Toronto

Billion Dollar Fund Manager Comes Out of Retirement To Bet Against Canadian Real Estate

Marc Cohodes

You may not know who Marc Cohodes is, but the 55 year old retiree is a Wall Street legend. So when the man the New York Times once called “the highest-profile short-seller on Wall Street” decided to come out of retirement, we were dying to get in contact with him to see what he was betting against – turns out it’s the Canadian housing market.

Before retiring, Cohodes previously ran one of the largest hedge funds in the world, Copper River Partners. They managed over $1.5 billion in assets, and made a fortune betting against companies whose books and practices didn’t quite make sense. In 2008 Marc quit the financial game after a correct bet against Lehman resulted in a complication between Copper River and Goldman Sachs, which led to the fund’s demise.

Since then he’s retired from his trade desk, and runs Alder Lanes, a swanky chicken farm in Sonoma County, California. That is, until he started following the Vancouver and Toronto housing market, which in his words “makes the US look like Sunday school with what’s going to happen.” So we sat down with Marc and he explained to Better Dwelling co-founder Stephen Punwasi, the perfect storm he sees in the Canadian housing market – a mixture of rising home prices, foreign money laundering, and an unregulated sub-prime lending system most Canadians don’t even know exists.

Rising Home Prices

Our first question to Marc, was the most obvious—what’s with the rising home prices in Canada? His response:

“Supply and demand doesn’t make sense” Cohodes explained, “Income levels are up in the GTA, but they’re not up as high as housing”. He might have a point, housing prices in the GTA over the past 30 years are up 188% and income has only risen around 1%. So why are buyers scrambling to purchase homes they can’t afford?

“The Country is using housing as an economic generator, and it’s going to be an economic killer…housing is shelter, and right now it’s being used for speculative purposes”. With the average Toronto home appreciating $550 per day, buyers have been piling in faster than people can sell their homes, and Cohodes thinks this is “not an organic situation, and it’s dangerous.”

“Don’t buy the supply demand noise. There’s plenty of places to build and live [in Canada]. It was the same story with Phoenix, Las Vegas, and Southern California when housing blew up here”.

Foreign Money Laundering

“You have a story that people laugh at, a college aged girl buys a $31 million dollar place to live in, she didn’t earn that money herself. She said it was her father’s, when they asked what her father does she said she doesn’t know.” While he didn’t specify the specific story he was referring too, he does appear to be referencing Tianyu Zhou, a “student” at UBC that was able to purchase a $31.1 million mansion in Vancouver’s Point Grey. As a student, Zhou was able to obtain a $9 million dollar mortgage from CIBC. Interestingly enough, her LinkedIn says she worked at the UBC cafeteria in her first year – a gig typically reserved for low income students.

“It’s international money laundering coming into Canada…regulations are very lax”, he further explained. “China has capital controls on their money, and Canada does not have respect for a nation that has capital controls”. Bloomberg estimates that US$500 billion in capital has been moved out of China by mostly individuals, with a significant portion of it landing in Canada. Much of that has been moved into the Toronto and Vancouver housing markets.

Non-Prime Lenders

“I think it’s horrifically bad, there shouldn’t be private lenders.”
–Mark Cohodes

If you’re a Canadian that has your mortgage with one of the Big 5 banks, you most likely don’t realize that we have a bustling sub-prime lending industry that exists with almost zero regulations. A few have interest rates as high as 15%, with a 15% fee for renewal after the first year (because what’s an extra $150,000 on a million dollar loan right?). Some go so far as to lend you your down payment, so you can skirt the federal regulation of minimum down payments. Or as Marc says, “As long as you can borrow more, you can keep the Ponzi going”.

Home Capital Group (HCG) is where Marc is betting the implosion of this industry will begin. Despite not being a household name, HCG has built a mortgage portfolio that’s around 1/5th the size of BMO, impressive considering BMO had a 160 year head start. Shortly after Marc began shorting HCG, an anonymous letter to the board of directors explained irregularities in their numbers, which forced the board to launch an investigation. The board revealed around $1 billion in fraudulent loans, that they traced back to 45 brokers. They stopped doing business with the brokers, and that $1 billion was quietly adjusted to $1.9B.

“Home Capital Group has admitted to $1.9B in fraudulently underwritten mortgages last year alone,” he explained. “FSCO, who regulates the brokers, hasn’t punished the brokers. The problem is when there’s criminal behaviour going on—and originating fraudulent mortgages is criminal behaviour… you’re allowing one class of individual to benefit another. If you allow it to go on, what’s the deterrent?”

Find that a bit confusing? Marc broke it down for us, “if I went to your town and robbed a bank and broke the law…and you caught me and know who I am. My punishment is ‘you need to leave town tomorrow, I won’t name you but you can’t do this around here no more’, what  urges me to stop? Me and my whole crew should be put in jail, there should be an investigation by the RCMP on exactly what happened, and who was involved.”

It’s hard to argue with that, most of us would say yes, there should be an investigation and someone should serve time. He goes on to say: “Were these mortgages insured by the CMHC?”. The 45 brokers have not been named to the regulator, and HCG has said that taxpayers are on the hook for the fraudulent loans, as they are mostly insured by the Canadian Mortgage and Housing Corporation.

Source: Home Capital Group.

Advice For The Canadian Government

Marc, far from shy “invites any regulator or politicians” to contact him. “I could stop it in a week…they just seem to not want too. They want to hold meetings, and take half a million dollars and look into it”, referring to the Liberal government’s recently announced StatsCan program that will take the next year to collect data on foreign ownership. He also suggests the biggest improvements will be made by having the government focus on cracking down on illegitimate foreign ownership, and unregulated private lenders, that he refers to as our “shadow banking industry”.

“China has capital controls for a reason…stop the conduit of money coming from China into housing. Stop it meaning, who are these people doing it, where are they getting their money from, who are the banks involved?” Marc states “I would work with the Chinese government, because they don’t want this happening.”

“It’s clear in BC, massive amounts of money are being laundered into the housing and real estate markets, and that stuff should be stopped immediately”, he further suggested. “I urge the government to do a whole lot more than say ‘we’re studying it’”

What Marc has to say about alternative mortgage lenders

Marc thinks “They [the Canadian Government] should make HCG disclose exactly what’s going on there….FSCO should have HCG name names, and arrest brokers.”

Marc’s advice For People Buying A Home

He was also very direct when questioned about advice for Millennials looking to enter the market in Toronto. “If you don’t own a place, rent. If you own a place, and someone wants to buy it at the right price I would sell it in a hurry.” Then added “It’s not the end of the world to rent.”

“Not everyone should be a parent, not everyone should have kids, not everyone should own a house”. He also urged young people thinking about jumping into the market because of FOMO rather than being prepared “If you think the market is going up and you’re not participating – that’s fine. Just be patient and the market will come down.“

Being a short seller hasn’t made Marc popular with investors, but his ability to mow through numbers and point out logical inconsistencies is so legendary they teach about him in some of the top business schools in the world. The real question is, now that we’re all aware of skyrocketing home prices, foreign money laundering, and unregulated sub-prime lending, how do we convince our government to sit up, take notice and make some changes?

Here’s an idea, why not tweet your thoughts to our fearless leaders?


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191 Comments

  • Reply
    Eric Neilson 1 year ago

    How do I get on this short?

    • Reply
      Tom Sun 1 year ago

      Short REIT with a lot of real estate holdings in Van & TO.

      • Reply
        Lahdeedah 1 year ago

        Damn, Tom Sun, great minds think alike 😉

        • Reply
          Mds73 1 year ago

          REITs hold primarily multi unit residential and commercial properties, which are not subject to exactly the same rules as single family dwellings which have been bid up the most.

          • Gale Leitch 1 year ago

            Some realtor friends of mine told me that condo rates in Vancouver have not risen this dramatically in 10 years or more. For example, I bid on a condo in November. I missed out and it sold for $287,000 in January 2016. It’s now back on the market at $425,000 in July. No renovations. It’s exactly the same, with the same photos posted. Although it was officially sold, the seller has posted the same photos with the same furniture. There is something fishy about that. Lots of flipping like that going on here, too. But that one situation is very strange indeed.

          • Anna 1 year ago

            Hi Gael,
            What’s the address of hat property? there are too many like that in the market these days.

      • Reply
        Trevor Chan 1 year ago

        Who do you contact?

        • Reply
          Be Wary 1 year ago

          If you don’t even understand how to place a short, you shouldn’t be doing it. Unlike a regular trade where you just lose the money you put in, there’s no limit to how much you can lose on a short.

          • Darth Yoda 1 year ago

            If you’re going to short REIT then at least have the brains to do it in a bracket trade. If you don’t know what a bracket trade is you probably should stick with going long.

      • Reply
        Kman 1 year ago

        How? and where?

      • Reply
        DJG 1 year ago

        That strategy doesn’t really make sense as a way of benefitting from a fall in residential real estate. Short of a dramatic population fall in the areas where REITs have their assets, I don’t see a drop-off in demand for rental accommodation. Multiples of rents in Van and TO are ridiculous, which tells us that house prices are far too high but also that rents are relatively affordable. If anything, I’d be more concerned about the REITs that hold commercial real estate. In many cases, they are in a shrinking market as there is less demand for class a office space, or traditional b space in high rise downtown buildings. Large companies are using technology to reduce headcount. People are working from home or in smaller businesses. Economic growth is generally weak.

        People will always need places to live.

    • Reply
      David Hedrick 1 year ago

      Scary, almost had me convinced to sell one of my houses in Toronto.
      But then, I have no financing so I don’t care if the interest rates go up, I’m not using any properties to generate revenue, so I don’t care if the value goes down.
      I’m using the properties for shelter, and the only thing that will happen if the market crashes is my property taxes will go down.
      So a market crash is good for me!
      Crash crash crash! Come on!
      F everyone that bought a house they can’t really afford or drove the prices up by using housing as a get rich quick scheme, I don’t care if greedy people get their due.

      • Reply
        David 1 year ago

        Interesting that you are using your properties for shelter. ..how many homes do you need?

      • Reply
        Timmy 1 year ago

        You seem not to understand how property tax valuation works in Ontario. The movement of your property value in absolute terms is immaterial to your taxes. It’s only that movement relative to the movement of property values in your city. The total amount of tax levied doesn’t change with the market – only the relative apportioning matters.

      • Reply
        Roman 1 year ago

        It is unfortunate, but it will down business and currency. Net negative for all Canadians. Than all tax revenues will go down, student tuition will be up. This what I lived through in Florida. It will be worse in Canada.

      • Reply
        DarVan 1 year ago

        You could sell your house now and buy 5 when market goes down…

      • Reply
        Blitz 1 year ago

        If houses prices go down your property tax will not go down. The mill rate will go up. Just because everyone’s house goes down in value doesn’t mean the city needs less money to operate. Do you’re homework.

      • Reply
        Bitter Pill 1 year ago

        The lesson from 2008 is that greedy people will NOT get their due. They will live for free in a nicer house than yours while you will be forced to bail them out in indirect ways. All their debts will be forgiven while yours will be ongoing and you will be unable to earn any interest on the money you prudently saved. Don’t be a sucker, join the party and let the other guy pay for it.

        • Reply
          Chris 1 year ago

          You are mostly correct. CMHC, and thus the Canadian taxpayer, are the ones who will be doing the bailing. Nothing indirect about that at all.

      • Reply
        Denis 1 year ago

        David a housing melt-down will not reduce your taxes. e.g. Windsor. the establishment still has to pay for infrastructure, service, etc.

      • Reply
        Howard Hare 10 months ago

        No, they will not,does not mean anything,TO still needs money to function and will need a lot more, look at te Don River project,tons of future money will be needed and the value of your house means nothing,the mill rate will be adjusted.
        We own, No Mortgage,kids educated, money in the bank,not worried about future implosions of debt ridden countries, I will be dead.
        Condos in TO without power,Windows falling out of condos,routine floodings,all these need money.

    • Reply
      Bruce 1 year ago

      One of the most effective ways to short the Canadian residential real estate market is to short home capital group I Live in Toronto but go to Vancouver at least three times a year , both cities are completely ridiculously overpriced However human nature being what it is results in the masses doing what the rest of the masses are doing which is to keep buying. I own my home with no borrowed money so let the crash happen which over time will reduce my monthly property tax grab by the most indebted non- sovereign land in the world , ontario. Everything that goes up does go down If you put $1000 in the stock market in 1900 and $1000 in the housing market in 1900 the return today in the stock market beats the return in the housing market by a country mile !

    • Reply
      Frank Drakman 1 year ago

      This article seems short a few facts. For example, $1.9 billion in fraudulently underwritten loans – how exactly are the loans fraudulent? $3 million loan on a property worth less than $1 million? Or “NINA” (no income, no assets) loans? And were those loans packaged, sliced, diced, and resold as CMO’s, which caused the problems in the US?

      However, the Toronto CMA has close to 1 million detached homes, worth an average of $1.2 million each, so the Toronto market is worth over $1 trillion (and that doesn’t include town homes, semi-detached, row houses, etc.). $1.9B isn’t even one quarter of one percent of that total. I’d need a lot more information before I get worried about the market in general, although specific companies might be worthwhile shorts.

      • Reply
        Frank Talk 1 year ago

        What? You could not have has $1000 “invested” in any market from 1900, It’s impossible. Few, if any, of the companies listed in 1900 are listed today, Ergo, you would have lost almost everything and would not have “tracked” the rising index, which is comprised of a weighted average of the currently traded stocks (so, when an old behemoth stock eventually implodes due to lack of revenues and profits, it gets displaced by the fast rising lean mean darlings that have revenues and profits).

        Financial planers use this old trick to confuse folks with extra cash and no financial common sense to transfer that cash to them, in the form of front and back loaded fees. They are called “suckers”.

        • Reply
          Bankster 4 months ago

          You don’t need financial planners to invest in the market – the point is the principle of appreciation. Today we have ETFs, so the principle is even more viable for the everyday person. That aside, I agree with you, as when you buy a house you have the benefits of leverage. Unless you leverage up on investing by the same amount you would borrow for a house, it is not apples to apples.

    • Reply
      Canuck 1 year ago

      This article quote was from 2015. So far Marc’s lost 20% on shorting the Cdn. housing market in Van & TO. With all that Chinese money being laundered in Canada not 15% tax will stem the wealth flood. Bubble? Tell me what isn’t.

      • Reply
        M 4 months ago

        He shorted HCG Home Capital Group which is down to $24 from a high of $54. So he is winning. And the bubble is ready to burst by the end of this year for the rest of the big 5 banks.

    • Reply
      Gringo 12 months ago

      Short Canadian banks all day. TD is leading the short chart. Lot of illegal currency resides in Canada which hires the best lawyers who keep the judges quiet.
      Private lenders are worse then drug dealers it’s hard to go a day without hearing/seeing their fat asses 100 times a day pushing dollars.

  • Reply
    Lahdeedah 1 year ago

    Probably to short REITs, which are real estate securities.

  • Reply
    Floyd Murdock 1 year ago

    The provincial government is taking over regulations for Real estate. The NDP is asking for an investigation. I hope this is not intended to help short Real estate for profit.

  • Reply
    Anthony Maw 1 year ago

    Short the Canadian banks and secondary lenders like HCG and MCAN. Most REITS are commercial real estate they are not as exposed to the residential housing bubble. Also short the Canadian ETFs like the XIU. The Chinese money laundering is now TOO BIG TO FAIL in Canada.

    • Reply
      Eric Neilson 1 year ago

      Thank you for the info i’ll look into it

    • Reply
      Derrick 1 year ago

      Competely agree. Having lived in vanc for 10 yrs (no longer – taxes are horrible and a very shallow economy outside of tourism and natural resources) two things stand out. The number of casinos within city limits and the reckless home investment behaviour shared by its residents, chinese and locals. Tax revenue from construction activity and land tax is too dear to let go. And when it does collapse expect to see more casino licenses approved within city limits and most likely a more de regulated gambing industry in BC which typically precedes more crime and an expanding shadow lending industry. Hopefully the city understands that gambling revenue for the city has a cost that is mainly shouldered by locals. Dont forget vanc is also the drug capital of canada. For all its beauty, vanc is pretty darn ugly underneath. The city needs to re engineer its economy and tack away from short term policies and look to build a city underpinned by a diverse economy with residents that can exhibit civic responsibility rather than look for the next quick buck.

      • Reply
        Kimberly 1 year ago

        Casinos within city limits? … There is only 1

        • Reply
          Jim 1 year ago

          Kimberly

          This article and Derrick’s comments are impressive with their complete lack of any factual foundation. Shorting some two bit lender that is over exposed is hardly a gamble. People have been saying that the Vancouver market is overpriced since 1961. It has yet to correct. There is very little land there and much of the population of the planet wants to live there. No one has ever lost money buying real estate in Vancouver and holding it for more than 5 years. Never.

          • Ryan 1 year ago

            Past performance does not indicate future performance.

          • Ryan 1 year ago

            One thing that I would like to point out about asset bubbles is that they do not really need a reason for why they occur. An asset bubble by definition does not follow the “fundamentals”, instead rising prices cause even higher prices.

          • Matt 1 year ago

            1980. 1994. Both took almost a decade to recover from the peak. Check your facts before boldly stating “never”

          • Andrew Baxter 1 year ago

            Angry Realtor Jim, try posting factual statements before denigrating your own industry even further.

            This is a howler:

            No one has ever lost money buying real estate in Vancouver and holding it for more than 5 years. Never.

          • John 1 year ago

            I graduated in 81 and remember my friends dad hung himself , he was a house builder in a lot of debt

          • murray thomson 1 year ago

            I purchased a condo on Nelson Street in 1980. I sold it in 1987 for 2/3 of what I’d paid, after paying mortgage on it for seven years, at interest rates varying up to 18% (not sub-prime, this was a big bank first mortgage, when interest rates were absolutely unbearably high). And don’t tell me I should have hung on to it and I’d be laughing today. I was starting a family and we needed room, and I certainly couldn’t afford two houses. Lots of people have lost money on house. Plus, my house in Richmond was nearing $425K in 1997 just before the “transition” of Hong Kong, and was back under $300K about two years later. Housing has certainly corrected in Vancouver!! Check the bottom chart here: http://www.theglobeandmail.com/real-estate/the-market/toronto-and-vancouvers-lofty-home-prices-put-into-historical-context/article27316493/

          • Zoe 1 year ago

            ‘Never’….

            I bought a townhouse in Burnaby in late 1993…. I can tell you it took untill about 2000 to be worth what I paid for it….

        • Reply
          Cynna 1 year ago

          Perhaps GVRD? Another one soon to go up in South Delta.

          • Bane 1 year ago

            There used to be one on West Hastings. They are building a new one next to the stadium

          • peter aardvark 1 year ago

            I remember those, I was around then and 1980 or 92-94 were not bubbles bursting just slowdowns, or soft landings.

        • Reply
          Monica 1 year ago

          If you live in the GVRD you’d know there are at least 5.

      • Reply
        Van 1 year ago

        “its residents, chinese and locals” – residents overlap with locals; Chinese is an ethnicity and many residents/locals are ethnic Chinese.

        • Reply
          Tiffany Greene 1 year ago

          Great point. It’s very important to separate local residents that just happen to be Chinese from foreign speculators that inflate prices and have zero to no intention of ever living in Vancouver.

        • Reply
          BobsYourUncle 1 year ago

          We all know what was meant. Pedantry…

    • Reply
      Brian 1 year ago

      A recent article in the Globe and Mail stated that the largest percentage of commercial real estate now being purchased is by Chinese investors. They drove up the residential real estate prices now they are doing it to commercial real estate.

  • Reply
    Mikepm 1 year ago

    This has been going on so long. The gov is so scared to stop it. They are addicted to the money. If they were to set up checks and balances with China on people leaving their country it would stop overnight. It’s ridiculous.

    • Reply
      Sandy 1 year ago

      I live in Vancouver. This market is crazy! People are lining up for open houses only to be told offers are only accepted on Tuesday for example. They say buyers are mostly from China. They also say many buyers are retirees from Vancouver and others cities downsizing, and putting hundreds in their pockets. This has created Demand and supply in low so everyone is panic buying. Who is right? What do we tell our first time buyers? My kids ask me if they should wait or buy now? I’ve seen the market in 1981 double in price and go up to 21% then fall right back down to where they started. But times are different. Supply of Real Estate in Vancouver and around is way way lower. It is s desired Province. I’m just not sure this market is going to correct itself? With all the variables, how can any person or expert know for sure?

  • Reply
    Shane 1 year ago

    A few questions:
    1) Can anyone elaborate on this “complication between Copper River and Goldman Sachs, which led to the fund’s demise.” This sounds sketchy to me and I don’t think Cohodes would be 100% innocent.
    2) Why would Cohodes be giving away this knowledge? For free, at that.
    3) I’m genY…if I’m not supposed to invest in Real Estate with my life savings, how on earth am I supposed to make money? I can’t get rich off a paycheque.

    • Reply
      Benzeneinmycola 1 year ago

      1. Don’t know. I haven’t read the link yet.
      2. The more bubble talk out there, the more sketched out regular joes will be to buy property. The more buyers pause, the quicker this thing will pop. Ergo, anyone who has shorted real estate benefits by stirring up bubble talk (not that he’s wrong about the bubble, mind you).
      3. Buying real estate now is a huge gamble. If you want to lay down some fat stacks at the casino, do so at your peril. This thing is gonna blow.

      • Reply
        Lauren 1 year ago

        Bad advice on the end. Rent for life ???? Instead , buy and hold what you can afford and don’t be afraid of ” loosing” money short term ( but the time you pay out your mortgage , values will be back ). If you buy income property , but positively cash flowing ones. Just my opinion

        • Reply
          Benzeneinmycola 1 year ago

          Yeah, bad opinion. If you enter the market now, you risk losing enormous sums of money. Your mortgage stays the same no matter what happens with the value of your home. Ever heard of underwater mortgages? Ask the Americans how all that turned out if them. Not to mention that here in Canada, there’s no jingle mail like in the U.S. Also, when it’s to time to reset your mortgage and you don’t have enough equity in your home and your home as a security isn’t worth what it was before, the bank can force you to pay the difference. Bankruptcy anyone?

          • peter aardvark 1 year ago

            he did say buy and hold what you can “afford”. Also comparing the US subprime is not on either, because (thanks to Paul Martin) there are stricter mortgage requirements in Canada, not ninja loans.

          • T 1 year ago

            Alberta has jinglemail…

    • Reply
      Scot 1 year ago

      Some very intelligent questions, Shane.

      (1) Google the Wall Street journal article on the demise of Copper River. Executing on a short selling strategy (selling stocks you don’t by borrowing it from others) entails risks (such as the person you borrowed it from wanting it back and you not being able to replace it). Yes, the rules did change in the middle of the financial crisis, but Coopper River essentially went bankrupt because they didn’t properly account for the risks inherent in their own strategy. His strategy lost a lot of money for his investors–more than a little “complication”!
      (2) He’s not “giving away his knowledge for free”. He has clearly already begun doing what he did before–betting against stocks such as Home Capital. He is then doing what most short sellers do–not simply sitting around and waiting for him to be proven right, but giving interviews like the one in this article to get people on his side to try and help create the situation that will make him a lot of money. Yes, join him on the short side, lobby your government–he’ll be laughing all the way to the bank.
      (3) There’s lots of ways to invest in real estate besides buying stocks which have direct exposure to the housing market–the office real estate market or industrial real estate market in many parts of Canada is quite healthy. But don’t limit yourself to real estate–there’s lots of other stocks to buy.
      I don’t often comment on articles, let alone other people’s comments on articles–but unlike 99% of the other comments above and below yours, at wanted to commend for you for at least asking some critical questions instead of buying everything contained in the article as the gospel truth.

      • Reply
        Shane 1 year ago

        Scot, thank you for taking the time to reply. Like you, I rarely (if ever) post comments but these were questions I thought were important to know the answers for. You’ve given me the confidence to continue to question things I read…just because someone like Cohodes is rich, doesn’t mean they know everything. Cheers.

      • Reply
        Benzeneinmycola 1 year ago

        Hmmm… Scot, Scot, Scot:
        1. Not a very good explanation. There’s an actual link in the article. Go there and get a much better synopsis.
        2. Yes, that was already explained.
        3. Could you be more broad with your recommendations 😉

      • Reply
        Ruth Tonon 1 year ago

        Thank you for your comments.

    • Reply
      Albert chin 1 year ago

      Shane,
      Exactly. All good questions I would like to ask to!

    • Reply
      Wood 1 year ago

      Shane,
      1/ Because he placed the same bet vs Goldman but knew that “GovernmentSachs” would bail them out. It helped when the head of the Federal Reserve was the prior Goldman CEO.
      2/ He has already place his bet and is already in the money. Part of this is to create a heard that will create a following and more money for him.
      3/ Buy a REIT for one. Diversify with other investments. Investment in yourself and start a business. Buy rental property in Florida. If foreigners buy here, why cant you buy there.

  • Reply
    A. Paul Gill 1 year ago

    Markets have a tendancy to stay irrational longer than you can stay solvent. Little shorters beware. Only jump on the train when it starts rolling backward along the tracks. This is a big dog short right now. Let Senior Mucho Huevos break the door down, and jump on his back. Toronto I would short. The market is fluffy. In Vancouver, but it won’t crash, correct yes, but no crash. Simple reason is geography. There is no where to build or buy. The money that has already been made started the fire and it will keep going. As for the market, many are renting waiting for the “crash” . If you are out of the market, the fear is you will never get back in. Many are cashing in by sellng spec properties. You don’t know the Vancouver market. Best place to live in the world. Just sayin’ . Would you short Palo Alto Real Estate? No. There is no difference. Is it “Fear the Beard” or “Beard Afraid?” Buying popcorn and watching from the porch investing in tech and mining.

    • Reply
      Benzeneinmycola 1 year ago

      The average incomes of Vancouver are nowhere near those of Palo Alto. Not even in the same galaxy.

    • Reply
      Wood 1 year ago

      I can see someone memorized their economics text book. John Maynard Keynes….good man.

  • Reply
    Jack Shields 1 year ago

    When the yuan falls to a certain level vis-a-vis the U.S. dollar most of the quote smart money will be already out of China. Any short seller should already know this as this is the most important thing and of course all the Canadian newspapers miss this fact. When the yuan falls to a certain point the Canadian housing market will top out. So anyone looking to short the Canadian banks just look the the value of the yuan. The newspapers also mistakenly remark that a falling Canadian dollar attracts more Chinese money. The converse is true as anyone investing money knows you only buy real estate in a country whose currency is rising not falling.

    • Reply
      Tiffany Greene 1 year ago

      We actually have a pretty interesting chart in an upcoming article that looks at this. Feel free to subscribe or like our Facebook page to get notified when it goes live.

    • Reply
      Graham Rowlands 1 year ago

      I think many are already moving it over to Bitcoin

    • Reply
      lumberjack23 1 year ago

      How do you define certain level? For an indicator that Canadians should look at to time their purchase of a new home, this is maybe too subjective i think?

    • Reply
      Brad 1 year ago

      Jack, why does the value of Yuan to USD impact money exiting China? What is the level at which the money flow stops?
      Thank you for your insight?

  • Reply
    LM 1 year ago

    P.S. it’s Point Grey, not Grey Point with reference to the student in Vancouver.

    • Reply
      Tiffany Greene 1 year ago

      Whoops, typo! Thanks for pointing that out, corrected.

  • Reply
    Socially Hazardous 1 year ago

    He’s down over 30% from last year.

    • Reply
      Tiffany Greene 1 year ago

      The article is more about the valid points he makes regardless.

      We honestly don’t have an opinion on Marc’s short position, but in a short position someone is betting on the decline of an equity. So it looks like he would be up 40%.

  • Reply
    John Lane 1 year ago

    What is your Facebook page?

  • Reply
    Lauren 1 year ago

    REPLY
    Lauren
    1 MIN AGO
    Bad advice at the end of the article. Rent for life ???? Instead , buy and hold what you can afford and don’t be afraid of ” loosing” money short term ( by the time you pay out your mortgage , values will be back ). If you buy income property , buy positively cash flowing ones. Just my opinion

    • Reply
      Kaitlin Last 1 year ago

      Thanks for your opinion! Technically Marc didn’t say rent forever, he said if you’re a first time buyer you should buy when you’re ready, not out of fear that you won’t catch the market.

      Renting is definitely not a silver bullet for everyone, and there is definitely a comfort to owning your own home that you can’t put a price on (Marc probably could, but not us).

      Depending on how rigid the person is about their investment plan, we had another article a few days ago that compared home ownership in Toronto to investing in the TSX or NASDAQ.

      We have some articles scheduled over the next few weeks to discuss the other side of the argument, and explore the raw numbers of home ownership vs renting. Hopefully you liked us on Facebook so you can tell us your opinion on them too. 😀

  • Reply
    terence 1 year ago

    I would love to hear your take on Kelowna BC real estate. We are up 15% just this year after an 8 year flat market. There is very little inventory. I know people are migrating from Alberta and other provinces and people are cashing out of Vancouver and moving here. Are we to see a short term up tick or a longer period of growth?

    Thank you.

    • Reply
      Kaitlin Last 1 year ago

      Hey Terence,

      First off, congratulations if you already own property! 15% is like winning the jackpot.

      There is very little inventory.

      I’d like to believe it’s just because it’s so beautiful in Kelowna! We are starting our Vancouver coverage at the beginning of next month, so hopefully we get to work on some fun BC related things like population migration. That is an interesting question for Vancouver though, if there are so many empty houses where is the population going?

      The biggest issue our analysts have with smaller markets are the availability of data. The government places private organizations (like real estate boards) in charge of the information, but doesn’t require them to make it public. But I’ll definitely throw Kelowna onto the schedule for management.

      If you want to stay up to date follow us on Facebook for our newest posts.

      • Reply
        tom 1 year ago

        anecdotal but i know 3 different families that cashed out of vancouver real estate and moved to kelowna.

      • Reply
        Colin Krieg 1 year ago

        I believe most boards do make their stats public. You just have to look at their website. Here is Kelowna’s: http://www.omreb.com/page.php?sectionID=2

        • Reply
          Andrew Baxter 1 year ago

          Colin, when you say “most boards do make their stats public,” I think it needs to be said that we lag far behind the US in transparency. While American have access to price reductions in listings, days on market, etc., through sites like Zillow, we are still hostage to real estate boards that do not make that information public.

          It is to be hoped that since the BC government has dealt a brutal blow to corruption within the BC RE Association that such information will eventually be made public.

      • Reply
        Jerids leigh 1 year ago

        Hi Kaitlin, I am a recent buyer in Victoria and it seems we are starting to (slowly) follow the Vancouver trend as more people are leaving the mainland and coming here (similar to Kelowna I’d assume) prices are rising at ridiculous rates. I was curious if you had any research on the Victoria market?

  • Reply
    Graham Rowlands 1 year ago

    It is amazing that nothing in this article actually touches on what may be the driving forces for the market. Sure under supply as mentioned is one of them but what about the increasing demand? Toronto is one of the best cities to live in the world. It continues to grow and there is a shift in people living in rural areas vs cities happening right now. Sure you could start a new city or grow from an existing one but considering how much it costs to build infrastructure there are few places that could actually afford to do so. The greater Golden Horseshoe is expected to grow by 4 million in the next 4 years and with a Greenbelt to our north and water to our south where are they supposed to find more land? Condos are making up for the majority of this growth but there are still people who dream of owning a home and with rates where they are it can be affordable for some dual income families or immigrants moving here that are already well established. Personally I don’t see it slowing down for a few years and won’t be taking advice from a guy who doesn’t actually hold on to any of his investments.

    • Reply
      Kaitlin Last 1 year ago

      Thanks for your well thought out comment Graham!

      It is amazing that nothing in this article actually touches on what may be the driving forces for the market.

      Unfortunately that’s not what the article was about, it covered specifically some of the bubbles a top advisor on Wall Street sees. We may or may not agree with Marc, but ask anyone on the Street and you’ll know his opinion is definitely one of the most respected.

      We will be exploring the growth argument in a few days, and to be perfectly honest I’m as interested to see what raw data says as you are. Pricing in Canada has become much more complicated than supply and demand. Cities with similar population growth like Berlin are not experiencing the same pricing issue, so it’s an argument that probably warrants a more thorough look.

      The greater Golden Horseshoe is expected to grow by 4 million in the next 4 years

      We Just did an article that showed that that income only grew 0.36% over the past 30 years vs real estate at 188%. The issue might not be real estate, it might be wage disparity between, or central banking policies.

      Just so you know, we aren’t against home ownership – we consider ourselves a resource for realtors. A significant number of Millennials don’t understand real estate, so we’re presenting data and expert based opinions to help clarify. We’ll be doing more articles on the buy side later on, we’d love it if you checked back in to tell us what you think. Like us on Facebook if you want to be notified of the next articles.

      • Reply
        Graham Rowlands 1 year ago

        Look forward to the future articles Kaitlin. They definitely bring up an interesting debate but it would be nicer if they were a little more balanced than so one sided.

        • Reply
          Andrew Baxter 1 year ago

          Look forward to the future articles Kaitlin. They definitely bring up an interesting debate but it would be nicer if they were a little more balanced than so one sided.

          Translation: You’ve deviated from my realtor’s script that it’s always a good time to buy, regardless of market conditions, a shrinking economy, stagnant incomes, and emergency rates destined to rise.

          Kaitlin, just know that for every realtor keen to keep Canadians in the dark about our notorious housing bubble there are countless Canadians eager to know how we can get out from under this dangerous situation that threatens to gut the middle class and put untold number of debt owners (a.ka. “homeowners”) under water. You will encounter opposition from the real estate cartel and their minions, but keep up the good fight. Canada needs an alternate narrative to the housing cult.

    • Reply
      Andrew Baxter 1 year ago

      It’s sad to see this website already being infested by self-serving realtors flogging their wares. Prices are completely detached from incomes at this stage, which is a textbook index of every housing bubble. As usual, this condo shill falls back into the usual pablum about Toronto being “one of the best cities to live in the world.” The most laughable part of Rowlands-the-realtor’s reply is this:

      Personally I don’t see it slowing down for a few years and won’t be taking advice from a guy who doesn’t actually hold on to any of his investments.

      Do you even know how incredibly ignorant this comment shows you to be? Your “personal” opinion against those of “a guy,” as you dismissively put it, who is actually a legend in financial circles for making accurate investing moves based on mathematical fundamentals. Is it any wonder realtors are held with such contempt by society? This is precisely why the BC government has just approved that all self-regulation be eliminated from the BC Real Estate Association. Realtors have lost the trust of Canadians. Graham Rowlands is demonstrating why this is so.

      • Reply
        Graham Rowlands 1 year ago

        Andrew, while I made no attempt to hide that I am a realtor because obviously my opinion is going to be slightly biased, I am drinking my own kool-aid and am invested in the market myself with no interest in selling. The whole prices being detached from income thing has been around for years as have all the other bubble articles but try buying a house for $700,000 anywhere in this city and you will see what the market is actually like. Condos are an affordable option for those looking to get into the market that can’t afford a home.

    • Reply
      bernie brunet 1 year ago

      An interesting read for those who invest in real estate:
      “Why the real estate BOOM will not bust – and how you can profit from it.”
      by David Lereah (Chief economist for the USA National Association of Realtors.)

      In it Mr. Lereah explains why the market will not crash. Among the reasons :
      -Economic expansion
      -Low interest rates
      -Home price appreciation
      -immigration
      -limited land supply

      The book was published in 2005.
      Two years later, the American housing market started melting.
      In 2009, TIME Magazine named Lereah as one of the “25 People to Blame for the Financial Crisis” .

  • Reply
    Bill 1 year ago

    There are 40,000 people a year moving into the city and NO LAND available, so as far as a demand issue goes, there isn’t one.

    Maybe the problem/insecurity lies in what someone commented on above, the average household income in Vancouver. (Income vs debt ratio). A Slight increase in interest rates and a correction in the market could be disastrous for those people that have taken on huge debt to survive in a city where the cost of living is getting out of control.

    I myself am one of those people thinking about cashing out and moving into the interior for a more realistic and balanced financial lifestyle. Having $100,000 a year household income and an $850,000 mortgage doesn’t add up for me.

    I think the Vancouver real estate quickly inflated to a reasonable evaluation in relation to the rest of the world, and after that major increase, the crooked money has rolled in and bloated the prices to an unsustainable place and a “self correction” is definitely on its way. So for those locals/Canadians that have mortgaged themselves to the max and have purchased homes $1,000,000.00 above the BC housing assessments might want to save their pennies vs buying a Range Rover like their wealthy foreign neighbors.

    My opinions above are begging for critique and comments and I’d love to hear and read more of everyone’s thoughts. It’s a strange time. What happens when Trumps elected? What is the current demise of the EU going to bring ?

    Cheers

    • Reply
      Anthony 1 year ago

      All of this is quite interesting as an American living in Los Angeles who actually survived the housing explosion. But to ease your worry, Trump has no chance…its all smoke and mirrors. Like the Great Oz. Watch as he implodes like your housing market…maybe you can short Trump? hmmmmm……

    • Reply
      Andrew Baxter 1 year ago

      There are 40,000 people a year moving into the city and NO LAND available, so as far as a demand issue goes, there isn’t one.

      “Angus Reid estimates that a staggering 150,000 struggling families are seriously thinking about moving away from Metro Vancouver to avoid the region’s housing costs and transportation issues.”

      The survey was from a year ago. Given that the bubble has grown even more toxic, it’s fair to assume that this number of people fleeing Vancouver is also greater.

      http://www.vancitybuzz.com/2015/06/85-of-miserable-families-ready-to-leave-metro-vancouver-over-housing-costs-poll/

  • Reply
    daniel 1 year ago

    You are simply looking at globalization in major cities around the world. It seeps a little in the rural areas around those cities and stabilizes.

    Vancouver is not really over priced at all in global measures. Its a nice city.

    I think if immigration is going to bring in so many people they should make it a mix of multiple races without majority. Keep the culture with different people and coop housing. Build them high than the other buildings and brighter. Start building kelp floors under the oceans waves around your local cities and really enjoy the planet. peace and love for everyone

    • Reply
      peter aardvark 1 year ago

      Interesting point. This is happening with a lot of popular cities and capitals such as London, Paris, and for that matter resort destinations where the locals are priced out of the market. In Prague Russians are buying up the fancy villas. In Seattle people are having bidding wars and putting down non-refundable deposits of $300,000 in order to get a house.

      Lately I think the main reason is that since there is almost no growth with financial investments, low interest rates, a stock market that is rigged (ie. read Flash Boys) against the small investor and people’s pensions – one sure place where there is growth is in real estate. Definitely a lot of foreign money being parked here and while it is good for house owners – is it good for young people or those who got priced out of the market? Personally we lucked out and bought 14 years ago but we also think about our kids and their future here. There aren’t enough high-paying jobs in Vancouver to support the housing prices, and many companies have trouble finding employees to move here once they see the cost of housing. So while it is good for those who own, it does not necessarily bode well for our kids.

    • Reply
      bernie brunet 1 year ago

      “Vancouver is not really over priced at all in global measures.”

      People keep trotting this howler out as if Vancouver was comparable to New York or Hong Kong.
      Makes me wonder if BCers just don’t travel much.

      In spite of what the Provincial government keeps telling them, BC (And specifically Vancouver) is not the “Best place on Earth.” I lived in Vancouver for five years. While I enjoyed the outdoors immensely, (It was as nice as say, PEI or Newfoundland.) it was “World Class” in only two distinct ways that I recall. First was the breathtaking expense of it all. Shelter, oops, I mean real estate investment, was outrageous of course, and that meant your local Vancouver shopkeeper, who’s store had real estate exposure, also had to charge outrageous prices for what ever they sold.
      EVERYTHING was expensive compared to eastern Canada. Cars, gas, food, schools, booze, entertainment. Definitely global class prices here.
      Secondly, I concede that East Hastings street is a truly a world class ghetto. I mean that in the American gun toting, car jacking, drug shooting gallery sense of the word. East Hastings could be a thrill ride even in broad daylight- and not in a good way. I rapidly learned to not drive there, and not mention it in polite company. Go ahead and Google map East Hastings, and enjoy the barred store windows and the stoners and the homeless trading meth on the side walk.

      The traffic jams are close to being in the elite class, but compared to Toronto, we’re not quite there yet. Besides, it’s not really a case of too many cars and people. It’s more the lackadaisical nature of Vancouver city planners, who really just don’t get this car and truck thing. If produce could be delivered from the farm to Vancouver’s grocery stores using bicycles, the city’s traffic situation would actually work very well.

      While I have not lived in Paris, Amsterdam, New York City, or Los Angeles, I have visited and/or worked in all of them often enough to know what a truly world class city is in terms of people, culture and business. Vancouver is not one of them. Not. Even. Close.

  • Reply
    David Shing 1 year ago

    The biggest cities are the least fair. As Toronto becomes bigger, a smaller and smaller portion of people will be able to be new home owners. People will of course moan about what is and what isn’t affordable, but moaning won’t get you a cheaper house in the GTA. Eventually other cities will improve within 250km, but not until it’s impossible to live in Toronto (guess is 25 years at least, Canada moves slowly). People will hold on here until they absolutely can’t afford it. Consider Manhattan, are there minimum wage workers, of course, do they live in Manhattan, of course not. They can’t rent in Manhattan let alone buy. Do you think the minimum wage worker in Shanghai owns a home anywhere close to Shanghai? Even someone making a middle class salary doesn’t (maybe they can rent). You must be filthy rich to own property there. Eventually all top cities are owned only by the richest of the rich, and everyone else pays rent (think Manhattan, Vancouver, London, Shanghai, Taipei, Paris). If you got a job in Paris would you expect to buy a home anywhere in the first 12 arrondismants for less than 1 million euros? And these are apartments, a house if were to find one in Paris would be astronomical! That is how the world currently works. It doesn’t take exceptional thinking to look at the bald truth of the worlds big cities: they are NOT affordable, there is NO RULE that everyone should be able to afford a house on a middle class salary, there is NOTHING that stops rich people from buying up property in popular locations and charging high levels of rent. Do I agree with how the world works (I don’t really), but that isn’t the point, put aside your class bias and think about how the world works. You’ll see there is no point in even arguing about these things (the author I’m sure would disagree, as they certainly enjoy readers and a lively debate.) If you want to change things, you’ll have to start from the beginning and improve world equality. If you don’t want to share everything you have with the other half of the globes poor, why would those richer than you care if you (or me) have a nice reasonable place to live that isn’t too far a commute? (The answer to this semi-rhetorical question is, they don’t really care.) When one day the world is like Star Trek, then we can all have a fair piece of the universe, but that’s a while away.

    • Reply
      Kaitlin Last 1 year ago

      Consider Manhattan, are there minimum wage workers, of course, do they live in Manhattan, of course not.

      Manhattan has a density of 27,812.2 people/sq. km, Toronto has a density of 4,149.5 people /sq. km. That’s almost 6 times the density. It’s not a fair comparison. Manhattan also has ~2,000 registered real estate agents, Toronto 42,000.

      • Reply
        Jamie K. 1 year ago

        “Manhattan has a density of 27,812.2 people/sq. km, Toronto has a density of 4,149.5 people /sq. km. That’s almost 6 times the density. It’s not a fair comparison. Manhattan also has ~2,000 registered real estate agents, Toronto 42,000.”

        False!!! There are 42,000 agents licensed with TREB which covers the entire GTA. Toronto, Mississauga, Vaughan, and Durham (pop: 6.05M, 2011 Census).

        New York City has 27,000 Real Estate Brokers and Agents according to State stats working in New York City (pop: 8.4M, 2013). That’s about 1/2 the brokers licensed in New York State…. Coincidentally about half the licensed Agents in Ontario work in Toronto.

        Both markets though have a much smaller group of Agents that would be considered active. For example, in Toronto 70% of Agents handled less than 4 transactions last year.

        • Reply
          Tiffany Greene 1 year ago

          You need to look up what false means. The density argument still doesn’t make sense, regardless of if there was 36 million or 2 real estate agents in Toronto.

    • Reply
      Trevor 1 year ago

      Great discussion on this thread but also lots of misinformation. I live in Manhattan and I can assure you that lots of minimum wage and unemployed workers live here. A huge percentage of the housing is supported by the housing authority. A little knowledge is a dangerous thing.

    • Reply
      LIBOR KRIZ 1 year ago

      Best comment from all of them!

  • Reply
    Magdalena 1 year ago

    I am so happy that someone is paying close attention. Thank you Marc Cohodes. I loved reading this article and Marc’s frankness.

  • Reply
    Matthew Chang 1 year ago

    I think Marc needs to do lot of home work….Real Estate prices world wide has gone up tremendously and i can prove him that some of the Asian countries have seen huge growth in home prices, way more than what we see in Canada.
    Prices are at risk for properties which are way out of cities…..did Manhattan pricing crash? If one buys 200 kms from down town Toronto at high prices then i would say yes its a risk. That’s why in Real Estate key drivers for investment are location, location & location.
    Stock market is not offering any sensible returns.

    • Reply
      Kaitlin Last 1 year ago

      did Manhattan pricing crash

      Yes, it did. It’s still 8.7% below the 2008 peak when inflation adjusted. Good question though.

      Stock market is not offering any sensible returns.

      Some markets are, here’s a rough overview of the NASDAQ vs Toronto’s real estate. https://betterdwelling.com/city/toronto/torontos-housing-market-demolished-tsx-performance/

      • Reply
        Matthew Chang 1 year ago

        Kaitlin
        I am not sure which stocks you invest in, one day its up second day it erases profits. Very difficult and almost impossible to pickup stocks offering good returns. The statistics which you are sharing doesn’t make sense and most importantly you are trusting your money to some body you don’t know nor have any say or control in the affairs of the company. Financial advisors pitch that they can help pick winning stocks, their definition of winning stocks is offering 5-7% returns and when markets go down they disappear faster then the stock market crash.

        I don’t agree that markets will crash in GTA (Greater Toronto Area) it may adjust but will bounce back very quickly as when you drive around there are not too many development lands available in Toronto. I have seen Mumbai market in the past 35 years and my father lived most of his life there, it was expensive even in 1920’s and its still expensive today…..what do you say about 100 year history? I can give you examples of many big cities which have always given excellent returns on real estate.

        I am not sure what part of Manhattan you are comparing and are you comparing condos to houses or what, its very fictitious and the housing market crash rumours are spread by people from financial industry as they want their cut into profits and want people to invest in stocks / mutual funds etc as they make money on each transaction, they don’t care whether people gain or lose.

        • Reply
          Andrew Baxter 1 year ago

          A balanced, diversified and liquid portfolio doesn’t “disappear” when the stock market crashes. Such a portfolio has consistently provided returns of around 7% in any ten-year period, including the Great Financial Crisis of 2008. You read that right, the worst financial crisis since 1929 did not alter the fact that markets have consistently outpaced housing as an investment, housing bubbles excepted of course.

          Just because you evidently don’t know anything about financial investments doesn’t mean that your opinion has any validity whatsoever in this instance. Kaitlin is once again absolutely right.

          • Matthew Chang 1 year ago

            Mr. Expert, seems you know it all….this entire noise is being created by financial industry guys who want to rip people off.
            Not sure which stocks & portfolio invest and even if you know how to measure the returns !!!

  • Reply
    Mdc 1 year ago

    Haha well then if we had listen to this guy or all the na sayers for the last 15 years we’d be multi millions less rich. Spare me, this guy is like all the market non real estate guys he’s trying to get you to make his stock go up. Use your head.

  • Reply
    SoPissedOff 1 year ago

    Saved for years and year and years (nearly 8 years) for a downpayment while trying to pay rent, car insurance for a modest vehicle, and live in the lower mainland of BC…finally – after years and years of saving we wanted to buy a 1200 sq ft 3 bed/2 bath townhouse in October last year (2015) – owners asking $329,900 (way over priced)…were going to settle on $305,000 but they pulled out, deciding to continue to rent it out instead….we weren’t too concerned as places were selling in the low $295,000-low 3’s for the past few years and lots of inventory…plus this place needed A TON of work done to it, including repainting the entire place (heavy smoker/pot user rented it); cracks in walls/water damage, pet damage, buying closet doors cause the renters broke them all, bedroom doors needed replacing as they didn’t fit and were just bolted on and actually weren’t measured to fit the doorway and wouldn’t close, the list goes on and on…so we waited, and waited…also too with shootings happening literally across the street, it’s not the most desireable neighbourhood, schools aren’t that great…but it’s close to our places of employment and it’s what we could afford…however, nothing came on the market…then the market in 2016 came CRASHING down on us…these same places are now selling for $70,000 over asking…the latest one coming on the market a few weeks ago for $489,900….UM WHAT THE HELL??!! bring on the damn crash – people’s greed is getting out of control….just the other day, there was a chinese realty tour group of prospective buyers coming through the complex looking at places to buy up and pay over-asking for. So disgusted with the foreign money laundering and price inflation going on I can’t even begin to describe how angry this makes me and all my fellow generation of middle-class 30+ year olds trying to get a place to call their own and raise a family (of only 1 child cause who the hell can afford to pay a mortgage, a car, bus pass, daycare, heat and hydro (whose rates are going up every 6 months or so! (cause BOTH parents have to work in this day and age and keep their head above water). Between foreign ownership driving up prices and greedy realtors wanting to line their pockets with huge commissions by ‘setting records’ in the neighbourhood, and the government turning a blind eye to it all for so long an then AT THE LAST MINUTE BEFORE ELECTION CAMPAGINING, say they are going to changes the ‘rules’…yea bloody right….too late….bring on the crash…

    • Reply
      Andrew Baxter 1 year ago

      I know it’s hardly consolation, but the higher the bubble inflates the more it will likely overcorrect on the way down. The worst thing you could possibly do right now is to buy into the cant of unscrupulous realtors and buy at the top of the bubble. Remember that EVERY international economic think tank is warning that Canada’s housing bubble is now the worst globally.

      Be patient and you will be rewarded in time. The price-to-rent ratio is grossly skewed in favour of renters in all bubbly markets at present.

    • Reply
      Michael 12 months ago

      Relax, be patient. It can’t continue to go up 30% year over year. It boggles my mind that people actually think prices can only continue going up. Bargain season is coming. Be patient my friend… you will be rewarded for your effort.

  • Reply
    George 1 year ago

    I have a question. I have lived in both Toronto and Vancouver. Born in Toronto, moved to Vancouver for school and returned to Ontario in 2012 because my wife and I wanted to buy a house and just couldn’t afford one in Vancouver. On our return we were quickly priced out of every Toronto market as well (Etobicoke, Keelsedale, Junction, etc.) Ultimately we settled in Hamilton where we were able to afford a home. Our investment is looking like a wise one and we already moved once in Hamilton turning a nice profit moving into a house that fitted our needs better. In addition I have ageing parents in North York (north part of Toronto) with a baby boomer bungalow on a huge lot that they own outright and purchased in the early 70’s. My parents are planning to sell the house and move but they are older and the process is taking some time. they had planned to move this spring but now won’t realistically move until next spring.
    First, should I be concerned for my parents? They get preposterous offers for the house regularly and I am wondering if they are risking losing a huge amount of money by waiting to sell. Second should my wife and I be concerned? We are intelligent responsible people but to be honest when we moved we went into a smaller less expensive house, and the bank we used for our mortgage made it impossible. It was clear they were only interested in helping us if we wanted to roll our profits from the first place into the new one, and when it became clear we would keep the profit and be responsible fiscally (by not buying a home we couldn’t afford) they made it so difficult that we had to get a lawyer involved. In fact they tried to scam us with an illegal 1700 dollar fee to a mortgage broker (that they requested we use because they had a relationship with her). When we called them on the fee they shut us out and forced us to make our own arrangements costing us time and money we never should have spent.
    With everything going on in the market I am at a loss for what to do. Should I push my parents to sell quickly? What is going to happen if the real estate industry crashes before the first amoritization period of my home? Thoughts?

    • Reply
      Issac 1 year ago

      You shouldn’t be worried about your parents home, as it is free and clear of any mortgages and debt obligations. So whether they sell now or later that is their decision. We can never time the markets exactly, but if your parents are at an age where they need to sell their home, then sell the home.

      If the markets continue to stay strong, then they may be able to sell their home for more next year, but don’t get to greedy. If they have a huge lot, many potential investors would be jumping at the chance to purchase this property just to tear it down and build a 2-3-storey home or even a multi residential townhouse complex to make big profits!

      I have seen bungalows in North York selling for $1 million plus, pretty much just for land value. North York. Hamilton is actually one of the areas that have been very hot in up and coming cities. Value must have gone up significantly there, depending on which side of Hamilton you’re living in. As long as you are not racking up debt you should be fine. Even if the market correct 10-20% which is highly unlikely, you would be left in the same position factoring in the increase in property value minus the current correction percentage assuming one happens.

  • Reply
    Richard. 1 year ago

    You are might be good at Stocks but you know little or nothing about Canada Real estate, so my Advice to you stay in Stock, I have been living in Vancouver since 1974, bought my first Home in 1978 at 22. By 40 bought 5 homes, between 30-40 Build more than 5 homes. In 1985 when I bought my second home which was Brand New, I become Obsess with Real estate and have “Never Made a Mistake in 31 years”. How many Investor do know can brag about that have Never Made any Mistake, in 31 years in they Career. You never mention any thing about the Economy in BC. We have the Hottest Economy in the entire World right now. My prediction for the next 3-5 years Real estate will counting to Rise at lease 20-25% Per Year.

    • Reply
      Jordan Caron 1 year ago

      Hottest economy in the world right now? I live in Victoria and find this outrageous! What do we have outside of tourism?

      Real estate will not continue to rise 20-25% unless the government continues to screw it’s own people over and not regulate out of country buyers.

      • Reply
        Matthew Chang 1 year ago

        True but real estate stayed low for a very long time it was time for the returns in real estate to pick up, it may again settle (not crash) for few years before rising again.
        Globally prices have risen its not just Canada.

      • Reply
        Andre 1 year ago

        You are absolutely right my friend. It is just ridiculous and owning a home should have NEVER been a business.

  • Reply
    Some Guy 1 year ago

    One small note, everyone keeps going on and on about the Chinese laundering money in Vancouver real estate, but remember B.C.’s second largest industry, after forestry and before mining is marijuana. All that money needs to be laundered. That’s a lot of money. I suspect we shouldn’t be blaming the Chinese so much

  • Reply
    Sean McKenna 1 year ago

    Who was the copy editor of this article? Sorry to distract from the good information, but I find it hard to read articles with so many grammar and syntax errors.
    I am a Seattle resident and former residential RE Broker. I still work in mixed use real estate development and agree with the comment that REITs are typically more about commercial real estate. The due diligence for commercial project development is more transparent and “business-like”, unlike the residential market. Seattle went through a bubble, as did all of the US, and is slowing on the rebound. Thankfully I held my own properties becuase I knew better than to extend beyond my ability to pay for the homes should my renters vacate (at least for six months, anyway).
    I visit family in West Vancouver twice per month and am shocked at how crazy prices have gotten in the last 12 months, let alone the last six years. Good, older homes (20 years or older) are being sold for at least $1.8M only to be torn down to build a post-modern or NW contemporary 5000 sf-plus home for absentee owners. Affordable housing agencies like BC Housing are being out-played by private development so look to see working families (below 80% Area Median Income), the elderly and disabled continue to be shuffled east past Coquitlam, Surrey and Langley. Then consider that those “workers” who have to live 60 miles out will need to use the crappy freeway system to get back into the city. Good luck, Vancouver!

  • Reply
    Margit Lieder 1 year ago

    I really enjoyed the original article and all the intelligent, respectful comments which were a delight to read. Even the comment with the spelling and grammatical errors was very informative.

    I cannot believe that the disfunctional Trudeau government will come up with any sensible regulations in the near future and so we are left to our own devices and judgements.

    Young people are leaving Vancouver in droves, including my own son who moved to Chemainus on Vancouver Island where there is a real estate boom although not as crazy as in Vancouver. He got two leads in two amazing musicals at the local theatre which started his career and he will never look back. Sometimes it isn’t the worst to move away.

  • Reply
    Andrew Baxter 1 year ago

    Tremendously important article. Thank you for featuring it. I sincerely hope Mark Cohodes makes a killing when the market finally turns. With any luck, his very public short position will become a self-fulfilling prophecy.

    Canada needs a housing correction before a crash becomes all but inevitable. Even on the comments here you can still read uneducated commenters spewing realtor clichés (“they’re not making any more land,” “real estate always goes up,” and my personal favourite: “Vancouver is not really over priced at all in global measures,” which makes the laughable assumption that Vancouver is a world-class city at par with Hong Kong, Paris, London, or New York).

    I live in Kelowna and rent a downtown luxury condo unit that used to be the show unit. My wife and I live here for just under half of what it costs “homeowners” in the building, which essentially means we’re heavily subsidized by the “landlord.” The dividends and capital gains we reap by investing our savings not only cover our rent, but we profit by an equal amount on top of it. Anyone buying into the recent uptick in sales in Kelowna is without a doubt the greater fool of economic theory. There is nothing here in terms of industry or incomes that justifies the mini-bubble that has popped here in the last year. It is of course amusing to watch desperate realtors try to fan the bubble after nearly a decade of moribund sales.

    Meanwhile, the savvy renter-investor who sees through this dangerous charade watches serenely as this most emotional of assets trick countless Canadians into becoming debt slaves for life.

    Thank you again for this website. Sincerely, Andrew Baxter

    • Reply
      Matthew Chang 1 year ago

      Does this fund manager know all the investment possibilities or is he too much inclined in only one type of investment ie. organized gambling (stock market).

      • Reply
        Michael 1 year ago

        Looks like he made the right move. “He didn’t start shorting the company’s stock until last November, when it was $51 (Canadian) a share (after a stock split earlier in the year).” Quoted from a 2015 Globe and Mail Article.

        From a price of $51 to $30.88, the stock has dropped around 40%. He made AT LEAST 40% profit. Most likely more since short selling is typically leveraged.

  • Reply
    randy 1 year ago

    If you think the Vancouver marker is coming down – short Canadian Western Bank, they will lose their pants if anything happens to the Vancouver market. They finance 75% of land+construction costs for builders and developers. A lot of times for inexperienced individuals building extremely high end properties.

    Their portfolio of construction loans is very high leverage and their overall loan portfolio is strongly skewed towards the construction sector.

    If the market takes any swing and developers start walking away from their projects, CWB will end up with a portfolio of foreclosures of half built properties where the outstanding loans exceed the current land value.

  • Reply
    Jeff 1 year ago

    There are many reasons Real Estate is increasing in Value. In my opinion Low Interest Rates are the Main Reason. Interest Rates are going NEGATIVE. That Simply means you will have to pay your bank to leave your money on deposit. Residential Mortgage Rates will soon be below 1% in Canada. People are also LIVING LONGER so there are Generations like your Grand Parents who haven’t moved in 50 years while there Grand Children are needing housing. Housing is Very UNDERSUPPLIED. Real Estate in Popular Markets will double from here before it Flattens out again. Probably 3 Years. Just my Humble Opinion. I live in Victoria, B.C..

  • Reply
    dallas green 1 year ago

    I stopped reading this article after the garbage metric that no one cares about and no one should read past. 3o year comparison? have you ever done analysis, dcf, any sort of understanding regarding financial metrics ? I know the answer is no. Trying to make the content on the internet much more visible with clarity, and asking why and really? yea in 1986 they didn’t have the internet therefore the growth in internet users has gone up 100000% , not relevant. thanks but no thanks on this content. For Canadian financial news that is concise, informative, and accurate I rely on digitaltwists.

  • Reply
    Danny 1 year ago

    Approx 40% of Canadian Households do not have a mortgage currently. Also the Canadian population is increasing and is expected to grow by 25% in the next 20 years. People need a place to live.

  • Reply
    Issac 1 year ago

    In my opinion below are a few subjects that would have an affect on real estate values.

    1. Supply & Demand (Basic economic principles)
    2. Interest Rates (Money is cheap at the moment & as long as it stays that way it will push real estate values up and up.)
    3. Immigration (Hundreds of thousands of new immigrants are coming to Canada every year, and a large majority are coming to the GTA. These people need places to live and many of them are bringing their money with them.)
    4. Income (Income might not be keeping up with the prices of real estate however if a home is a bit too expensive for a persons monthly budget, they can always rent out a room or two or even the basement if they have one to cover the shortfall.

    I purchased a older bungalow in Toronto (Dufferin & Eglington area) for $550K last Dec 2015. It’s a fixer upper and I have spent additional funds to renovate and complete it to my standards. I closed on the home in March 2016 and a similar property has sold for $600K which needs a full home renovation to get it to current dated standards.

    Another property on my street that I lost out on a bidding war was sold for $560K and was fully renovated and flipped a month after my closing sold for $725K. Same property in less than 4 months sold for $165K more than previously purchased, keep in mind the renovations may have costed them $50-$100K. This area is an up and coming area in my opinion as they are building the crosstown Eglinton LRT project minutes from this area with multiple stops. The project is projected to be completed in 2020 and is only minutes from the famous (Forest Hill) area.

    When I was looking for a property I wanted a location that would withstand corrections and crashes of real estate values, and seeing as I purchased in a decent price range, sacrificing size of home for location, I believe my investment will turnout in my favor. If values stay the same or decrease slightly, I’m not too worries as I put a 20% down payment to maintain a good buffer. My recommendation to people purchasing at higher prices with lesser down payments are to go for Location! Location will always be the number one rule of real estate investment.

    • Reply
      Bo 1 year ago

      You had the same thinking as I have wow! Just brought couple stacked towns near there, last year as well.

  • Reply
    Alexis Tsaparas 1 year ago

    Many comments made here. Some are obviously in denial or baseless. I have been in the Vancouver West Side residential real estate market since 2001, have bought, improved and subsequently sold several properties in this time. I speak with Realtors and home owners in multiple neighbourhoods on a regular basis and I can safely say that what is happening right now is a majority of the most expensive properties on the west side are being bought with Chinese (offshore) money while the sellers of these properties are downsizing and buying in Vancouver East and beyond. Right now, this is working. Low interest rates, offshore capital pouring in from China coupled with moderate climate and a desirable city have fueled this growth in the market and left unchecked, there is no foreseeable end to it. But, if domestic laws change on foreign investment such as this article suggests, it could essentially cut the head of the snake and it our market would crumble. Just my opinion and I am by no means an expert but I will be selling my home in hopes not to get caught with my pants down.

  • Reply
    M. Herrick 1 year ago

    Well in nut shell, yes homes are expensive in the Vancouver area but are not so bad in the out lying area of this Province, young people that want into the housing market should not expect to be able to purchase in a city like Vancouver or Toronto with a low paying or even medium paying job, as most home owners bought into these markets years before and did so to raise there families and of coarse have an investment down the road.Lots of opportunity in places like Prince George with low housing costs and high paying jobs just for your information…There will always be a need for renters and I rented for 10 year before I saved enough to put a down on a property in the 1980’s when you could buy an acre in South Surrey for $130K with a house and shop on it, it is all relevant to our economy those are the hard facts.The out of Country money also moves the engine that runs the machine called progress which you will never stop. yes make sure the money coming is legal money but by no way stop it,because with growth comes jobs in all facets from the corner store owners sales , to home building and all it’s trades.YES PROGRESS

  • Reply
    Kevin 1 year ago

    What would you suggest for a first-time home buyer in the greater Toronto area? Prices still seem to be on the rise. I’m apt to wait for a crash, but is it likely to happen in the next few years? Is there still time to buy and make significant profit or have I already waited to long? I’m content with renting for a couple more years if it’ll potentially be a smarter move.

    • Reply
      Andre 1 year ago

      I am not a professional but my gut feeling is to wait. How high can prices climb? for the pas decade something wasn’t adding up and I don’t think you have long to wait before a massive correction. All of the landlords who will be holding the bag will want to sell.

  • Reply
    Daniil 1 year ago

    Is the graph in millions or in billions?
    If it’s in millions, are their total assets of $14 million?
    This does not seem right.

  • Reply
    Is There a Bubble In Housing? | Price Tags 1 year ago

    […] Certainly it looks like a bubble, and here’s someone betting on it bursting. […]

  • Reply
    Andre 1 year ago

    When Marc says,” Housing is shelter”, he is absolutely right. Owning a home should have never been a business. I never wanted to own many houses as I believe it would take opportunity way from other family’s.

  • Reply
    John 1 year ago

    Seems the author has no clue when to use “to” or “too”. Shady opinions without any facts to back them up. Don’t buy the smoke.

  • Reply
    David 1 year ago

    Gotta agree with John ^ here. This article is simply the opinion of one person and the author has done no research to support his claims. While I don’t doubt the concept of Asian money laundering in the Canadian real estate market, Canada is very different from the states and has no sub prime mortgage market. This type of fear mongering “journalism” is simply seeking to gain attention for the author by sensationalizing. Give it a rest.

  • Reply
    Eugene 1 year ago

    The question is….when will Foreign Money Laundering stop? And what if it doesn’t? The government doesn’t seem to want to do anything about it (nobody wants to be the one to trigger it, especially now that Candian economy is down ).
    So if foreign money doesn’t stop (and there is infinite money in China), will the prices ever go down?

  • Reply
    praveen nadaraju 1 year ago

    http://www.scmp.com/comment/blogs/article/1854618/judges-cibc-bank-supports-clients-who-break-chinas-cash-export-laws

    there goes his theory.

    ALSO… ……Chinese have access to MLS listings FROM CHINA..

    Don’t go in with blinders on because A so called BILLIONAIRE..is calling a short.

    This is a new age and a new game..Remember he was retired just watching from the sidelines.

    The info. I just posted refutes more then half of his position.

    The Banks and Government will decide when housing falls NOT HIM.

    All the signs point to a consistent influx and rise.

    A peak economy in China where near no immigration happens.
    A median income of 275gs.
    Over 3 million , Millionaires.
    3 loop holes to bypass cdn. foreign investment law.
    A 400sq ft condo costs over 800gs there.
    Look at Markham…17yrs lived there..spoke to all neighbours.
    Husband leaves 3-6months earns comes back while family stays..completely LEGAL.
    What he fails to understand and MANY do..the asian culture is FAR ahead of us in terms
    of a business sense. They are not here temporary like the Japanese were when investing.
    Markham downtown is backed by Chinese BILLIONAIRE.
    Bought Buttonville airport to build largest asian mall in Canada.
    Kennedy and Steeles new mall is condo driven and backed by that same builder.
    The list goes on and on.
    Sure people may be pushing hard to get in the market and paying.
    The supply and demand is not local based it is foreign based.
    The expensive homes in good areas will be scooped up by richer asians and locals. bottomline.
    This scenario has never been present in Canada before .
    It is a new game unlike any other.
    Be prepared for a 10yr plus slow growth.
    It has peaked and will not see insane peaks continue..it’s going to level in my opinion
    but will be based off all foreign media incomes not our local ones.
    🙂

  • Reply
    praveen nadaraju 1 year ago

    He’s crazy..if he thinks the gov. who is cashing in on this and the economy being driven by foreigners are going to just drop it because he says so. He needs to be multi trillionaire not a billionaire..that is PEANUTS…maybe they would listen then…especially when a bailout comes down the pipeline because of his silly idea to stop foreign investment. We are an open nation to all cultures. Things are being done by the gov. for affordable housing on a consistent basis. I hope he is reading this…

  • Reply
    praveen nadaraju 1 year ago

    read the below from Buffet:
    He has no clue how different our situation is..if he is referring lightly without looking deep in the situation. We are FOREIGN driven.PERIOD. and it will not STOP….The peak economy of China is just now having lots of median income types looking here for a home. That is all.
    As long as the Canadian culture welcomes this unity among cultures unlike any other country
    we are going to see a 10yrs + slow even growth take place as we start to be dictated by the median income of China. Remember..oil sands etc are a thing of the past and Trudeau is now gunning for renewables & weed approval…to raise the GDP here in a different way..Very forward looking of him and this housing thing again will continue. It is currently the bread and butter of the government.
    Plus? you think Trudeau wants to leave a legacy of disaster in housing? grow up.

    “The basic cause, you know, embedded in psychology, was a pervasive belief that house prices couldn’t go down and everyone, virtually everybody, succumbed to that. But that’s the only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise. It’s quite interesting how that develops.

    “The originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action. So the media investors, the mortgage bankers, the public, me, my neighbor… you name it — people overwhelmingly came to believe that house prices could not fall significantly. And since it was biggest asset class in the country and it was the easiest class to borrow against, it created probably the biggest bubble in our history.”

  • Reply
    praveen nadaraju 1 year ago

    Another smart person posted this:

    The only question is how much of the 1 Trillion that left China in 2015 went into the Vancouver market. This isn’t racist. Doesn’t matter to me where foreign investors are from. The point is the market Vancouver is being driven buy a huge volume of foreign influx of cash.
    If you don’t think so then sell your place now because it’s going to burst huge.

    But if a large amount of foreign investment has come in then actually the market is going to go flat or down a little bit but won’t bubble out huge and in fact may still keep going up.

    If 1% of the 1 trillion dollars that came out of China in 2015 went into the Lower Mainland. That would be 10 billion dollars of new money going into the area. Don’t forget that the value of all residential real estate transactions in BC for the entire Province was only around 50 billion last year. So just for giant round numbers realize that a ten-billion-dollar injection in the province would equate to 20% of all the money going into residential real estate for the whole province. Imagine for a second that maybe it is actually two or three or 4% of all the money that came out of China last year and in fact it’s a localized primarily in Vancouver and close surrounding regions. You have a recipe for doubling or tripling the entire market just on foreign money that isn’t leveraged.

  • Reply
    John 1 year ago

    Marks game is simple. He wants to push his short of Home Capital and drive the price down so he can profit from his short, He always mentions Home Capital when ever he is interviewed and has for two years. Lately he has found a new way to get on BNN and many other stations by talking of the bubble in real estate but again his goal is to make money on his short sell of Home Capital. He throws out so called facts that he knows are not true like Home issued 1.9 Billion of fraudulent mortgages.The facts are backed up by quarterly reports that the 1.9 billion is the total mortgages issued by 45 brokers over 5 years that Home fired. Home has gone over every one of these mortgages and found less than 5 percent do not make their standards, and this are renewing the remaining 95 percent of the so called fraudulent mortgages.
    As others have pointed out ,his Fund went under maybe ten years ago, and he was not heard of for years after. But now he seems to be the darling of the Canadian financial press.
    He throws out so called facts about Vancouver real estate with little regard for proven facts other than the fact it has gone up in price, much like Sydney and Auckland over the last three years.
    For example, the offshore buyer who bought Peter Browns house for over 30 million, put the ownership in his daughters name, a student at UBC. Why- does this mean it’s laundered money ? No it simply means he had tax advise, as if a house is owned by a resident of Canada as his daughter is, then on resale, the gain is tax free.
    Yes we have high prices in Vancouver and I am lucky enough to have bought on the west side 20 years ago. Yes, prices will fall again sometime, as they always do, but then they will always go up again. I am not selling lol
    Dont get sucked in by Mark. He has an agenda.

    • Reply
      Trip 1 year ago

      This is exactly what I’m thinking

    • Reply
      hr 11 months ago

      I guess John is right here. Housing market is totally different in Canada then USA. Just relax and nothing is gonna happen to housing here. Money is coming to Canada, which is good and government is earning much in Taxes which benefits indirectly to people.

  • Reply
    Trip 1 year ago

    I suppose it’s in his best interest that this article gets caught on and have the bubble burst. Based on Google search, I can see that he began short selling over a year ago. If he’s been keeping a short position for this long, then this is becoming very risky for him. Correct me if I’m wrong?

  • Reply
    praveen nadaraju 1 year ago

    Yes, you have to take a position on a short. Long etc…I do trades and use the same software the freaking so called analysts from banks etc. use. All the information they use is staring people right in the face. On a side note…it’s pretty funny how this ponzi scheme of the stock market works. The Mafia has given everyone the answers in specific trading type software but not everyone seems to have the intellect or patience to learn it. All traders go ballistic when they see a stock move in a direction that is not according to there markers. Just go look at SCTY on stocktwits. You can see the twitter feeds. Those feeds were covered with negative comments and links to bad press non stop for the past 12 weeks or so since that stock took a downward move due to Warren Buffet. Now, if you look the trade shorter chart shows a pop from 23.78 to 31.00 USD within likely 4 weeks. The short guys who put in bad trades are freaking and there is ONLY one left. LOL..That guy just won’t stop posting nonsense. He tries to create a negative sentiment in the face logic. So , I have to believe this guy according to his fund losing money and now making this statement is trying to gun for the win. His timeline is probably approaching. I believe he probably made his marker around 2011 or 2012 when things started to go a little mental. Likely had a 4 or 6 year marker. Who knows….but he strikes me as either a SAINT to save all young Canadians OR a TROLL trying to get money from you for crossing his bridge. I rarely see SAINTS who were involved in the stock market 😉

  • Reply
    praveen nadaraju 1 year ago

    Finance Minister Mike de Jong has said he does not believe Vancouver is in a real estate bubble, to which Cohodes said “he’s full of more crap than a Christmas turkey.”

    • Reply
      Frank 1 year ago

      Yes. The trend in interest rates is something to keep an eye on. I think that it has a lot to do with the so called bubble that is being talked about. I looked at some properties in the Toronto area, and it seems to me that the return tracks the mortgage rates. So if the mortgage rates increase, property values will likely decrease, and probably quite fast. Some Sellers are reluctant to sell now, because owing Real Estate seems to be good, because there appears to be no better alternative. But when signs indicate that values are dropping, it’s going to be a “landslide”. That’s my opinion.

  • Reply
    Jack McIntyre 1 year ago

    Cohodes will no doubt continue to promote his agenda. As for Industrial R/E– It is bought and sold based on ROCE. (Return on Capital Employed). Unless a purchaser will get 7% to 9% on a triple net lease they will not be ready to buy. Yes, there might be a few speculators with little commercial knowledge but as far as the big money that enters this market, it is governed by the return on investment.
    The real culprit are the central banks offering cheap money. When that is corrected you won’t need to worry about only Vanc. and TO. –

    Vancouver proper does have land constraints. The mountains,water and the USA border. There is no virgin land left in Vanc., they can only go up. What does that do to land values? One can still purchase a 2 bed, 2 bath apartment only a 35 min. drive to Vanc.. Anyone entering the RE market should look to the burbs.

    The market could be over heated but I am not smart enough to say when it corrects. Who is?

    Perhaps a macro view of all this could be taken. The US$ will one day be re valued due to their massive debt. One day like countries in Europe (before the euro) a cup of coffee cost 1,000 pesos or whatever currency was effected.

    The USA will one day be faced with a huge devaluation of their currency, then a home won’t seem so expensive. Wages and the cost of goods will adjust.

    Is the gold price telegraphing something?? None of us know when but it will happen.

  • Reply
    Jack McIntyre 1 year ago

    To be more precise which makes Vancouver proper even smaller the bounderies are, to north Burrard Inlet (ocean) , to the west the U.B.C. endowment lands , to the south the Fraser River and to the east Burnaby. No virgin land left.

    That apartment 30 minutes from Vancouver BTW just sold for $379,000., pool, work out room, nice view and 3 blocks from shopping. 2 beds, 2 baths and about 900 SF.
    Starter homes are not located in Vancouver proper.
    I went to the burbs when I was young and worked my way up.

    HGC may have some rot in it but I believe the chartered banks in Canada are not full of bad loans.

    I recently heard of a buyer for a $3 Mil home with $1 mil down being rejected for a $2 Mil mortgage at a Cad bank.

    • Reply
      Tiffany Greene 1 year ago

      The big banks also adjusted their portfolios, with most purchasing additional insurance on their mortgage portfolio last quarter. They aren’t the big 5 because they don’t know how to handle risk.

  • Reply
    Joshua S. 1 year ago

    I agree there are issues with the housing market, but Marc Cohodes is comparing the GTA and Vancouver to Vegas/Pheonix and the California suburbs?

    If the really wants to have a more accurate comparison, it should be against major cities like New York, Chicago, and the Tri-cities.

    The GTA has a very diverse economy and an influx of generational demand from baby boomers. Add international demand and 30k realtors pushing the buy agenda and it’s tough to ‘burst’ the bubble unless a catastrophic employment/loan affordability issue arise.
    Income to loan ratio is good, but a better measure should be Income to Loan Payment ratio. Loans where smaller in 1992 but our interest rates where double digits.. so a more insightful comparison should be made.

    I do believe our markets are a little inflated, but we need to note that Vancouver is now a globally prefered destination. We have a country of 1.6 billion and even with a 10% of upper middle class (160M), that’s a huge demand for one of the most desirable places to live from a global perspective. That’s more than 5x the entire Canadian population. The numbers are not in our favour.

    • Reply
      Jack McIntyre 1 year ago

      “The GTA has a very diverse economy and an influx of generational demand from baby boomers”

      Well said. There is $67 Bil of property owned by those 75 years and older in greater Vanc.. All that will fall to those younger over the next coming years.

      The number is $160 Bil for those aged 60 and over.

      Couple that with 40,000 new people coming to B.C. each year and it will create ongoing create demand.
      having said that a market correction of some type would be good to see.

      I have never tried to call tops or bottoms and always stayed in the market even tough I have built my own home.

  • Reply
    Jason 1 year ago

    So should i short manhatten real estate? Its still 3-4x more expensive than toronto and he isn’t predicting a crash there.

    • Reply
      Tiffany Greene 1 year ago

      Manhattan real estate is down almost 9% down from it’s 2008 peak when inflation adjusted, with 6 times the population.

  • Reply
    Jon 1 year ago

    Not so fast on the REIT shorts. TSX listed REITs and REIT ETFs are monthly pay securities that have yields ranging from 3.75% to 10%. In addition unlimited potential losses from capital gains, the short seller is also short the “distribution” and must pay it to the broker. Let’s take Canadian Apartment Properties REIT or CAP REIT as an example. Last traded at $33.24 on the TSX, you would be responsible to pay the $1.25 annual distribution ($0.10417 per month) whether or not the stock gained, lost or went sideways. You’d be betting against a company that currently owns 48,000 apartment suites – up from 2,900 units in 1997 – and maintains a fortress balance sheet. If the housing market went bust USA style then lots of people would become renters, providing additional long-term support to the REIT. Good luck shorting CAP REIT.

  • Reply
    Jack McIntyre 1 year ago

    Put Vancouver and Manhattan on a more even footing.
    Great Vancouver grows by 40,000 people a year but Manhattan has 6 times the population.

    Imagine Manhattan growing at 6 x 40,000 = 240,000 people a year.
    What might happen to RE prices?

    Vancouver needs local governments that don’t take 2 years to permit new construction.

    Plus a $43K permit for one free standing home.

  • Reply
    George 1 year ago

    People ! …. Vancouver is a bunch of sell outs and have sold out to the highest bidder and that is China ! 10,000 empty homes ? No one is putting money back into the community or creating jobs ? Not to be racist,but I Don’t read Chinese so stop shoving it down our throats just for the all mighty dollar bill $

    Shame on you Vancouver

  • Reply
    Jack McIntyre 1 year ago

    “Industry experts estimate that most of the real estate speculation taking place in the region is being done by local investors,”

    Let’s not speculate and use conspiracy theories to arrive at an answer.

    The B.C. Gov’t did a small survey in June /16 and found that only 3% were Chinese buyers.

    Now more data is being collected on who is purchasing homes/condos in the metropolitan areas of BC. .
    They are now also going to embark on an objective study to determine which homes are empty.

    That will of course exclude snowbirds and home about to be demolished for new construction. (I only mention the latter as I saw an article presenting a home as empty and owned by Chinese.) It was empty, but shortly after the picture was taken it was demolished and town homes built.)

    I hope that a non emotional, logical and objective approach is taken. So much media hype.

    Employ a new “empty dwelling” tax but after they know the real facts.

  • Reply
    NSland 1 year ago

    “Short the Canadian banks and secondary lenders like HCG and MCAN. Most REITS are commercial real estate they are not as exposed to the residential housing bubble. Also short the Canadian ETFs like the XIU. The Chinese money laundering is now TOO BIG TO FAIL in Canada.”

    Definitely single family homes are far more volatile, but they are also going to be propped up to the last dollar by governments terrified of the middle class suburban swing voter. They will bankrupt the upper lower class that can’t buy a home, they will bankrupt the lower upper class that pays most of the taxes in professional jobs at high marginal rates, they will leave all the loopholes in place for the upper middle (business owning) and upper upper (insider trading, politically connected) class who don’t care because to them taxes are something their accountant deals with in the Caymans.

    The lower lower class will lose vital life preserving services as money pours down the drain of sustaining a housing bubble, just as they did as Harper poured money down the drain of sustaining a speculative fossil bubble, doing great long term harm to nature and the economy itself – we are far more dependent on fossil fuel revenue and infrastructure than we needed to be. You know in Norway half of all cars sold are electric, right?

    The collapse of the C$ with the collapse of the fictional “stranded asset, no value” Tar Sands bubble has *ALREADY SILENTLY DEVALUED* C$ real estate by >20%. Measured in Chinese currency or even in globally neutral new Special Drawing Units including the Chinese currency, you will notice that there is no longer a rising trend… anyone who isn’t talking about that particular curve is incompetent to do any kind of financial analysis at all.

    The question is what *not* to short. Not all neighbourhoods in Vancouver are dependent on grow-ops (due to die when cannabis goes legal) or drug money laundering (again, not so necessary once cannabis goes legal) or on speculation by Chinese and wealthy mobsters from offshore (who tend to buy in Toronto’s Bridal Path, as the Chinese money concentrates in Van – you should see some of the security configurations in place in Toronto…!).

    Any fundamental view of housing is going to consider also factors like the age of the home, it’s adaptability to modern heating/cooling methods like geothermal, it’s orientation to the sun, mold vulnerabilities (grow ops cough), moisture vulnerabilities (good for grow-ops, bad for your lungs), whether it’s on wired broadband or lousy “fixed wireless” or cell systems, whether it’s on mass transit (and the commute time required regardless of how), whether it has walkable routes to shopping and services, and so on.

    MURBs are good investments because they were generally built where the services exist, rather than being built out further to wait for services. They remain good investments because the people renting won’t buy any home any time soon.

  • Reply
    Dom Mill 1 year ago

    Ok, just to provide the author with some credibility, correct this. I quote the article: ”He might have a point, housing prices in the GTA over the past 30 years are up 188% and income has only risen around 1%.”

    Really, income has risen 1% over 30 years? Can’t be.
    1% yearly maybe but not 1 percent over 30 years!

    Source that stat if I am wrong.

    Maybe I am missing something here!?

  • Reply
    Simon 1 year ago

    You do know that a $1.5 Billion dollar hedge fund is tiny. It is an outright lie to call this one of the largest hedge funds in the world. To even be included in the top 100 you must have $10 Billion AUM. There are probably 5,000 hedge funds across the globe with $1.5 Billion AUM.

    For that reason I would take this article with a grain of salt or at least be aware of this information.

  • Reply
    Glynis Van Steen 1 year ago

    . In my opinion, the article reflects a lot of doom and gloom hype that the media seems to encourage.

    I think that Marc Cohodes’ comments reflect a lack of understanding of the Canadian mortgage industry. The mortgage lending industry here in Canada is highly regulated, both at the federal and at the provincial level. FSCO (financial services commission of Ontario) guidelines are very tight and are ever increasingly so for mortgage agents, brokers, underwriters and risk managers in order to provide checks and balances to mitigate the chance of the real estate sector imploding. Every province has a similar regulatory body.

    FSCO has been monitoring the situation at HCG for quite some time. And so has Home Trust, the ultimate parent of HCG. Home Trust has been conducting an extensive audit of these questionable mortgage files and has found no spike in defaults in these files. Most of the files involved had to do with committing “fraud for shelter”. This is the term in the industry pertaining to prospective borrowers who, for example, falsify their income, or down payments to meet the underwriting guidelines to qualify for a mortgage.

    Cohodes is quoted as saying that “FSCO, who regulates the brokers, hasn’t punished the brokers” All the mortgage agents that were involved have been culled (i.e. fired). We are talking about 45 people vs the 10,000+ mortgage agents and brokers in Ontario. In an attempt to curb this supposedly rampant fraudulent activity, FSCO has further tightened up the regulations pertaining to confirmation of income and confirmation of down payment, making it even more prohibitive to own a home.

    Home Trust has been a very successful company in the alternative mortgage lending space and has been a godsend to self employed individuals. The greatest growth of jobs in Canada has been proven to be in the business for self sector, yet Canadian mortgage regulations are truly punitive for small entrepreneurs.
    Cash flow for start ups generally are up and down, but Home Trust has been very successful in the past by being one of the earliest lenders to show some understanding and compassion for the self employed and their income challenges.

    Alternative private lenders are a necessity, given that the major financial institutions are so risk adverse. If the 5 major banks were the only source of mortgage funds for all prospective borrowers, you would certainly see the hot real estate “bubble” cooled down in a hurry. And with it, a major slowdown in overall economic growth in Canada. And what is the matter with using housing as an economic generator? Our manufacturing sector has really sputtered over the past decade.

    Rising home prices IS a question of supply and demand. Prices are skyrocketing because the GTA and Vancouver are the “promised land” relative to many places in the world. Foreign money and immigrants are pouring into Canada because Canada is perceived as a safe haven. But Canadians also continue to flock to the GTA and Vancouver areas because municipal and provincial governments have not done a very good job at providing incentives to develop outlying areas as attractive transportation/employment hubs, or to open up land for development.

    In my view, Cohodes is implying that the major source of foreign capital pouring into the Canadian housing market is a result of rampant money laundering. There may be some of that but there are now many more very wealthy people and places in the world compared to even 20 years ago. So called developing economies are thriving like never before. In any event, statistics indicate that in Vancouver, only 1 in 10 homes priced over $2M are purchased by foreigners. And there are lots of Canadian homeowners who are still upsizing, using their existing housing equity windfalls to help purchase new acquisitions.

    What are Canadians really mad about? I think a lot of anger and blame for unaffordable housing is misdirected. Even this Wall street legend has pointed out that housing prices in these 2 hotspots in Canada have risen 188% over the past 30 years vs incomes increasing only around 1% over the same period. That is the problem that needs to be addressed. But I don’t think that makes it a national problem or warrants all the media hype it is given.

  • Reply
    The REALLY Big Short: The $13.7 Billion Dollar Bet Against Canadian Banks Over Housing and Insider Sales | Better Dwelling 1 year ago

    […] no secret that smart money has been piling into bets against the Canadian housing market, but now it’s reaching an epic scale. A little digging revealed that more than $13.7 billion in […]

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    Oana 1 year ago

    If you think RE is gonna crush, just buy puts on any bank stock, or on Home Capital, long term or leaps…or a do a bear put spread to minimize your cost. You only lose the amount you pay for the puts. Or buy puts on the bank stocks, and buy calls on REITs, sort of a hedge trade..

  • Reply
    Kerry 12 months ago

    some of you have no idea… I don’t have all the answers either, but consider this –
    Ultra High Networth Asians typically have 6-8 high end houses as investments around the world. Vancouver is not the only target, but the existing climate is ripe for this.
    The $5million spent on a home in Vancouver goes to an owner who buys a $3M home in Richmond, that previous owners buys a $2M home in Surrey, and that former owner buys a $1M home in Abbotsford. One large purchase causes that kind of ripple of 2-4 other transactions involving BC residents. The money does benefit BC. Each sale is taxed of course, but we also have an army of moving personnel, real estate, bankers, mortgage and insurance professionals, and tradespeople earning “trickle down” money from the original purchase. Every transaction taxed with PST, GST, etc.
    What I recommend is anyone who wants to start, don’t overreach with a house. Buy a $250K condo with $50K down . After 5 years, you may have paid down $50k in mortgage, it “may” go up in value to $350, so with your original investment, you have value of $150K and $150K mortgage. Use that $150K to buy a $450k townhouse. In another 5-10 years, you will have $300K down available if you want to upgrade to a house.
    Either: 1. Values go up, therefore you will have even more investment when you sell at each level, or 2. Values go down, in which case it will be easier to attain the next entry level home, or 3. Values stay the same, so your traditional mortgage payments will build your equity. This is a 20 year plan, not an overnight flip.

    Oh, and Vancouver may plateau off, and may have a slight temporary decline, but overall will not “crash”

  • Reply
    The Age of Persuasion 12 months ago

    […] Recently there has been some people who are making it their goal to attack Vancouver’s Real Estate market. Which is odd. Why Vancouver? Why not NYC or London. Have you read about this guy? https://betterdwelling.com/city/toronto/marc-cohodes-short-canadian-real-estate/ […]

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    Canadians Racked Up Twice The Mortgage Debt of Americans | Better Dwelling 12 months ago

    […] is estimated to be only 74% of all outstanding mortgage debt. The number notably excludes loosely regulated private mortgage lenders. An increasingly popular option in big cities, as under qualified borrowers desperately seek […]

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    summer 8 months ago

    i dont recall pheonix las vegas southern californian cities being listed as one of the most desirable cities to live in the world. Van has made the top 5 for a several years in a row.

  • Reply
    1 In 5 Canadian Homeowners Commits Mortgage Fraud, Says Top Broker | Better Dwelling 6 months ago

    […] brokers that fabricate documents to help secure a mortgage. Last year former hedge-fund manager Marc Cohodes told us that Canada was filled with rogue mortgage brokers, especially in the Toronto suburb of […]

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    BROKER: 1 in 5 Canadian homeowners commits mortgage fraud 6 months ago

    […] brokers that fabricate documents to help secure a mortgage. Last year former hedge-fund manager Marc Cohodes told us that Canada was filled with rogue mortgage brokers, especially in the Toronto suburb of […]

  • Reply
    经纪人:五分之一的加拿大房主承诺按揭欺诈 (BROKER: 1 in 5 Canadian homeowners commits mortgage fraud) | Atman资讯 6 months ago

    […] brokers that fabricate documents to help secure a mortgage. Last year former hedge-fund manager Marc Cohodes told us that Canada was filled with rogue mortgage brokers, especially in the Toronto suburb of […]

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    BROKER: 1 in 5 Canadian homeowners commits mortgage fraud | News 6 months ago

    […] brokers that fabricate documents to help secure a mortgage. Last year former hedge-fund manager Marc Cohodes told us that Canada was filled with rogue mortgage brokers, especially in the Toronto suburb of […]

  • Reply
    Chloe 6 months ago

    Plenty of lands to build…. where? Plenty of buildings to buy.. well I’m looking for a townhome to buy… in Coquitlam… and see 5 listings….

    It’s going to crash… that’s what people say in the last 15 years… what makes this year different? Prices are too high… it was way to high before…. at least that’s what everyone said, so what makes this year especially high? prices went up by 10-20% per year since 2002 with the exception of a few years like 2007-2009.

    There are tens if not hundreds of articles predicting the demise of Vancouver’s market….. it’s like throwing candies to the wall to see which ones stick. Sure it may correct/crash/fall, whatever you call it, but it doesn’t mean these people are correct when they say I told you so….they have been predicting the wrong thing in the last 15 years….

    and even if they crash, who has the money and/or job to buy these houses at bargain prices? It will only benefit Big banks, the rich, politicians, CEOs, etc…..houses will be possessed by banks, governments, etc if a crash happens…. none of it will be owned by you or me… the general population will suffer.

    If the article is true, brace yourself….. don’t worry, you won’t be able to buy a house… even if you have down payment, banks won’t lend you money.

  • Reply
    From Toronto to Dublin… Housing is a human right, not a commodity – ESC Rights – Ireland 5 months ago

    […] in Spain during the same period, 300,000 were evicted. Legendary Wall Street short-seller Marc Cohodes has predicted that this is the direction in which Canada is now […]

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    The Bank of Canada Is Full of S**t, Here's How Interest Rates Impact Speculation | Better Dwelling 4 months ago

    […] that’s being called out for entertaining dodgy mortgage practices. People like US short-seller Marc Cohodes have been warning Canadian regulators about this for […]

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    One of Canada’s Largest Mortgage Lenders Just Imploded, Here’s What Happened | Better Dwelling 4 months ago

    […] the company’s subprime operations. Then last year, former hedge-fund manager/noted short-seller Marc Cohodes called out the company for not cracking down hard enough on known fraud. Sometime this year […]

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    One of Canada’s largest mortgage lenders just imploded – MadePress™ 4 months ago

    […] the company’s subprime operations. Then last year, former hedge-fund manager/noted short-seller Marc Cohodes called out the company for not cracking down hard enough on known fraud. Sometime this year […]

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