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What does a truck load of cocaine and Canadian real estate have in common? 🤔

How money launderers pay for it!

Due to capital controls restricting how much people can transfer out of countries, money launderers use a technique to evade warning flags - smurfing.

#VanRe #ToRe
2/ Smurfing is a technique pioneered by drug dealers, where large payments are broken into payments small enough to not trigger a warning.

For example, since anything above $10,000 is flagged in the US, drug dealers will get several people to make payments $9,999 or less.
3/ Now a few people caught this on my weekend laundering thread - if capital controls are US$50k/year, how do you make a $700k down payment on a $2 million home?

You smurf it! Get some friends (or hire people 😉) to send your money to several accounts in 🇨🇦, in different names.
Read 7 tweets
Want to know how money laundering priced you out of a home? 🙋‍♂️

One thing I hear often is launderers aren’t buying enough homes to influence prices. Not true.

It only seems that way if you don’t understand how asset prices are created.

Thread 🧵 👇

#VanRe #ToRe
2/ Prices aren’t just a function of input and output like people learned in Econ 101. It’s often influenced by a marginal buyer.

The marginal buyer is the one paying the most, that actually gets an asset. Competition between marginal buyers is what drives prices higher.
3/ usually a marginal buyer is trying to get the best value for their money, while still buying.

In regular market, two people go back and forth. Self-interest helps contain prices from rising too quickly.
Read 11 tweets
My bear case for Condos market in Tor
1- Pre-constructions: According to Urbanation Condo rprt in May. We have unsold inventory 13K units, 92% of the 76k units under construction pre-sold. As well, the 33K units in pre-construction were 79% sold = met financing targets./1 #tore
A record 29K (revised down to 25k) new condos were scheduled for occupancy in 2020 in the GTA by Q3, more than Half of units pre-sold to Investors, so plenty of "investors" supply to hit the market this year /2
2- Resell: While the MOI was low in May, it was the highest since 2015 . Condo inventory rising rapidly since May 1st and accelerated since June 1st, in the last 2 weeks, the new listings is much higher than last year. Vaughn sitting on 15MOI(sals 2-4 week, inventory higher YOY)
Read 8 tweets
Okay, weekly 👀 at Sold-Over-Asking (SOA) numbers in the 416. I manually track this one way to heat-check the market, and I noticed back in wild 2017 that you could see things changing on a weekly basis. Same holds true now. First off here's Freeholds selling 20% or more OA. Image
Maybe the 25% in the one week was a bit of a fluke (you can see things are jagged and not purely linear. But you can see definite downturn since week ending March 15 (19%). So this has cooled off. /2
Now to regular SOA (I use 1% or more OA for this. I said that last week's 67% may have been a fluke too. But the 46% last week (ending Sundays) is a definite cooling indicator. It's the lowest since January. Even if it was a bit flukey low and next week it bounces up to 51%... /3 Image
Read 6 tweets
Weekly check-in on 416 sales transactions versus prior year. Freeholds (lowrise) and Condos moving down similarly in last 3 weeks. Now less than half of 2019 volumes. /1 Image
Some context around 2019 volumes... For this time last year they were up over soft 2018 volumes but lower than recent volumes. Here is April 2019:
Freeholds: ⬆️15% vs. 2018,⬇️18% vs. 7-year avg
Condos: ⬆️6% vs. 2018,⬇️6% vs. 7-year avg
/2
Here are the absolute numbers for 2020. Note they're never going to go to zero. There will always be some level of activity (barring further gov't action on this). #TOre /3 Image
Read 5 tweets
There's no moratorium on shady-looking stuff in Toronto #realestate during COVID-19. Listing goes up March 31 (Tues) 5:58 PM. No mention of Offers but obviously underpriced at $599K. Mentions seller is an agent (have last name as Broker of Record). /1 Image
16 minutes later they update broker notes (section of MLS public can't see): "Offers Sunday April 4th 5Pm. Seller Reserves Right To Review & Accept Pre-Emptive Offer Without Notice."
Maybe they just forgot offer date? /2
Always love that "without notice stuff" - they're supposed to notify every agent that has expressed an interest in the place (e.g. booked a showing) if they get an offer. /3
Read 6 tweets
RBC Economics with another new report out today (they've upped the frequency). Bullets from their summary:
▪️ expect activity to slow to a crawl in most markets across the country in April and as long as social distancing and lock-down measures are in place
/1
▪️ unclear how long home prices will hold up
▪️ expect property values to come under increasing downward pressure the longer restrictions persist and the deeper the recession gets
▪️ Super thin activity also makes the market prone to erratic price moves.〰️
/2
TRREB had predicted 97,000 transactions for 2020. Were tracking well the first 2.5 months. Now they're saying they're going to issue a revised forecast when they get some more info. /3 Image
Read 4 tweets
Sometimes when things are shifting so quickly, it's important to look at things on a weekly basis, instead of waiting for monthly data. This is one of those times. Two v interesting things in my 416 active listings this week.
1. Freehold listings (lowrise) went ⬇️ /1 Image
It was only 11 listings (0.7%). It could be because of March break (which it really doesn't feel like now, eh?). Last 2 years it also went down in March break week. Then the next 2 weeks went +5.1%, +8.0% in 2018, and +5.3%, +11.2% in 2019. I doubt we'll see that bounce. /2
More interesting one is condos which went ⬆️200 listings. That 12.2% week over week increase is the largest jump I've seen since I've been tracking (Aug 2017). Now condos aren't as seasonal as houses, and last year's March break condo listings went up 4.5%. /3 Image
Read 10 tweets
My unpopular take on Canada’s massive immigration.

Raising immigration targets as much as Canada has, all at once, doesn’t solve the problem people think it does.

It actually compounds existing issues. Here’s a progressive’s rant on high immigration.

<thread> ⤵️

#VanRe #ToRe
An aging population is one of Canada’s biggest issues.

As Canada ages, we have fewer people of prime earning age, more dependents, and a dwindling tax base to support dependents.

Basically, we need more young people to pay our bills. So we import them to cover the loss.
Sure, they’ll create their own dependents, but immigrants tend to have more kids in general. Right?

That was a good assumption for Canada in the 1980s, but not today. Increasingly, immigrants find Canada super expensive - who can afford a bunch of kids?
Read 11 tweets
WHAT LIES BENEATH IN THE #VANRE MARKET?

(Warning: This will be a long thread, grab a cuppa coffee)

Most people are familiar with Warren Buffet's saying "Only when the tide goes out do you discover who's been swimming naked."

I believe it may be EXACTLY what lies beneath the
2/ level of the tide that could be the final nail in the #Vanre mkt once the full effect of foreign owners (FLIPPERS) selling their West Side SFD's kicks in. Considering that we are already 35% off the peak mkt highs, that in itself is an ominous thought.

Now, I've always
3/ suspected (no proof) that MANY #Vanre home owners have dipped into the "equity lottery winnings" that they have realized in the past 10 years to fund who knows what.

So when I saw an article yesterday from @BetterDwelling about Cdn Helocs,

betterdwelling.com/canadians-used…
Read 16 tweets
BOUGHT TO FLIP IN SOUTH GRANVILLE, BUT COULDN'T GET OUT IN TIME. NOW THERE IS SERIOUS #FONGO: 1749 62nd Ave W, South Granville, #vanre. Property was purchased in Mar/05 for $620,000, again in May/14 for $1.99M and sold to the current owner for $3.2M in May/17. Listed Oct/17
2/ to flip it, for $3.398M. Did not sell. 2019 Assessment came in at $$2.8M, and the assessment from the year before was $3.25M. Just re-listed today, Feb 6, 2019 for $2.98M, $200,000 less than they paid. But, that does not take into account transaction costs and the fact
3/ it is still listed almost $500,000 OVER TODAY'S mkt value of $2.52M. In the end I can easily see this turn into a +$1 million dollar flipping loss.
#vanre #northvanre #westvanre #richmondre #burnabyre #bcre #tore #cdnre #torontore #victoriare
Read 3 tweets
#StateOfTheHack follow up. Thank you to everyone who tuned in, and we apologize for the technical difficulties and audio. We are going to get that figured out for future iterations. I wanted to follow up with indicators I talked about at the end to prove a point regarding #GDPR.:
My team develops sources and methods for pursuing adversaries across our customers networks, and beyond. We do not become reliant on a single source, nor do we allow the loss of a source to cripple our collection efforts. Loss of WHOIS information is not a deal breaker.
This is the domain I dropped in our #StateOfTheHack discussion today. The screenshot indicates we illuminated it on day zero of the adversary establishing it. The WHOIS information is privacy protected. However, we didn't discover the domain through registrant information.
Read 5 tweets

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