The head of Canada's largest lender said Toronto housing is "running hot" and is fueled by a "concerning mix of drivers" that include lack of supply, continued low rates, rising foreign money and speculative activity. Similar circumstances in Vancouver prompted British Columbia's government last year to impose a 15 percent tax on foreign buyers.
The comments from the bank CEO come as frustration grows over the unaffordability of properties in Canada's biggest city. The average home price in Toronto jumped 22 percent in January from the previous year, the fifth straight month of gains topping 20 percent. Listings have dropped off, down by half from last year, squeezing prices further.
Since the tax was imposed in Vancouver, monthly transactions in the metro region fell on average by 36 percent compared to a year earlier, according to data from the Real Estate Board of Greater Vancouver. Prices for prized single-family detached homes had been rising in double digits last year. In the past six months, they've fallen 6.6 percent to an average C$1.47 million, according to board figures released earlier this month.
Dozens more former Caja Madrid senior executives, most of whom are closely connected to either, or both, of the country's two main political parties and/or unions also face three to six years in prison. They were found guilty by Spain's National High Court of misusing company credit cards. Those cards drained money directly from the scarce funds of Caja Madrid, which at the height of Spain's banking crisis was merged with six other failed savings banks into Bankia, which shortly thereafter collapsed and ended up receiving the biggest bail out in Spanish history, costing taxpayers over €20 billion, to date.
Though the nation's housing inventory increased from December, it remained near a record low. As a result, the median house price vaulted 7.1 percent from a year ago to $228,900 in January. That was the biggest increase since January 2016.
Demand for housing is being underpinned by a strengthening labor market, which is improving employment opportunities for young adults and, in turn, boosting household formation... But a persistent shortage of properties available for sale, which is lifting house prices, remains an obstacle to a robust housing market. That is likely to put pressure on homebuilders to ramp up construction.
Last month, the number of homes on the market rose 2.4 percent to 1.69 million units, still remaining close to an all-time low of 1.65 million units in December. Housing inventory was down 7.1 percent from a year ago. It has declined for 20 straight months on a year-on-year basis.
Economists say homebuilders are struggling to plug the inventory gap because of difficulties securing funding as well as shortages of land and labor. The NAR estimates housing starts and completions should be in a range of 1.5 million to 1.6 million units to alleviate the chronic shortage.
The apartment sector, which contributes some $284 billion to the economy annually, has been a winning bet for investors since the housing crash, as the economy recovered and more renters sought out units. Since 2010, average U.S. apartment rents have increased by 26%, according to data tracker MPF Research, a division of RealPage.
But fresh supply is beginning to overwhelm demand. More than 378,000 new apartments are expected to be completed in 2017, a 30-year high, according to real estate researcher Axiometrics Inc. In the fourth quarter of last year, 88,000 units were completed but only 50,000 of those were rented by tenants, according to MPF.
"Our business has radically changed," said Toby Bozzuto, president and chief executive of the Bozzuto Group, which owns or manages 59,000 apartments in cities across the U.S. "I haven't seen anything this seismically different since 2008, when credit dried up."
... Toronto is just an a example. There are many jurisdictions in the US that face similar budget problems, and the only thing that keeps them from falling deeper into a financial and fiscal sinkhole is the rich tax revenue that the local property bubble extracts from the economy. Homeowners and investors might grumble, but they usually put up with it, mollified by soaring property prices. So this system works until suddenly, it doesn't.
Indeed, the company's fourth-quarter comparable sales growth represented an acceleration from the prior quarter, even as it was up against a 7.1 percent increase from a year earlier. During fourth quarter 2015, the unseasonably warm weather allowed contractors and homeowners to continue working on outdoor projects through the winter.
So, if you just say, "Well, I've got 900 billion in the kitty, it's going out the door at 50 to 100 billion a month," I'm going to be broke by the end of 2017. That's what I mean by going broke. You say, "Well, wait a second. Where did the 1.1 trillion, the first part we talked about that the reserve position went down, where did the money go? It didn't disappear." Well, no, it didn't disappear. What's happening is that everybody in China is getting their money out. They're scared to death that the yuan's going to devalue, so what are the Chinese doing? By hook or by crook, some of it's legitimate, some of it's corrupt, some of it involves bribery, some of it involves false invoicing.
The FHFA is run by Mel Watt, appointed by former President Barack Obama. Watt's term ends in 2019, at which point Trump will pick a successor, though it's possible the president could try to remove Watt from office before then. FHFA spokesman Peter Garuccio declined to comment on potential conflicts, as did spokesmen for Fannie and Freddie.
Before loans are issued for large or unusual deals, representatives of Fannie set interest rates and review borrowers' applications that are submitted to the lenders. They don't do that for smaller, routine loans.
Freddie, however, examines all applications submitted to the lender, including scrutinizing the appraisal and applicant's history of payments on other loans. Depending on the review, Freddie representatives could adjust the interest rate quoted by the lender.
If Kushner Cos. fails to make Fannie-backed loan payments on time or violate other terms, Fannie employees would determine whether to foreclose. Fannie backs about $142.3 million of the outstanding loans.
Deutsche Bank has already conducted a "close internal examination" of President Trump's personal account and found no evidence of suspicious dealing, according to the London-based liberal-leaning publication. That investigation was a routine piece of compliance after Trump became what banks' internal money-laundering police call a "politically exposed person," or PEP, by announcing his run for the presidency. Banks typically subject PEPs to stricter compliance scrutiny. The bank "double-checked" its records after Trump's election victory in November, according to the paper's source.
That would normally be an end of the matter, but not everyone is inclined to take Deutsche's compliance department at its word after a string of governance scandals in recent years that culminated in a $630 million settlement for failing to police money-laundering by its Moscow office last month. As part of that settlement, the New York Department for Financial Services ordered it to hire an independent monitor to review its compliance operations.
Deutsche's relationship with Trump goes back a long way. The German bank stepped in when Wall Street lenders stopped lending to him after his fourth bankruptcy filing. However, Deutsche's private bank now manages the relationship, after the commercial banking division also had a bust-up with him in 2009. According to Bloomberg, it has granted four loans, worth around $300 million in total, secured against Trump properties in Washington, Chicago and Miami. Trump's daughter Ivanka and son-in-law Jared Kushner are also clients, as is Kushner's mother Seryl Stadtmauer (according to The Guardian's sources).
Trump's family has made no secret in the past that they had received significant funding from individuals in Russia and the former Soviet Union to develop their projects. That strategy has sometimes attracted controversy, most notably in the case of the ill-fated Trump SoHo development, where the project's developers have faced allegations of financing it in part with laundered money. The developers, rather than Trump, were responsible for due diligence in that case, according to Trump Organization general counsel Alan Garten.
"Under any objective standard, Mr. Mnuchin has ample experience, credentials and qualifications for this important position," Sen. Orrin Hatch (R-Utah) said Monday, decrying what he called "continual and pointless delays" of his confirmation by Democrats.
By March 17, Mnuchin would need to persuade Congress to increase the nation's debt limit. If he can't, he would have to start using a series of so-called extraordinary measures to extend the deadline for several weeks to avoid a U.S. default on its debt.
On the same day, he'd be scheduled to begin two days of meetings in Germany with finance ministers of the world's advanced economies at a G20 summit, amid a rocky start for Trump on international relations.
By April 15, Mnuchin would face a statutory deadline to inform Congress if the Treasury Department will label China a currency manipulator.
Trump promised during his campaign to direct his Treasury secretary to take that step, which would trigger negotiations to resolve the matter. If those talks fail, the U.S. could levy sanctions that might lead to a trade war.
Keeping currency exchange rates artificially low makes a country's products cheaper to buy abroad, boosting exports. China has faced allegations of manipulations in the past, but since 2014, financial markets have been pushing down the value of its currency and China has been trying to intervene to keep the value up.
And by the first week of June, Mnuchin would have to report to the White House about changes needed to financial regulations under an executive order Trump signed Feb. 3. The order directed the Treasury secretary to consult with regulators and review the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Trump has pledged to dismantle.
In Manhattan, the median rent--including the cost of concessions--has been on the decline for six consecutive months, year over year, landing it at $3,259 for the month of January. (Without concessions, the median rent in Manhattan comes in at $3,369.)
Like in Manhattan, the demand for two- and three-bedroom apartments in Brooklyn remained softer than studios and one-bedrooms, with rents falling nearly four percent from this time last year for two-bedrooms, and almost eight percent for three-plus-bedrooms. On the flip side, the median rent for studios has remained relatively stagnant from this time last year, clocking in at $2,300--way down from December's $2,409. The median rent for one-bedrooms has increased about four percent since last January, bringing it to $2,700.
Ruh-roh. And from this WSJ article:
The concessions and flattening of rents have been attributed to a surge of new rental buildings coming to market, as well as a slowdown in growth of higher-paid jobs in New York City.
Mr. Gavzie said the weakness was most pronounced in more expensive apartments. Tenants typically had less room to negotiate in lower-rent starter apartments, he said.
Gary Malin, president of brokerage Citi Habitats, said the rental market is now value-driven, with tenants willing to try new neighborhoods to get a better deal.
In the Bronx, the Trump Organization is raking in millions of dollars from a special rent-free arrangement to operate Trump Ferry Point, a city golf course built on top of a noxious garbage dump. As the current president continues in his quest to weaken environmental regulations, it is unclear what the future will be for these polluted sites, and for the many other brownfields, Superfund sites, and contaminated wastelands in New York City.