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We’re Already Starting To See Some Very Distressed Sales In The Vancouver Market

A report from the Vancouver Star in Canada. “With its slightly kitschy but homey pine-panelled interior, stunning view of the ocean and backyard swimming pool, it’s easy to imagine a family living in the four-bedroom home on Russet Way in West Vancouver.”

“But today the house is empty, a court notice affixed to the door, the pool holding just a few inches of slimy green water.”

“Like many houses in West Vancouver, this house’s value has dropped dramatically since a series of government interventions, in response to a price spike in 2016, let air out of the market.”

“Real estate market watchers say this home is also an example of how borrowers and private lenders are scrambling to recoup their investments in several high-priced neighbourhoods where home prices are rapidly deflating.”

“A recent analysis shows private lending has been growing in Toronto, but a dearth of data in Vancouver makes this area, and its potential impact on the wider housing market, a mystery.”

“Two private lenders have registered a total of $4.47 million against two West Vancouver homes owned by Sherrin Lim, including the one on Russet Way. While the two properties together have an assessed value of $5.85 million, one of the homes sold for $2.4 million in a court-ordered sale in July, while the Russet Way home is currently listed at $2.1 million. The owner has seen $1.35 million in value disappear.”

“‘It’s much more vulnerable right now, and we’re already starting to see some very distressed sales in the Vancouver market where the lenders were private lenders,’ said Ben Rabidoux, the owner of North Cove Advisors, an investment research firm in Ontario.”

“B.C.’s government has put in place a suite of measures targeted at rampant speculation in the province’s real-estate market, including higher taxes and stricter data collection rules. In response for a request for comment for this story, B.C.’s Ministry of Finance sent a statement that said the province has ‘secured a permanent federal-provincial table on white-collar crime and information sharing, where we will be discussing how to improve data collection on the mortgage market.'”

“In the Greater Toronto Area, private lending provided funds for 20 per cent of second mortgages in the second quarter of 2018. This is a 67 per cent increase compared to two years ago, according to an analysis published in October by John Pasalis of Realosophy and Paul McGowan of Teranet. The same study found that private lending was most heavily concentrated in areas of the GTA where there had been a lot of real-estate investment activity.”

“Steve Saretsky is a Vancouver realtor who has been approached by companies like Neighbourhood Holdings to invest with them. The companies usually pitch investors a guaranteed investment return of eight or nine per cent, Saretsky said.”

“‘I think there’s a need, but it’s concerning how much they’re growing,’ Saretsky said. ‘We saw this in the U.S. in 2006 and 2007. A lot of the lending growth started to turn more into the shadow lending sector, and that’s kind of what’s happening here.'”

From the Vancouver Sun in Canada. “A B.C. man connected to the Wolf Pack gang alliance has been sentenced to two years in a U.S. prison after admitting to international money laundering. Omid Mashinchi, a former Vancouver realtor who was leasing high-end condos to Lower Mainland gangsters, pleaded guilty in July to moving cash across the border for Canadian drug gangs.”

“On Wednesday, he was sentenced in a Boston courtroom to 24 months in jail and ordered to pay almost $30,000 US in fines and damages. U.S. court documents said that Mashinchi transferred funds from a bank in Vancouver to a bank in Boston over several months in 2017, knowing that the money — almost $240,000 US — was derived from drug trafficking.”

“Postmedia revealed in June that Mashinchi was facing money laundering charges and had been linked to condo leasing to gangsters. One of the those condos, a penthouse in North Vancouver, was leased to Brothers Keepers boss Gavinder Grewal, who was murdered in the suite at 1550 Fern St. last December.”

“No one has been arrested in Grewal’s murder, but in June, the Integrated HomicideInvestigation Team released images of suspects from surveillance videos near the apartment building.”

“Other condos and houses Mashinchi, 35, had leased out to unsavoury clients were targeted in drive-by shootings or were being used as stash houses for drug trafficking, police told Postmedia.”

“In announcing the charges, VPD Staff Sgt. Lisa Byrne spoke about the underworld leasing service that Mashinchi had been operating. ‘My team found this really disturbing because we had rival gang members housed within dozens of metres of each other and the potential for spontaneous violence and gunplay was obviously something that was super concerning to us.'”

This Post Has 22 Comments
  1. You knew it was coming.

    BTW, I’m flying back to Texas this afternoon and will be out there for a couple of weeks. Posting times and moderation may be affected.

  2. “With its slightly kitschy but homey pine-panelled interior, stunning view of the ocean and backyard swimming pool, it’s easy to imagine a family living in the four-bedroom home on Russet Way in West Vancouver.”

    The reason there’s no happy family in that outdated shack is that the price is too damn high. If there was a family living there, they would probably be massively stressed out due to the financial pressures they were under to keep that insanely overpriced roof over their heads.

  3. The owner has seen $1.35 million in value disappear.”

    Gosh, it seems like throwing away money on rent would’ve been far cheaper.

  4. It’s much more vulnerable right now, and we’re already starting to see some very distressed sales in the Vancouver market

    I love watching speculators and their lenders getting vulnered.

  5. Omid Mashinchi, a former Vancouver realtor who was leasing high-end condos to Lower Mainland gangsters, pleaded guilty in July to moving cash across the border for Canadian drug gangs

    HSBC and Wachovia, two of the biggest villains of the fraudulent lending that led to Housing Bubble 1.0, were also up to their eyeballs in laundering drug money for Mexican drug cartels. Eric Holder’s Justice Department turned a blind eye to these crimes, eventually assessing slap-on-the-wrist fines, but no jail time, per usual, to a few low-level miscreants.

    https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs

    1. as the tide goes out in Vancouver we’ll not only see naked specuvesters but crawling-for-cover criminals.

    2. The asking price per square foot is up. The real story there is that inventory is up 477% (call it 5X). So prices are gonna come down but they haven’t yet.

        1. Other than the house itself (‘the structure’) and the land (the area of dirt’)… uh.. what exactly are you buying?

      1. The asking price per square foot is up.

        Because smaller house Jackie. If the house is not going to make you rich, smaller is better.

    1. Not normally a fan of Michael Bloomberg, but that’s an extraordinarily generous gift. Bravo, Mr. Bloomberg.

  6. Did the Vancouver governmental authorities willfully turn a blind eye to international crime syndicates laundering money into their residential real estate market? Or was it a matter of abject ignorance, even though a ragtag band of posters on this blog, and doubtless others, spotted it from thousands of miles away?

    In a just world, heads would roll over governmental complicity in criminal money laundering operations that have the attendant effect of driving home prices into the stratosphere.

    1. professor bear, you can bet the governmental machinery was profiting enough to keep the whole process well lubricated.

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