It had 37 last month versus two in August 2015.’

‘Quick possession duplexes in the Calgary area were more affordable last month than the same period in 2015. The average price on constructed but unabsorbed units in this segment was $629,682, down from $687,635 a year earlier.’

Comment by Ben Jones
2016-09-25 18:02:45

‘Canada’s top financial regulator is beefing up capital requirements for mortgage insurers to make sure they are adequately accounting for the creditworthiness of borrowers and fast-rising real estate markets.’

‘The Office of the Superintendent of Financial Institutions published a draft advisory for public consultation Friday that would force mortgage insurers to incorporate additional risk attributes when determining how much money to set aside to cover the loan, including the borrower’s credit score, outstanding loan balance, and the amount of time left to fully repay the mortgage.’

‘A noteworthy addition is a supplemental capital requirement for cities with “house valuation concerns,” said Jason Mercer, an analyst at Moody’s Investors Service who published an in-depth look at the residential mortgage market in June. He said boosting the amount of capital to be held against mortgages in hot real estate pockets with high price-to-income ratios mirrors measures introduced earlier for the mortgage portfolios of the country’s banks.’

‘The new OSFI rules for mortgage insurers are to come into effect Jan. 1, with possible revisions, following the consultation period that ends Oct. 21. Genworth MI Canada Inc., the parent company Canada’s largest residential mortgage insurer, issued a statement Friday that said the company expects it will compliant with the new framework, “subject to business and market conditions.”

Comment by A Random Realtor
2016-09-26 10:18:33

Starting to see an increasing number of cash buyers from Canada get that cash from HELOC’s instead of savings.

Starting to see a disproportionate number of self-described flippers in the aforementioned group.

Starting to wonder how much money has been borrowed against appreciating real estate in Canada to speculate on real estate in Florida.

Comment by Ben Jones
2016-09-25 18:06:56

‘Vancouver’s housing market may have cooled, but that hasn’t stopped west side ranchers and mid-century moderns giving way to “stockbroker Tudors” and monster Cape Cods—anything that allows builders to maximize the available lot size and add a touch of “luxe” to the neighbourhood.’

‘Demolitions in Vancouver“Business has definitely become busier in the last several years,” says Kevin Li, VP of marketing with VictorEric Design Group, a luxury homebuilder that has around 10 homes under construction at any one time. Forty per cent of the firm’s work is in Vancouver, with the remainder spread between Richmond and the North Shore. Li says that recent immigrants account for the bulk of his clients, though he’s quick to add, “They are living in these houses.”

‘Between January and April of this year, the City of Vancouver permitted 290 new single-family houses. And while the number of new builds hasn’t grown appreciably, the value of these new homes—limestone-clad manors in South Vancouver, 4,000-square-foot marble monsters in Dunbar—has. In 2009, the City of Vancouver permitted $187 million worth of new single-family-home construction; last year, the tally was almost twice that amount, at $337 million.’

‘The latest spurt of construction echoes the boom of “stucco specials” built in the late ’80s, says historian Michael Kluckner, author of Vanishing Vancouver. Homebuilders in that era built blown-out monster homes on spec in anticipation of Asian buyers. “These great big houses were blown out to the maximum, but they didn’t tend to be particularly well built. They were just a hell of a lot bigger,” he says.’

‘The craftsmanship got so shabby—Kluckner cites a house where the cornerstones were made of Styrofoam—that the City of Vancouver ultimately intervened, introducing a bylaw in 1992 mandating the type and quality of materials that could be used. Now, he fears shoddy construction is returning—though builders BCBusiness talked to maintain that Vancouver has the toughest guidelines of any municipality in the region.’

“It would be all well if the city said they needed to densify this area—the way mansions in the West End were subdivided into rooming houses,” he says. “It would at least indicate that in this cycle of demolition and renewal you were getting something that advanced the city. Instead we get the demolition of all this cultural landscape and its replacement by another generation of almost unsustainable single-family ownership.”

Comment by Ben Jones
2016-09-25 18:09:49

‘A Vancouver landlord is apologizing for posting a rental ad demanding that any potential tenant not cook much, barely be home, and pay $1,400 for a two-bedroom basement suite on a busy street with no laundry. The landlord told CTV News he’s been inundated with angry comments from renters saying he’s taking advantage of a tight rental market by making outrageous demands. But he says he was just trying to find a good fit.’

‘The landlord advertised the unit as being minutes away from SkyTrain and steps away from Commercial Drive, but said he’s only looking for “REALLY special tenants.”

‘What that means, according to his Craigslist ad, is people who won’t do much cooking, don’t have pets, and don’t plan to spend much time at home. “Our ideal tenant would not cook much (only because the smell travels upstairs directly into our living room) and we are vegetarians so we don’t like the smell of meat either,” it read. “Yes I know I’m asking for a lot but what the hey…”

Comment by Ben Jones
2016-09-25 18:12:38

A letter to the editor:

‘Re: “Chinese companies want courts to seize B.C. properties.”

‘This article confirms that B.C. real estate might be the alternative to the Swiss bank account for large sums of money flowing out of China. The problem is that some of this money, estimated in the article at billions of dollars, is owed to Chinese banks.’

‘These same banks were reported recently to have about $300 billion US in non-performing loans on their books. And now the banks want to protect their depositors in China by taking action to collect on these duff loans.’

‘Coupled with the new 15 per cent property-purchase tax levied on non-residents, this move by the banks could further destabilize the Vancouver real-estate market.’

‘First, there could be a negative impact on supply if numerous properties are kept off the market when Chinese creditors obtain so called Mareva injunctions. This could be followed by an avalanche of properties hitting the market after successful foreclosure cases wind their way through the courts.’

‘In the meantime, all sorts of shenanigans could take place as debtors try to transfer titles fraudulently to avoid injunctions.’

‘Legitimate buyers of property that would otherwise have been subject to injunctions might also find themselves caught in a legal morass.’

Comment by Ben Jones
2016-09-25 18:16:09

‘Everybody is out of work, and they’re just regular people there. From one week to the next you can’t make your mortgage payment.’

When you look back Peter, you can always say, “it was cheaper than renting.”

Comment by rms
2016-09-25 21:56:39

“From one week to the next you can’t make your mortgage payment.”

One week away from living on the street. Globalism.

Comment by scdave
2016-09-26 06:11:09

One week away from living on the street ??

Thats right…Without a job, it does not matter wether your paying a mortgage or renting…You cannot afford either…

Comment by rms
2016-09-26 07:23:57

I always carried at least six-months of savings specifically earmarked for PITI payments during my mortgage years.

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Comment by scdave
2016-09-26 07:47:31

earmarked for PITI payments during my mortgage years ??

I always had a minimum of 1 year but I am self employed so my income fluctuates greatly…

Comment by Bwahaha
2016-09-26 08:26:32

Pimping used shacks just ain’t reliable work.

Comment by In Colorado
2016-09-26 08:33:27

I thought people who didn’t pay their mortgages could live in their houses for years before they were evicted.

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Comment by Tarara Boomdea
2016-09-26 11:01:47

I thought people who didn’t pay their mortgages could live in their houses for years before they were evicted.

Top 10 states for long-term delinquent mortgage squatting

Just the chart: Serious Delinquency of Non-Agency RMBS Loans / Ten Worst States through August 2016

Hawaii is #1: over three years 76%, over five years 61%. Jersey and NY are next. Here in Las Vegas, some people stopped paying very early and are still in “their” homes, generally higher priced properties (Nevada #6 on list, 57% and 37%).

Comment by palmetto
2016-09-25 18:56:34

“The U.S. Department of Treasury has named a a relatively unknown Vancouver company with offices downtown as a ’significant transnational criminal organization,’ which has helped to defraud Americans of hundreds of millions of dollars. The allegations against PacNet Services Ltd., which have not be proven in court, came during a press conference with U.S. Attorney General Loretta Lynch.”

Oh, dear. They must’ve been cutting in on the Clinton Foundation’s action.

Comment by Raymond K Hessel
2016-09-26 06:12:02

Meanwhile, the biggest criminal racket in North America, the Federal Reserve, has operated with impunity since its furtive establishment in 1913.

Comment by palmetto
2016-09-26 07:06:06

What’re the chances on the occurrence today of a national/international incident serious enough to postpone the debate?

I guess it “depends” on how Hillary’s feeling today.

Comment by phony scandals
2016-09-26 08:52:06

I just hope Hillary doesn’t cough her way off her box and fall off her podium.

Randy Newman - Short People - YouTube - 228k -

Hillary Gets Super-Sized Podium To Compete With Trump

JP Carroll
National Security & Foreign Affairs Reporter
7:09 PM 09/25/2016

Before Republican nominee Donald Trump and Democratic nominee Hillary Clinton debate each other Monday, Clinton’s podium needed some adjustments.

Trump is a towering 6’2″ and Clinton is only 5’4″. To even the height field, Clinton’s podium now has plywood placed in the middle, according to WABC Radio Host Rita Cosby. The WABC journalist gained exclusive access to the podiums, which not only show Clinton’s is now a bit larger than Trump’s, but that there is also a small box Clinton might stand on.

Read more:

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Comment by Professor Bear
2016-09-26 07:15:39

‘We know that in the Trump Tower building, the developer was helping people assign their properties to permanent residents and citizens to avoid the tax.’

That reminds me, does Trump plan to soon release his tax returns?

Comment by palmetto
2016-09-26 07:34:10

Probably around the same time that Obama, Comey and Lynch resign.

Comment by Neuromance
2016-09-26 04:25:47

I’ve always been intrigued and puzzled by non-monetizable “wealth”. The article touches on several related issues, including real estate.

You’re Not as Rich as You Think
Sep 21, 2016 11:37 PM EDT
By Satyajit Das

The idea that the world is awash in savings — one factor driving the theory of secular stagnation — is, on the surface, a persuasive one. Too bad it may not be true.

Yes, the postwar generation is wealthier than any before it. But the ultimate value of any investment depends upon being able to convert it into cash and thus generate purchasing power. In fact, the world’s accumulated wealth — around $250 trillion, according to Credit Suisse’s Global Wealth Report — is almost certainly incapable of realization at its paper value. The headline number thus vastly overstates the supposed savings glut.

Most of these savings are held in two forms: real estate, primarily principal residences, and retirement portfolios that are invested in stocks and bonds.

Comment by Raymond K Hessel
2016-09-26 06:38:05

Ready for true price discovery, Bitchez?

Comment by Overbanked
2016-09-26 04:35:39

Can someone explain to me the business rationale of a bank owning a single family house without a tenant? Where does this show up on the financials after the foreclosure? Is it some sort of investment? I’m wondering if the nonperforming loan is $300k after all late fees and unpaid interest and at foreclosure the house is valued at $320k, then after the foreclosure they can just show an investment at $20k. Then if the property rises from $320k to $340k, their balance sheet goes from $20k to $40k. WOW! Look at that ROI!

Comment by Watson
2016-09-26 09:03:30

I assume that if the house was worth $320K they would show it as Real Estate Owned worth $320K on the books. So before the foreclosure they have a loan worth $300K, afterwards they have a house worth $320K. However if they then sell the house for more than the amount of the outstanding loan plus fees, costs, etc., I think they’re supposed to refund the excess to the former homeowner. It may vary by state, I’m not sure.

Comment by taxpayers
2016-09-26 05:11:03

The mbs held by the fed is about 2 trillion
Most is based . On mid 2000 morts

Any guess on value
Bids ?

Comment by MightyMike
2016-09-26 09:12:55

It sounds like your guess is two trill. How’d you come up with that?

Comment by taxpayers
2016-09-26 05:40:53

Crb index up 5% yoy
Health care up huge
Rents up big

No inflation ?

Comment by Raymond K Hessel
2016-09-26 06:14:25

Pay no heed to all those flashing red warning indicators out of China. The Comrades of Proven Worth managing their central planning have matters well in hand.

Comment by Raymond K Hessel
2016-09-26 06:37:01

Hard landing…pshaw! The comrades at the central planning bureau assure us all is well. Forward!

Comment by Raymond K Hessel
Comment by Raymond K Hessel
2016-09-26 06:18:52

“Bear Stearns is fine!” — CNBC permabull and market tout Jim Cramer, days before Bear Stearns plunged from $60 to under $2 a share.

Comment by Raymond K Hessel
2016-09-26 06:24:03

While 95% of the ‘Murican electorate are demonstrably too stupid to grasp basic facts, I’ll put these out there anyway.

Comment by Raymond K Hessel
2016-09-26 06:43:52

Fundamental transformation is breaking out all over. The tax bills for all-pervasive “security” are going to reach crippling levels if this keeps up.

Comment by In Colorado
2016-09-26 10:25:01

I would expect private businesses (like malls) to be responsible for providing their own security.

I wonder how long until you have to walk through a metal detector to get into a mall, multiplex, big box store, supermarket, church, etc.

Comment by Raymond K Hessel
2016-09-26 06:47:35

After Angela Merkel and her Quisling CDU foisted 1.1 million Third World refugees on German taxpayers, the latter would probably come after her with pitchforks and torches if she and her globalist masters tried to force them to bear the costs of a DB bailout. This is going to have an EU-wide impact, as Merkel, a toady of the globalists and banksters, as never hesitated to put German taxpayers on the hook for endless bailouts to insolvent banks in the PIIGS.

Comment by Raymond K Hessel
2016-09-26 06:49:31

Are the sheeple finally waking up to the fact that the Keynesian fraudsters at the central banks are running out of ammo and are bereft of actual solutions to the downward global economic spiral?

Comment by Raymond K Hessel
2016-09-26 06:51:20

But…but…the wise and all-knowing “former” Goldmanites and Keynesian fraudsters at the Fed and central banks assure us debt-based “growth” is the way forward!

Comment by Raymond K Hessel
2016-09-26 07:16:52

Are tapped-out ‘Muricans in our Obama-Fed-Goldman Sachs “recovery” losing their appetite for overpriced houses and debt servitude?

Comment by In Colorado
2016-09-26 09:06:30

They’ll be back for bubble 3.0

Comment by Raymond K Hessel
2016-09-26 07:18:37

When DB hits single digits, look out below.

Comment by Raymond K Hessel
2016-09-26 07:20:15

In Comrade Clinton’s Amerika, “super gun owners” must be targeted for disarmament and reeducation…for the children.

Comment by aNYCdj
Comment by In Colorado
2016-09-26 08:37:57

The lonely $250,000 S-Class coupe at Mercedes-Benz of Greenwich says it all. For six months, it’s been sitting in the showroom, shimmering in vain while models priced at only $70,000 fly out the door.

You know times are tough when the upper middle class can only swing a $70K car.

Comment by phony scandals
2016-09-26 10:02:29

“No such problem if it’s $2 million or less.”

I know of a house in Greenwich that sold for the $1.4 million asking price within days of being listed recently in what used to be a nice middle class hood.

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