It’s been a year of hot debate over Vancouver real estate, as prices continue to soar.
Who’s to blame, what government should do, and how locals can afford to stay have all been sharply contested.
But while most of the attention has been focused growing prices, some have begun to warn that the party is over.
SEE: Heat map of Vancouver real estate prices
A recent Postmedia report suggests U.S. short sellers, who make money off of slumping markets, are now making big bets against the Vancouver Market anticipating the bubble will burst.
Marc Cohodes, once called Wall Street’s highest profile short seller, says those bets aren’t being made out of ignorance.
“Vancouver is sort of a casino unto itself. In a Casino people get lured in to putting not a lot of money down to make a lot of money. And with all the stories of ‘this house is worth this’ and ‘that house is worth that and goes up,’ defies logic, and on and on and on. People feel if they don’t play, they’ll miss out.”
Cohodes says he’s seen plenty of warning signs, among them weakness in China and Hong Kong, a slumping Canadian dollar and oil prices, and red flags at the CMHC coupled with new rules on down payments.
He says that’s set things up for a correction in the 30-50% range.
“The prices are so beyond a level that the average working class person can afford the decline will be severe, it will be swift, it will be without warning notice.”
And for the fist time buyer? He says be wary of the the ‘buy now or miss out’ mentality.
“At the end of the day housing is shelter. If you want to speculate, speculate on stocks or oil or gold or what have you. Bet on the B.C. Lions. Don’t speculate on housing because it tends to happen with borrowed money, and if you lose you’ll probably bankrupt yourself.”