Real Estate: Data on condo speculators prove elusive
An effort to get more information about the influence of some speculators in Toronto’s condo market has collapsed after developers refused to take part, leaving policy makers in the dark.
Urbanation Inc., a data-research firm, has pulled the plug on a survey that it had tried to conduct, with the support of Canada Mortgage and Housing Corp., to quantify how many “assignments” are taking place in the market.
An assignment is when a buyer who has bought a condo in a building that’s not yet finished, or registered, assigns their right to buy the unit to someone else.
Urbanation officially called off the study Tuesday, after the vast majority of developers who were asked for information did not give it. The study could have shed light on an aspect of the condo market that economists and policy makers have been worried about, as they have sought to get a handle on just how overheated the market might be and what risks it might pose to home buyers and the greater economy.
“There aren’t any good numbers on the amount of properties being used for investment purposes,” said Toronto-Dominion Bank chief economist Craig Alexander. “It’s very hard to assess risk in the market when you don’t have insight on that.”
Urbanation had sent a letter to developers in August, notifying them that it would be conducting this “very important data collection exercise” with the support of CMHC.
Ben Myers, executive vice-president at Urbanation, said he sent the survey to more than 100 developers that had launched condo projects in the past five years, asking them for either the percentage of units or an exact number of units that had been assigned before the condo buildings were registered. “We wanted to know what’s happening with this shadow market; there’s no real way to track it,” he said.
He said that one person he spoke to, outside of the developer community, speculated that “because some of the people assigning units are not paying capital gains taxes on that, developers may not want the government looking into that any further.”
I came across this on another blog……
A peek behind the curtain of the invisible monster that will affect Toronto economy for years.
Assigned condo investor information was held back by almost all Toronto developers asked by Urbanation.
Citing the least offensive reason they could think of, that investors aren’t paying capital gains tax on the sale of assigned units. This alone is very bad, and could/should require a RCMP raid on developers head offices by the CRA as part of a large scale investigation.
But truth is, what is behind the curtain of the pre-sale condo ponzi is far far worse. And because money laundering is now a federal offence if committed by developers….this story could be huge IF its investigated.
Depends how in bed authorities are with these people.
This doesn’t even touch on the shoddy construction, bad cement and faulty China made glass being installed on condos. These problems will bankrupt many people in years to come.
While I think we can all agree this Real Estate mania has had a lot of $teroid$ injected to create the bubble….by honest yet naive people…I did hint at this ” laundering $$$ ” issue.
Parties that simply ” flip paperwork ” are subject to tax….and one wonder why the ravenous revenue whores in Gov’t wouldn’t have figured this out…or as many of us suspect their are (2) sets of laws..one for “THEM” ……..and one for the other 99.9% aka “US”.
Aren’t banks supposed to report suspicious activities, which has been made quite simple via a certain $ benchmark activities ?
Another reason to BAN pre-sales. EXAMPLE Person “A” could “buy” 6 condos at a Pre – Sale…put minimum deposit down. Sale price of $350,000 each….. so then what is the paper trail ? A piece of paper that is not registered at Land Titles, as its not completed yet, thus title cannot be transfered , thus no record for the Gov’t ? Say the condo takes 2 years to build…then assignee goes on Craigslist etc. ….or has some broker waiving (6) pre -sale assignments …or is part of a major gang that flips assignments amongst themselves.
If they sell the pre-sale assignment for $399,000 each….then they have pocketed (6) X’s $50,000 (approx.) = $300,000. The condos are not yet finished…but the next “owners” could sell the assignments for $450,000 each. The final assignment would be the party that has to pay the full amount ( unless they can flip the finished product ), but by then it is registered at Land Titles. All the Gov’t sees is a sale registered at $450,000.
This simply artificially skews the market…if dirty money is pouring in to be laundered, as these types don’t care so much about profit…as their ill – gotten gains seek to be made untraceable.However, the honest people are forced to pay higher prices for an artificially inflated product.
Again ban pre- sales….and/or set up a system that the purchasers must register their assignment using Gov’t documents.
As I have often outlined….the game is over….the bubble is popped…and their will be a lot of collateral damage that will trap many people. Or conversely, if Gov’t does NOT act, then we, the 99.9% know where, who, and what they in Gov’t are in bed with.