A report from Dirt on California. “A couple months ago, a Sunset Strip house sold for $14 million – exactly $5 million less than the sellers had paid in 2014. Months before that, another nearby house sold for $12.5 million, a $7.3 million loss for the seller. These aren’t anomalies, either — sellers of other neighborhood properties have lost as much as $10.5 million or ‘got lucky’ with only a $3 million penalty.”
“Built on speculation by a developer, this house first sold in 2018 for $17.5 million to ‘Peter’ Xu Tenghe, the younger son of Chinese billionaire Xu Jiayin, founder of Evergrande. Unsurprisingly, Xu’s Hollywood Hills mansion quickly popped back up for sale, first asking $18.5 million. But with no takers, the price quickly fell to $17 million, and records reveal the place closed off-market for a bargain-bin $12.5 million — a $5 million loss before realtor fees, taxes, other closing costs and three years of maintenance.”
The Philadelphia Inquirer. “The median listing price in the Philadelphia metro region — which includes the Camden and Wilmington areas and parts of Maryland — was $320,000 in October, down about 8% compared with the same time last year, according to Realtor.com. In October, about one in five Philadelphia-area sellers cut their prices. That doesn’t necessarily point to price weakness, said Danielle Hale, chief economist for Realtor.com. Sometimes sellers who are used to seeing booming price growth in the overall market get overexcited and need to adjust their listings to be more realistic.”
From Banker and Tradesman. “The housing market is not likely to implode like it did in 2008, when it ushered in what’s now known as the Great Recession. But could a price correction be coming? ‘The cure for high prices is high prices,’ noted economist Austan Goolsbee said at the recent Urban Land Institute conference in Chicago – meaning that at some point, people will stop buying houses until prices become more reasonable.”
“To hear Laura Cole of Lakewood Ranch Communities in Sarasota, Florida, tell it, prices have been slipping for the last three months as ‘consumer fatigue’ sets in. Todd Mansfield of Crescent Communities in Charlotte, North Carolina, agrees. ‘At some point,’ he said at the ULI meeting, ‘enough is enough.’ He added that the market is ‘on the verge’ of self-correction: ‘I can’t imagine it will keep going as it has.’”
The Greeley Tribune in Colorado. “A Larimer County man facing felony charges for scamming at least 15 people out of more than $850,000 in a housing development scheme has a preliminary hearing early next year. Bret Lamperes, 52, of Berthoud appeared virtually in Weld District Court before Judge Timothy Kerns on Monday morning for a disposition hearing. Paul Matthew Warren, Lamperes’ attorney, requested to set a preliminary hearing and advised his client has not entered a guilty plea.”
“His case dates back to February 2015 when Lamperes entered into a business called Investments of Windsor, LLC. In relation to the Investments of Windsor project, investigators suspect he completed 29 sales contracts, but only built eight condos pursuant to the contracts. Further investigation revealed Lamperes was believed to have stolen a total of $852,510 from at least 15 investors in the project. He turned himself into the Weld County Sheriff’s Office for the five felonies in early March 2021.”
From Global News in Canada. “In August 2012, a 19-year-old student from Guangdong arrived from the Dominican Republic to Montreal with $23,800 in euros and U.S. dollars stuffed into his backpack. Four months later, Zhang Guanqun purchased an 8,500-square-foot mansion in Coquitlam, B.C., for $2.1 million. It was only one of Zhang’s many multimillion-dollar transactions while attending Coquitlam College. From about 2012 to 2015, Zhang would funnel at least $33.75 million in electronic funds and cash through Canadian and Hong Kong bank accounts.”
“As it turned out, however, the Canada Border Services Agency and Fintrac, Canada’s anti-money laundering watchdog, had long been monitoring Zhang’s movements. They watched his parents, too. While living in Markham, Ont., they were wanted in China for allegedly defrauding 60,000 investors of about $200 million in a pyramid scheme, according to filings in a Federal Court case involving a refugee claim by the parents.”
“Evidence in B.C.’s current inquiry into money laundering, the Cullen Commission, asserts the occupation of ‘student’ is often used to buy luxury real-estate in B.C. In one example, commission lawyers found that a landowner in China accused of bribery — now facing deportation hearings in Vancouver — had transferred at least $114 million from a Chinese province into British Columbia through Hong Kong currency exchanges with links to organized crime.”
The Associated Press. “Criminals pumping nefarious earnings into the housing market could be contributing to high house prices across the country, locking people out of owning a home. The head of Transparency International Australia, Serena Lillywhite, says money laundering creates ‘devastating impacts’ for the country.”
“‘Australia has become the destination of choice for illicit financial flows … which too often end up in the property market,’ she told a Senate inquiry. ‘It can reasonably be argued that it is driving up property prices in Australia and locking Australians out of owning their own home.’ Sudanese generals, Malaysian bankers, Papua New Guinea elites and Chinese high rollers were all signalled as people using the Australian property market to wash funds.”
“The hearing was told Australia’s financial markets were attractive to criminals because of the ease at which they could hide funds through the creation of trusts and shell companies. Labor senator Deborah O’Neill said the evidence shocking, quipping that rock band AC/DC had it right. ‘You can do dirty things cheaply in Australia,’ she said. ‘A $2 company and off you go, no one will know what’s going on.’”
The Sixth Tone. “Zhang Junxiao and his wife have lived in a cramped, barely furnished apartment with bare, concrete walls for nearly three decades in the central Chinese city of Zhengzhou. As the 51-year-old planned for their retirement in mid-2019, he decided to purchase a new apartment. He chose a two-bedroom apartment with an elevator in a complex called Qifucheng — ‘Happiness Town’ — a complex of more than 20 buildings then under construction at the edge of Zhengzhou’s city center, slated to be completed in 2020.”
“Zhang borrowed money from friends and relatives to pay cash for the 550,000 yuan ($86,000) apartment to take advantage of a discount for cash offers. All told, he borrowed more than 100,000 yuan from relatives and friends and spent all of his savings for retirement. Two and a half years later, Zhang still has the debts, but no new apartment.”
“‘At first, I still held some hope. Now I have zero hope. I don’t know what hope means. I don’t know where hope is,’ Zhang said.”
“For years, China’s property sector has relied on selling unbuilt apartments to fund construction. When a project fails, ordinary buyers like Zhang can be left holding the bag. The Qifucheng complex alone sold more than 5,000 units before construction stopped. Zhang was counting on selling his current home so that he could pay off his debts. Instead, he’s stuck at his old home while struggling to get by. His family members blamed him for making a bad decision. ‘Now I have all sorts of debts everywhere, but I still haven’t got a new home,’ Zhang said.”
“With a kid in kindergarten and another in primary school, Zhou said she needs to spend at least 10,000 yuan per month to pay for expenses associated with rent, her two children’s education, a car loan, and this housing loan. The Qifucheng apartment was supposed to be her first apartment. ‘To be honest, we are in a really difficult situation. I was just telling my husband the other day, ‘If this apartment matter cannot be resolved, we may just abandon this apartment,’ she said. ‘I am tired of everything.’”
“But walking away from loan payments would negatively affect the family’s credit, which would affect her children’s education and the family’s travel plans. In China, defaulted debtors are often put on a ‘credit blacklist,’ which forbids debtors from sending their children to private schools, traveling by high-speed trains and planes, and borrowing more loans from banks. ‘To put it simply, this is a bottomless hole,’ she said.”
“Presales are so widely used that it is often hard for home buyers to purchase new homes without paying in advance — and Chinese buyers strongly prefer new over ‘second-hand’ homes. “Everybody was using presales. There were no ‘readily available homes,’ said Jack Li, another Qifucheng home buyer.”
“Li said if given another chance, he would not buy a presale home. Instead, he would choose to buy a second-hand apartment. ‘Now so many apartments are unfinished,” he said. ‘I live in Urumqi now. There are many unfinished buildings as well. When I saw them, I thought of my own unfinished building.’ He said he used credit cards and borrowed money from relatives and friends to finance his apartment, which cost around 670,000 yuan.”
“Li said he last visited Qifucheng in July, and there was no one there. The buildings’ basements were inundated with polluted water.”