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Profit from potential home price drop in Canada, especially Vancouver and Toronto
- Thread starter M.W.
- Start date
There will be zero to miniscule nominal decline in housing prices in Canada. If housing corrects, depression follows.
You mean like the Depression we had in the 1990s coming out of the last decline in housing prices ? Might as well dress up the bs theories full hog make it seem really dramatic. Don't let reality get in the way.
That's probably as close as it gets, lumber futures and other building materials. But the building boom will most likely continue in Canada, high or low property prices. Canada is horribly equipped to immigrate multiple dozen millions of newcomers in the next decades. I am now researching poorly equipped mortgage lenders that hold loans on their books instead of selling them off. Not much information on public domain in Canada. Also as mentioned, lots of builders are private or so small that their listed shares fly all over the map and who are easy takeover targets when shit hits the Fan.
In the US before public builders listed and often got bundled into ETFS the housing hedge was lumber futures.
I only know here in Toronto condo prices more than doubled in average price in the past decade due to a surge of immigrants. Mostly students that come from rich families in China.Canada is horribly equipped to immigrate multiple dozen millions of newcomers in the next decades.
Chinatown use to be only canto-speakers now it's just "China" in the Town.
(From my own observation.)
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I only know here in Toronto condo prices more than doubled in average price in the past decade due to a surge of immigrants. Mostly students that come from rich families in China.
Chinatown use to be only canto-speakers now it's just "China" in the Town.
(From my own observation.)
You'd be mistaken. Might as well pile in some more bs it's apparently what traders here do. The vast majority of home owners in Toronto are long term Canadian residents. Many baby boomers owned since the 1980s and 1990s. The "students that come from rich families in China" wouldn't even register basically a rounding error type number.
I have been thinking of how to profit from a correction of residential home prices in Canada, especially in Vancouver and Toronto.
It does not seem as straightforward as initially thought. A number properties have seen their asking prices slashed by sometimes over 10% in the most recent weeks but that's just sellers trying to cash in on the exorbitant housing price bubble. It's just unrealized profits that are adjusted downwards and does not yet affect the economy.
Builders seem to be insulated from a potential 20% or higher correction because they are building at record pace and municipalities and provincial governments continue to encourage home construction to ease the supply crunch.
I also don't see much pressure for mortgage lenders other than a soft landing due to rising interest rates. I can't spot much of a reason for a hard landing in lending as subprime mortgages don't really exist USA style. Lending requirements are a lot more stringent here. Also most home loans are securitized and sold off rather than kept on the books.
This gets me wondering what other companies/stocks might be in for a downward correction should home prices adjust to the downside at some point. We can talk about fair value all day and I am the first one to believe fair value lies at least 50% below current valuation but that does not mean companies are equally affected.
I checked home builders and many in Canada are private non listed companies. The few large ones that are listed have fairly low valuations in the single digit billion dollar range and drop off very quickly.
Then stock options on the Montreal exchange are rather illiquid and I am not sure it makes sense to even consider puts for a controlled and longer lasting move to the downside, I would pay away too much in eroding time value and don't see large vol spikes in this regard. Shorting Reit ETFs come with their own complications such as large borrow rates or the ETFs otherwise limiting inflow or the risk of winding down.
What do you guys think might be suitable instruments or companies that are very sensitive to a Canadian house price correction especially in the local Vancouver and Toronto markets? If city governments were traded they would probably be my prime short candidates, especially ultra liberal Vancouver that will feel hard pressed to finance their blown up spending programs once they have to adjust downward property valuations. Actually a lot of municipalities are against tightening laws and regulations to limit housing speculation such as proposals in Ontario. Municipalities fear they can't sustain their spending when they adjust down property valuations. But how can one take positions on such view?
How can you make it as a trader if you think a "supply crunch" can exist but fair market value is 50%++ lower. Such a stupid idea.
I'll post what I posted in 2010 and 2011. Toronto's housing market is going to remain strong until at least year 2050. This is not some wild guess it's based on what truly matters to a real estate market. The posters back then were equally sure some massive correction was coming shortly. Yes, there are new laws to limit housing speculation. They only affect a portion of the 3.4% of foreign ownership in Toronto. Yes, 3.4%. And building is accelerating to the point that it's ... oh, still nowhere near meeting new demand never mind putting a dent in the legacy situation.
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There will be zero to miniscule nominal decline in housing prices in Canada. If housing corrects, depression follows.
Canada's economy doesn't rely on real estate values. Housing corrected around 1990 and what followed a few years later was an economic boom. We went from a nation with debt issues to one running a surplus for a few years. What is it about traders and their doomsday theories are you really so caught up in your book you can't see reality ?
You'd be mistaken. Might as well pile in some more bs it's apparently what traders here do.
The rise in condo prices were around the same time when chinese immigration exploded in Canada.
But I have no interest to argue over something that isn't statistically proven.
Like I said, it was just an observation/theory of mine. (Out of the blue.)
Fair market value is 50%++ lower? If you can articulate your argument in clear terms then we might be able to understand what you are trying to say. Fair market value of most homes in Canada are easily a 30%, most often 50% lower than currently assessed value. There is a difference between market prices and fair market values. Every econ student learns that in the second class.
If you truly believe the current market prices are not blown out of all proportions then you must be yourself living in some sort of helium bubble. If you take a look at some of the homes in Vancouver that are currently priced at 2 million but otherwise are falling apart at their seams and still believe they are fairly valued then that's on you. Most every economist would strongly disagree with you. When a median income cannot even afford to pay the property tax on a median priced home in Vancouver then there is something seriously wrong with this market.
I get you see Canada's property assets and stocks all fairly valued and believe they go even further to the moon. Not sure what you base those beliefs on but again most every professional in this space strongly disagrees with you. Interestingly you can't name a single plausible argument that would support your bizarre views
If you truly believe the current market prices are not blown out of all proportions then you must be yourself living in some sort of helium bubble. If you take a look at some of the homes in Vancouver that are currently priced at 2 million but otherwise are falling apart at their seams and still believe they are fairly valued then that's on you. Most every economist would strongly disagree with you. When a median income cannot even afford to pay the property tax on a median priced home in Vancouver then there is something seriously wrong with this market.
I get you see Canada's property assets and stocks all fairly valued and believe they go even further to the moon. Not sure what you base those beliefs on but again most every professional in this space strongly disagrees with you. Interestingly you can't name a single plausible argument that would support your bizarre views
How can you make it as a trader if you think a "supply crunch" can exist but fair market value is 50%++ lower. Such a stupid idea.
I'll post what I posted in 2010 and 2011. Toronto's housing market is going to remain strong until at least year 2050. This is not some wild guess it's based on what truly matters to a real estate market. The posters back then were equally sure some massive correction was coming shortly. Yes, there are new laws to limit housing speculation. They only affect a portion of the 3.4% of foreign ownership in Toronto. Yes, 3.4%. And building is accelerating to the point that it's ... oh, still nowhere near meeting new demand never mind putting a dent in the legacy situation.
The details of some of your ideas get even sillier throughout this thread.
Should I name you the percent of GDP in Canada that is made up of activity in the property market and resource extraction? Do you actually know anything about your own country or you just talk for the sake of disagreeing with others?
Another hard cold statistic for you to enjoy is the fact that the growth in government debt, corporate debt, and household debt in Canada is the absolute highest in the entire developed world. Absolute debt levels per capita are equally highly worry some. Are you seriously arguing that Canada's economy is not built on a huge debt pile that can at some point collapse like dominos?
Another hard cold statistic for you to enjoy is the fact that the growth in government debt, corporate debt, and household debt in Canada is the absolute highest in the entire developed world. Absolute debt levels per capita are equally highly worry some. Are you seriously arguing that Canada's economy is not built on a huge debt pile that can at some point collapse like dominos?
Canada's economy doesn't rely on real estate values. Housing corrected around 1990 and what followed a few years later was an economic boom. We went from a nation with debt issues to one running a surplus for a few years. What is it about traders and their doomsday theories are you really so caught up in your book you can't see reality ?