October 8, 2015

Quarterly Fund-Raising Drive

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Sellers Are Starting To Chase The Market Down

The Denver Post reports from Colorado. “Residential real estate markets typically slow in September and the autumn months. But the changes underway in metro Denver appear to be going beyond the normal seasonal changing of colors. ‘Sellers are starting to chase the market down,’ said Anthony Rael, chairman of the market trends committee with the Denver Metro Association of Realtors.”

“Rael said he is noticing more homes in the $500,000 and $600,000 range coming down substantially from the original list price after spending weeks on the market. Of two dozen listings in that price range he recently reviewed for a client, about 20 had dropped their prices. Lower-priced homes are still moving quickly, but not at the frenzied pace seen from February to June, when multiple bids with waived contingencies above list price were common.”

The Seattle Times in Washington. “After the most brisk summer selling season in a decade, the Seattle area’s home prices showed signs of easing in September. Potential buyers may welcome a cooling, but it’s grim news for the large slice of the region’s homeowners whose mortgage debt remains greater than their home’s value. More than 33,500 King County homes had negative equity at the end of June, or 9 percent of homes with a mortgage, according to Zillow. An additional 19,600 homes in Snohomish County, or 13 percent of mortgaged homes, were in the same predicament. Collectively, the homeowners owe $7.5 billion more than their homes are worth, Zillow estimates.”

“‘It’s causing a lot of friction at the bottom of the market, which then ripples through to the entire market,’ said Zillow Chief Economist Svenja Gudell. ‘For some of these homeowners, they may pay off their mortgages before they resurface.’”

The Foothills News in Arizona. “John Schneider, a realtor who specializes in Foothills real estate, and others working the area commonly recognize two markets in the Catalina Foothills community: Those priced at $1 million or more, and those priced below $1 million. Homes priced over $1 million have been struggling for about seven years, creating a buyer’s market. Schneider says he thinks sellers of high-end homes are playing the waiting game.”

“‘I believe, because sellers of high-end homes have the financial means to hold on to their homes, they don’t have to sell — and they continue to wait for prices to climb,’ he said. ‘But, so far, that has not proven to be a good strategy as many overpriced high-end homes continue to languish on the market. And now, with six to seven years of tepid sales at $1 million-plus, it is obvious that many high-end buyers have moved on.’”

“There are currently 73 homes listed at $1 million or more, and only 25 have sold year-to-date. ‘This works out to a 26-month supply of homes — a huge supply,’ said Schneider. ‘At $1 million-plus, it’s a strong buyer’s market, but, unfortunately, very few buyers are jumping in.’”

From Chicago Now in Illinois. “On Thursday I wrote about all of Chicago’s new high rise construction in the South Loop that has recently been announced. With just the 5 projects I wrote about I estimate that we are looking at approximately 2061 new apartments and 1123 new condos/ townhomes. That’s a ton of new housing units so the question is whether or not the South Loop can absorb all that new supply.”

“If you recall the South Loop became a real wasteland during the housing bust and it wasn’t until Related Midwest bought 504 condos and remarketed them that we were able to put that whole series of unfortunate events behind us. But according to a May article in Crain’s it took Related Midwest just about 3 years to sell all those condos. So how long will it take the South Loop to absorb 1123 new condos and 2061 new apartments?”

The New York Times. “Buyers may be reaching a breaking point when it comes to outsize prices for luxury real estate. ‘At the upper end of the market, I believe there is a little bit of a pushback from the buyers,’ said Diane M. Ramirez, chief executive of Halstead Property, which found that the average sales price of co-ops with at least three bedrooms declined 26 percent to approximately $3.1 million in the third quarter of the year, from $4.2 million during the same period last year.”

“Hall F. Willkie, president of Brown Harris Stevens Residential Sales, said that though demand remained strong, ‘more sellers are asking prices that are just not justified.’ Especially at the high end, he said, ‘there’s a glut of inventory that’s overpriced.’”

From DNS News. ” Kroll Bond Rating Agency analysts Christopher Whalen and Joe Scott reviewed the U.S. bank sector’s credit outlook and concluded that having the banking industry reporting zero or low default rates is a clear sign ‘of mounting future credit risk.’ In fact, we may be looking at another asset price bubble within the housing sector among others. During the mortgage bubble of 2004-2005, Washington Mutual and Countrywide—two of the lenders that eventually had to be bailed out by larger banking institutions—reported negative defaults, Whalen and Scott reported. On the surface this looks like good news since it means the banks’ recoveries exceeded charge-offs, the pair explained.”

“But it also could be a sign of overheating in the market with asset values exceeding economic fundamentals such as employment, income and GDP, according to KBRA’s note. Whalen and Scott have this warning about the banking industry’s low default rate data: ‘the credit results measured by metrics such as charge-offs and recoveries are simply too good to be believed—or sustained.’”

“While others have praised the Fed for keeping interest rates low on the grounds that economic fundamentals support a push back against rising interest rates, KBRA’s note says ‘the responsibility for the rising risk in bank loan portfolios lies squarely at the feet of the Federal Open Market Committee (FOMC), which explicitly set a policy to push up asset prices to facilitate greater risk taking.’”

“The problem with rising prices is the creation of an asset price bubble where as Whalen and Scott point out, ‘these higher asset values … have not been validated by the performance of the U.S. economy, either in terms of rising income or GDP.’ In other words, you cannot create confident consumers out of thin air. They are either making enough money to swim in your pond and buy your house, or they’re not.”

“They also warn that loan-to-value ratios are on the rise, which is another déjà vu moment, given the fact that LTVs reached a great imbalance in the years leading up to the housing crash. With rates staying low, asset prices rise artificially, and now consumers who are taking a bite of the apple are buying into a price structure that is artificially stimulated since it is not supported by economic fundamentals. Is this the year 2008 all over again?”

Bits Bucket for October 8, 2015

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October 7, 2015

Unorthodox Demand With Unorthodox Capital

Some housing bubble news from Wall Street and Washington. Bloomberg, “As residential real-estate prices stage a comeback, Federal Reserve policy makers may be gaining an extra motivation for lifting interest rates for the first time in nearly a decade: They don’t want to let recovery evolve into excess. San Francisco Fed President John Williams said in a speech on Monday that he sees ’signs of imbalances’ emerging in asset prices — especially real estate. After saying that conditions haven’t yet reached a tipping point, he recalled that in the mid-2000s it was too late to ‘avoid bad outcomes’ by raising interest rates once the housing boom was in full swing.”

“Williams told reporters that his housing market warning is ‘not about fighting bubbles, or trying to deal with financial stability’ — it’s more a response to why interest rates need to rise even though inflation remains low. ‘The reason you don’t just let an economy rip — let it grow, and grow, and grow, and just see what happens, is because that usually ends badly,’ he said.”

From CNBC. “While home prices nationally have not yet returned to their peak of the last housing boom, some local markets have surpassed it. Now, some claim the housing market is in a bubble far worse than the devastating one in 2006. The argument: Housing is far less affordable today than it was back then, and the home price gains are driven not by healthy, end-user demand but by a lack of construction, artificially low interest rates, and institutional and foreign all-cash buyers.”

“‘In the days of ‘anything goes,’ ninja financing caused housing prices to lurch higher, which forced people to rush in and buy, which in turn pushed prices higher, thus increasing volume more, and so on. But when it comes to the new-era, end-user buyer, that can’t happen any longer, as buyers actually have to fundamentally ‘qualify’ for the mortgage for which they apply,’ wrote housing analyst Mark Hanson in a note to clients. He calls it an exact replay of the last housing boom, ‘when unorthodox demand with unorthodox capital would pay any price it took to hit the bid.’”

From FOX Business. “During an interview with Maria Bartiromo on FOX Business Network’s Mornings with Maria, former Federal Reserve Chairman Ben Bernanke was asked about the current state of the housing market. ‘There doesn’t seem to be anything remotely like we saw before the financial crisis, people have to look at their individual market, make good decisions, banks have to make good lending decisions, all those things,’ notes Bernanke.”

“He does acknowledge that prices are getting ahead of themselves in places such as New York, San Francisco and Miami. ‘Look, I know prices in New York are really high, that’s actually a good thing in a sense that one way of thinking about house prices is to ask whether the price/rent multiple like a price/earnings multiple on a stock, is really high or not.’ Bernanke continued: ‘In the housing bubble, the prices of houses were way, way higher than the rents seemed to justify. In this case, you’ve got the high rents at least providing some kind of fundamental, which suggests that house prices in those particular areas, it’s certainly not a national thing, should be high.’”

From The Intercept. “Former Federal Reserve Chair Ben Bernanke joined practically everyone in America by saying in his new memoir, The Courage to Act, that more Wall Street executives should have gone to jail for criminal misconduct that led to the financial crisis. Unlike practically everyone else in America, however, Bernanke in a pretty good position to actually facilitate criminal misconduct proceedings, if he wanted to see them so badly — as head of the nation’s most powerful bank supervisory agency from 2006 to 2014.”

“The Fed, like all banking regulators, can initiate criminal referrals to the Justice Department for individuals they find to have broken the law. This acts as the first line of defense to discipline criminal misconduct on Wall Street. But such activities were absent during the period when Bernanke was chair, according to criminologist and law professor Bill Black. ‘The Federal Reserve appears to have made zero criminal referrals; it made three about discrimination,’ Black told Bill Moyers in 2013.”

“And when Bernanke took action, his stumbling attempts at accountability weren’t just inadequate; they were absurd. The one major action his Federal Reserve took regarding specific conduct regarding the financial crisis wound up as the most embarrassing display of fake accountability in the history of the Obama Administration.”

From DNS News. “Amid all the good news for housing lately, foreclosure starts were up by 7 percent in August—driven by a rise in the amount of repeat foreclosures, according to the August 2015 Mortgage Monitor released by Black Knight Financial Services. Repeat foreclosures accounted for 57 percent of the 80,500 foreclosure starts reported in August, the largest share of repeat foreclosures for one month on record, according to Black Knight. While all foreclosure starts saw an increase of 7 percent month-over-month in August, the number of repeat foreclosures jumped by 13 percent.”

The Palm Beach Post. “The federal Hardest Hit Fund has been a flop in keeping Florida homeowners out of foreclosure, a federal inspector general concludes. Only 20 percent of homeowners who applied for help in Florida got it, amounting to 22,400 homeowners in a state that saw hundreds of thousands of foreclosures. A report from the Special Inspector General for the Troubled Asset Relief Program paints a damning picture of Florida’s performance on the Hardest Hit Fund.”

“In a state known for rampant mortgage fraud, federal and state authorities ran no background checks on applicants to the Hardest Hit Fund. ‘Rather than conduct due diligence to ensure compliance with the DoddFrank Act, Treasury has shifted the burden to the homeowner to self-report in an affidavit affirming no mortgage fraud conviction within the past 10 years,’ the inspector general writes.”

The New York Times. “The promise of widespread relief for homeowners facing foreclosure in the wake of the housing bust has never been realized. The government did not require the banks to rework bad loans, which in many cases the banks offloaded on the federal agencies that insured them. Now these same agencies are selling some of these loans at a discount to hedge funds and private equity firms.”

“One of the firms The Times’s report focused on — Lone Star Funds, a $60 billion private equity firm that has become a major force in the market for distressed mortgage debt — has relied largely on foreclosure and resale of the homes to make money. Loan modifications that reduce borrowers’ principal have been virtually nonexistent.”

“In the aftermath of a bust, there is a legitimate role for distressed debt investors who seek to extract what value remains in impaired assets. But the federal mortgage sales are apparently occurring before all borrowers have been given a chance to apply for and receive help that was promised under the terms of the bank bailouts and, since then, under various legal settlements and regulations intended to prevent foreclosure abuses.”

Bits Bucket for October 7, 2015

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October 6, 2015

Not A Market For Speculation And Overpricing

The Globe and Mail reports from Canada. “Real estate buyers in Toronto appear to be treading more cautiously into the fall market – especially compared with the excessive bidding that took place in the city last spring. Chander Chaddah, a real estate agent with Sutton Group-Associates Brokerage Inc., listed two houses recently; one sold on offer night and the other didn’t. The one that didn’t sell is a three-storey semi-detached house, which has an asking price of $1,249,900, is the type of large, renovated family home that often attracts a crowd of bidders, he says. ‘The offer date came and went,’ he says, adding that several other houses in the same area remained on the market after the official deadline for bids.”

“Diana Petramala, an economist with Toronto-Dominion Bank, says some of the momentum has come out of the Bank of Canada’s interest rate cuts, which fuelled so much of the buying in the spring. ‘There’s little left in the form of a driver for housing demand,’ Ms. Petramala says.”

The Langley Advance. “The craze for housing in Langley began this summer with bidding wars for houses, and it wound down with people camping out for more than a week to catch coveted condos. Most of the people there were hoping to snag a condo for themselves, or for a family member. But others were there as paid placeholders. Calvin Adams had just moved to the Lower Mainland from Prince George when he spotted an ad on Craigslist looking for someone to sit in line for $200 a day for four days to secure a spot. ‘They don’t line up for anything up there, especially not a condo,’ said Adams.”

The Global News. “Home sales in Saskatoon were sluggish during September, according to the Saskatoon Region Association of Realtors (SRAR). Sales were off 16 per cent compared to a year ago and are down 12 per cent for the year. SRAR CEO Jason Yochim was optimistic, but he offered a word of caution. ‘This is not a market for speculation and overpricing.’”

“The drop in sales compared to listings has tilted the landscape from a balanced to a buyer’s market, making it more challenging for sellers to see offers close to their asking price. Inventory levels remain elevated, with just over 2,000 properties available. Many are new homes and condo units and Yochim expects to ’see vacant condo units hit the rental market.’”

The Calgary Herald. “Calgary MLS residential sales fell well below five-and 10-year averages through September. CREB president Corinne Lyall said while inventory levels are elevated, the number of properties on the market remains well below the highs of the previous economic downturn in 2008/09. ‘There is no question that we have seen a shift in our local housing market conditions, but it needs to be put in perspective,’ she said.”

“The average number of days it is taking to sell homes has risen from 31 last year to 40 this year. Ann-Marie Lurie, CREB’s chief economist, said a sales to new listings ratio of 50 per cent implies that for every 10 new listings five are being sold.”

The Edmonton Sun. “House sales are trending down in Edmonton but it’s not a complete horror story — more of a Goldilocks tale. Geneva Tetreault, chair of the Realtors Association of Edmonton, said those looking to downsize from larger homes, as well as growing young families in need of more space than a condo, have looked to the mid-level homes and have found a relative glut of choices.”

“‘In the boom, when we saw a lot of new construction, we saw a lot of that style of home being built and since then we’ve seen that continue. So those homes are now becoming available for resale as well,’ said Tetreault.”

“For Canadians who already own property in the U.S. Sunbelt, their accommodation expenses are fixed, but many other related expenditures are not. Steve and Liz McQuaid (they’ve asked for pseudonyms, not wanting to advertise that their Southwestern Ontario home sits empty for months each year) are reminded of this when they pay their Florida condo fees each quarter. ‘It takes more and more Canadian money to pay the U.S. fee,’ says Mr. McQuaid.”

“The United States is already seeing a decline in the number of houses sold to international buyers. According to the 2015 Profile of Home Buying Activity of International Clients report, published by the U.S. National Association of Realtors, there has been a 10-per-cent decline in homes sold between 2014 and 2015. Seventy-five per cent of Realtors reported to the NAR that the strong U.S. dollar has had an impact on their sales numbers.”

Bits Bucket for October 6, 2015

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October 5, 2015

The Decks Were Stacked With Aces

A report from the Idaho Press Tribune. “We all knew the housing market was going to rebound at some point, and now that it has, developers are ramping up plans to start building more large subdivisions. So now the question city leaders in Nampa and the Treasure Valley’s other cities have to ask themselves is, are we prepared to handle it? Remember the subdivision boom of the mid-2000s? It was a time when home values were rising at astonishing rates. Some properties saw their values double within a year or two. People were buying and selling homes, making tens of thousands of dollars in profits — it was Las Vegas and the decks were stacked with aces; the slot machines were rigged to come up triple cherries with every spin. Only instead of cards or cherries, it was houses.”

“Farmers were selling their fields for astronomical sums to developers eager to take their turn at the casino table. Remember all those tracts of agricultural land that were being prepped for new homes here in Canyon County? You know what happened. It was an artificial bubble. Nobody’s income was doubling, so there was no way buyers could afford houses of those spiraling values. The bubble eventually burst, and everything came crashing down.”

“Now that values are back up to where developers believe they can make a profit on new homes, there are five monster subdivisions planned in Nampa alone — 381 homes, 385 homes, 216 homes, 178 homes and 254 homes.”

The Bend Bulletin in Oregon. “New plans for apartment complexes in Bend submitted this year bring the total number of proposed units in a rental-starved market to more than 1,500. However, most of those applications remain on the drawing board, or in some phase of plan review at the city. The surge in applications is still lagging behind the demand for new rental housing. The numbers still apply for units of about 1,000 square feet, said Kevin Restine, general manager of Plus Property Management and an association board member. Above that size, and above rents of $2,000 a month, the market has ‘gone quiet,’ he said.”

“Properties that rent for more than $2,000 are less in demand for an obvious reason, Restine said: ‘Folks that can afford those things have probably moved into the purchase market.’ The leasing slowdown in properties priced at $2,000 a month and more may indicate the start of an overall market slowdown, he said.

From Leesburg Today in Virginia. “When Tim Nuhfer and Natasha Schuh-Nuhfer began their hunt for their first home, they jotted down a list of priorities. The husband and wife wanted at least 2,000 square feet of space, two to three bedrooms and a garage with space for their outdoor gear, and they didn’t want to pay much more than $450,000. Their search led them to a neighborhood that’s considered one of Loudoun’s real estate hot spots. They found their new abode, a four-bedroom, 2,100-square-foot house with a two-car garage, on the far east end of Sterling.”

“‘With the Silver Line coming, now is the time to buy here,’ said Schuh-Nuhfer. ‘People are on to it now, and the prices are really going to go up.’”

“If there’s any part of the market real estate agents might call a ‘cold spot’ in Loudoun, it’s the houses priced at seven figures. There are 200 homes for sale at $1 million or more, and just 16 are under contract, according to Pamela Jones of Long & Foster Realtors. So far this year, 67 at that price range have sold—just 1.5 percent of the county’s overall home sales. ‘So we currently have a 21-month supply of homes over $1,000,000,’ Jones said in an email. ‘Yikes!’”

The Tampa Bay Times in Florida. “Even for Tampa Bay homeowners who plan to stay put, steadily climbing home prices are a reason to cheer. After all, rising water floats all boats, right? Not exactly. Despite the continuing recovery of the housing market, 18 percent of all Tampa Bay homes lost value between August 2014 and August 2015, according to Zillow. In some areas, including Dade City and eastern Hillsborough County, more than 30 percent of homes were worth less this summer than they were a year ago.”

“Among the four bay area counties, Zillow found that Hillsborough had the most ZIP codes in which at least 18 percent of the homes declined in value over the past year. That’s a roughly accurate reflection of how values are faring in Hillsborough even though its property appraiser’s office, like that in Pinellas, examines sales in much smaller geographic areas. ‘We have 300 neighborhoods and looking at the overall change in price, the data suggest that approximately 25 percent dropped in price, while 75 percent increased,’ said Tim Wilmath, Hillsborough’s director of valuation.”

The Houston Chronicle in Texas. “Weeks after buying his first house, Anthony Escobedo got word that his company planned to close the California oil equipment plant where he works as a mechanical design engineer and ship him and his co-workers to headquarters in Houston. Escobedo, 26, wasn’t surprised. With domestic crude fetching less than $50 per barrel, fewer oil companies are clamoring for the products churned out of the Bakersfield factory, forcing his employer to cut costs and pare back operations.”

“But he’s not upset either. While the move across the country may come at an inconvenient time, the Golden State native says he’s looking forward to putting down roots in Houston, where the cost of living is cheap, the people are nice and opportunities abound to advance his career. ‘I’ll do the whole house search again, meet new people and work with new people in the company,’ said Escobedo, who has listed his Bakersfield home for sale and plans to move to Houston soon.”

“The global crude slump battering oil towns across the country has created a paradoxical effect in Houston, home to more than 3,700 energy companies, including some of the world’s largest. While the city has lost thousands of oil and gas jobs since oil prices collapsed by half over the past year, its energy capital status makes it a logical place for companies to consolidate operations as they shutter far-flung plants and offices to save money.”

WGRZ in New York. “For a couple of months now, Assemblyman Michael Kearns has been doing his ’shame campaign,’ calling out banks for holding onto foreclosed vacant homes. He goes to those homes and puts a sign on the property letting everyone know that he thinks it’s the bank’s fault that a home sitting for up to several years has fallen into disrepair. Now he’s taking that effort a step farther by trying to get the banks to work with local developers.”

“You can see how widespread the problem is online, where his ’shame campaign’ map of foreclosed homes shows more than 500 vacant properties throughout Western New York. While the house on Franklin Street is a success story, Matt Fisher who works in the Old First Ward on housing issues, is all too familiar with a different outcome.”

“‘There’s a big wall the banks put up. You know, there’s one [in South Buffalo] for example, the owner has been dead for seven years, and the house is still vacant. I reached out to the bank and they said they can’t talk because of privacy concerns. Well, the owner’s dead,’ Fisher said.”

Bits Bucket for October 5, 2015

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October 4, 2015

Getting Their Money Out

Continuing a discussion on the role of money-laundering and the housing bubble. LA Biz Journal. “Economists at UCLA Anderson School of Management foresee healthy growth for the nation’s economy over the next two years, but California will likely experience a slowdown in employment growth. In another essay, Economist William Yu looks at the turmoil in China’s economy and the potential implications for Los Angeles’ economy. Yu says that China’s economy is more volatile than suggested by official numbers and its economy, housing market, stock market, and currency are all in trouble.”

“The implication for Los Angeles is that China’s turmoil might reduce the growth of Los Angeles’ exports and tourism, but Chinese investment in Los Angeles real estate will persist due to better and safer expected returns in the U.S., Yu says. However, Los Angeles’ housing market, despite becoming more expensive and unaffordable, is not in a bubble and its housing prices are highly unlikely to bust this year or next.”

From CNBC. “The address 520 Park Ave. is still mostly a hole in the ground, but the sales office is now open for business and redefining the luxury price point in New York City. Luxury condominium prices already hit a record this year, according to several report on the Manhattan market. This as more units go up, but global financial markets fall. ‘Everything concerns me, but, very funny, we think we’ve seen more Chinese buyers in the last 60 days than ever before,’ said William Lie Zeckendorf, the developer behind 520 Park. ‘I think, frankly, what’s unsettled China has made the U.S. that much more appealing.’”

“‘Probably more likely now than ever. We are seeing more and more interest in New York City from across the world, we’re also seeing record-breaking prices being paid by New Yorkers,’ said Zeckendorf, who claims that the majority of his buyers are still from the tri-state area.”

“In the new development market, the price per square foot reached a record, up nearly 17 percent from a year ago, and sales surged 61 percent. ‘The sky is the limit. I was once asked could we exceed a hundred million and I think we can keep on going up,’ said Wendy Sarasohn, a real estate agent with Brown Harris Stevens in Manhattan, adding, ‘My prime buyers are from the metropolitan tri-state area, California and then international buyers.’”

From Realty Today. “‘Everything is selling fast, I don’t see how there could be a bubble. I think to some degree real estate follows the stock market, but people buy real estate to live in also, not just to invest in,’ said Howard Lorber, chairman of Douglas Elliman.”

“Also, foreign investors are still continuing to flock in Manhattan and occupy its real estate properties. One example of strong foreign investors are the Chinese. Lorber said. ‘When the Chinese stock market went down, when their real estate market went down, that didn’t stop them from buying here. It actually made them more interested in getting their money out of there and buying in New York City.’”

From Forbes. “With the crisis in Ukraine growing, it does seem that Russian investors are trying to extend their reach into many properties of London. It appears that one reason for this interest is an attempt to avoid heavy taxation on their assets by extending them overseas to London where they can invest in properties. It is projected that this new Russian invasion could last for quite a while as the flight from Russia of major investors is expected to increase over the next few years.”

“In an interesting turn of events, a London home right next to 221B Baker Street was used to launder what was estimated to be over $200 million in wrongly acquired cash. If the address sounds familiar, it was the one used for the address of literature’s most famous detective, Sherlock Holmes. In fact, the actual Baker Street address as well as much of the surrounding property was owned by someone linked to Rakhat Aliyev who is a notorious international money launderer.”

“His presence in the London area for years is an indication of foreign money being laundered in the billions of dollars which in some cases may have been turned into investment capital. A large influx of questionable money that is now thoroughly mixed with good money has managed to pump up the London property markets to the point where it is very difficult for common residents of the city to find affordable housing.”

“What’s even more interesting is that there are vast luxury apartment blocks that are mostly empty as a result. It is estimated that upwards of 75% of the new apartment blocks are totally unoccupied and that it is simply acting as a hiding place for all sorts of dirty money, money launderers, tax dodgers and even drug dealers which has helped to create an artificial residential shortage in luxury apartments.”

“It is this influx of money and new properties which is fueling further investments in new properties that will arguably sit mostly empty as well that is pushing upwards the housing bubble by creating a lack of proper housing in the city.”

The Financial Post. “A recent report by Washington think tank Global Financial Integrity reveals the fatal flaw in the world’s globalized financial architecture: It has not been accompanied by a globalized governance and regulation system. The failure to apply controls across the global economy represents a serious threat to all and is quantified in the report, sponsored by the Ford Foundation, entitled ‘Illicit Financial Flows: The Most Damaging Economic Condition Facing the Developing World.’”

“I have written extensively about the fact that Toronto and Vancouver condo markets are driven by hot money flows, that have increased housing prices for all residents to excessive levels. The same has happened in London, Sydney, Melbourne, New York and Miami.”

“In Canada, banks operating in Hong Kong. London and tax havens facilitate flows out of China and elsewhere. Compounding this is the fact that our governments — like those in Europe and the U.S. — represent gigantic secrecy havens because they don’t require disclosure of beneficial ownership.”

“The U.S. and Europe are studying laws to publish central registries of beneficial owners for public and/or law enforcement access. The G20 and G7 have each paid lip service to cracking down on tax havens but nothing substantive has occurred.”

“‘There remain powerful segments of 
the business community that want to retain abusive transfer pricing as a mechanism for shifting revenues across borders’ wrote GFI’s founder Raymond Baker ‘and some actors in the banking community that want to continue accepting suspect deposits out of other countries via weak legislation and enforcement.’”

From The Speaker. “Mansion owners in Vancouver are claiming poverty at the same levels as those suffered by the city’s homeless struggling in the Downtown Eastside. A recent study by University of B.C. geographer Dan Hiebert has revealed that wealthy business-investor immigrants to Canada — hundreds of thousands of whom have chosen to relocate to Vancouver — are ‘poor’ enough to receive social welfare.”

“The neighborhoods that report the most poverty, according to Hiebert’s report, which is based on Statistics Canada data, are the upscale Metro neighborhoods with high proportions of immigrants — mostly Chinese. In these areas over 30 percent of adults claim poverty. The houses in these areas, including Shaughnessy-Arbutus, south of Oakridge Shopping Center, and north-central Richmond — sell in the range of $2 million to $6 million Canadian.”

“Several north Richmond neighborhoods are ‘low-income’ according to tax stats. These neighborhoods are also approximately 60 percent Chinese. Hiebert’s data echoes another recent study conducted by Vancouver mathematician Jens Von Bergmann which found that 1 in 10 households declare less income than they spent on housing costs — mostly in Vancouver’s West Side.”

“Canada’s business investor program allowed foreign nationals to obtain a Canadian passport in exchange for a temporary investment of $800,000 Canadian — an amount much lower than similar programs in other countries popular with wealthy immigrants. The program was cancelled last year but the Quebec business investor program remains in use, allowing thousands to land in Quebec before relocating to Vancouver.”

“Just those immigrants who have relocated to Vancouver (current population under 2.5 million for Greater Vancouver Area) using this program amount to approximately 200,000 in the last generation. However, the number of new immigrants to Vancouver is estimated to be over 30,000 per year.”

“Critics such as Immigration Watch Canada’s Dan Murray have pointed out the political nature of the problem. Despite the breadth of the issue and the cost to Canadian taxpayers, no Canadian political party has said a word about it, despite the current federal election.”

“‘So far, none of our five major political parties has even uttered a peep about this matter,’ Murray told The Speaker. ‘The point is that several million immigrants — particularly hundreds of thousands of Investor Immigrants — have been taking huge amounts of economic and social benefits from Canada, but have been contributing next to nothing. And they have been getting away with it because the Canada Revenue Agency has not pursued these hundreds of thousands or millions of cheats.’”

Bits Bucket for October 4, 2015

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October 3, 2015

Bits Bucket for October 3, 2015

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