Wall Street players bet Vancouver’s housing bubble is about to burst

VANCOUVER (NEWS 1130) – We’ve heard the warnings for years — the housing bubble is about to burst in Vancouver. Well, some of Wall Street’s biggest investors are betting it is about to happen and are looking at the potential profits they could make if it does.

Short-sellers are looking at how much debt Canadians are holding and some are predicting a real estate crash could start as early as this fall if the US raises historically low interest rates and there is a financial spillover into this country.

Hedge fund investors who made billions of dollars in 2008 when the American housing market collapsed have been watching for a similar scenario to play out north of the border for years, but there are reports major investors are now actively “building positions” against Canadian housing targets.

“Vancouver’s market is something unto itself,” says Marc Cohodes, once considered one of the highest-profile short sellers on Wall Street.

Cohodes is out of the hedge fund business now, but spoke to NEWS 1130 from his home in Sonoma County, outside San Francisco.

“The problem is housing is no longer housing. Instead of being a shelter, homes have become more of a speculative game, akin to penny stocks, where value has lost all sense from price,” he says.

“When a place to live becomes extraordinarily speculative, where people invest rather than own to live to the degree we’ve seen in Vancouver, some people should be extraordinarily concerned.”

While some real estate professionals in Metro Vancouver believe the local housing market will be protected from any price correction by overseas investment, Cohodes thinks it is only adding to the problem.

“Frankly, it’s worse. In the brokerage business, there’s a saying: ‘You have to know your customer.’ I think with some of the prices and transactions going on in Vancouver, in my opinion there are things going on that should make someone scratch their head up there in a very big way. Whether it’s laundering money from China into Vancouver or other places, I don’t know exactly, but it’s not normal.”

No matter what happens, Cohodes says it is the ordinary home buyer who will feel the pinch the most, with people who make good incomes  being pushed out  of the market while some homes sit empty.

“People are getting pissed off. This concept of buying a place to park overseas money in Vancouver, to me, is a very, very dangerous concept and construct.”

Top Stories

Top Stories

Most Watched Today