In a recent interview with VICE
, Marc Cohodes revealed that he’s betting against the Canadian real estate segment amid the seemingly unstoppable growth of home prices over the past few years.
Cohodes advised young people, who are already facing the prospects of a financially tight future considering the ever-rising costs of living, to seriously consider renting instead of going for the “buy now, sell later” strategy to safeguard their prospects in the event of a crash.
“Because when things blow, you're going to want to have cash to come in and buy. And you will have an opportunity. Because when things go, they're not going to go by a little bit. They're going to go by a lot a bit,” Cohodes said.
“When things blow, [the] money launderers are going to have to sell, but there'll be no bids in the market, because affordability in these places is still out of control. When things get cheap enough, banks won't be in a lending mood unless it's sort of a steal,” he explained. “That's when your millennials, your 28-year-olds, your 30-year-olds will be in a position to buy.”
Cohodes maintained that Toronto, in particular, is standing over thin ice, even when compared to its fellow red-hot market Vancouver.
“The only Canadian stock that I'm short [selling] that affects housing is something called Home Capital Group, which trades in Toronto under the symbol HCG. In Vancouver there's nothing to short,” he stated. “It can last. It can blow. There's no real way to predict when it will happen.”
Industry players should keep a sharp lookout on any steps that Chinese authorities might take, the billion-dollar hedge fund manager warned, as any drastic action on the mainland’s end would pretty much lead to the bubble popping.
“[When] a college girl buys a $31 million place in Vancouver—who has no income, who can't answer questions about what her father does for a living, who can't answer questions about where she gets the money—you know the Chinese don't want this going on. They're pissed about capital flight into YVR. Toronto as well. At any point in time, the Chinese can crack down on people, on Canada—they can do whatever behind the scenes to make it end abruptly,” Cohodes said.
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Poloz Warns Potential Homebuyers on Toronto, Vancouver Risks
Renting is the most viable option for young adults and new families looking to put roots in Canada’s most overheated and volatile housing markets, according to a renowned Wall Street short seller.