Certainly it looks like a bubble, and here’s someone betting on it bursting.
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.
Why drag out this turd of a puff piece from 2001?
Cohodes is now a “retired” chicken farmer – after his turd of a company Copper River imploded. He failed.
He was in bed with Goldman Sachs – a company he now calls a bunch of racketeers. That, at least, is not a turd of information. He is completely irrelevant. Let him stick to pontificating with his undiscerning chickens.
Author
The referenced article was published June 28, 2016
The turd of an article was published by a cleaning company in Toronto – with a link to the puff piece from 2001. Looks like the guy running it wants to cash in on some advertising by running a blog. Rubbish.
Well Arnie perhaps this link meets your approval. Though the story is a year old:
http://www.google.ca/url?sa=t&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwje1IKu2drNAhVY6WMKHXjJA5gQFggaMAA&url=http%3A%2F%2Fm.theglobeandmail.com%2Freal-estate%2Fthe-market%2Fcalifornian-short-seller-targets-home-capital-group-canadian-real-estate%2Farticle25715455%2F%3Fservice%3Dmobile&usg=AFQjCNGrSwb36aQBO2OB-P53RCZFT5BzYQ&sig2=gRkYqdPJKx63Pv8v7qNvNw
I’ve already seen the article, thanks. He’s shorting one dubious company – so what.
Unclear why people think there is a bubble in Vancouver.
We have TEN factors converging, resulting in high demand and thus, high prices!
1) Interest rates are low low LOW .. and they will not go anywhere. They might head lower, like in Europe. A Canada 5 year bond is 0.6%, and a 10 year bond is a whooping 1.1%. Prime rate is at 0.5%.
2) Baby boomers working longer, living longer and not moving in very large numbers to areas outside of MetroVan. Yes some folks move to the Okanagon, Sunshine Coast or Vancouver Island but it is not a very large percentage.
3) Baby boomers kids – the Gen Y folks now in their late 20’s and early 30’s – want to buy, and with mom’s and dad’s bank are flush with downpayment cash
4) Supply is non-existent except condos and far away tiny homes or townhouses. Almost no single family houses (SFHs) are developed anywhere in the MetroVan area. A few hundred maybe. Condos remain affordable further out: Surrey, New West, Abbotsford, Langley and appeal to some but not to folks that wish to stay near the water.
5) No more land is created due to pressure by radical environmentalists, green movement, sheer laziness and a political class unwilling to make a bold move to create more land, say in Boundary Bay, off Delta in the Fraser River delta, off UBC even or up the mountains, say Indian Arm.
6) Property gains are untaxed if it is a personal residence, unlike any other investment that is taxed at at least capital gains rates (around 22-25% tax) or as investment income (close to 50% tax)
7) No inheritance tax in Canada, allowing cash to be gifted down the line
8) 1% or so immigration into Canada, many with cash, and the first thing folks want to acquire is a home. A higher concentration if immigrants arrive in MetroVan than say, Saskatoon or Yukon where housing is cheaper but climate is not as desirable.
9) foreign money is arriving in record numbers from unstable regions of the world with autocratic governments, corruption or mere undesirability.
10) even new condo supply is getting more expensive due to more and more rules, levies or surcharges heaped onto developers. Add land scarcity and condo prices will continue to climb, albeit not as much as SFH.
Yes, we may get a speculation tax to take away some element of popular gambling with housing, and yes we may get a surcharge tax on foreigners, but that still leaves 9 reasons why demand is high and prices will not drop.
Don’t want to bother with all of this, but your let’s create land out of the ocean grows weary.
Check out the urban containment boundary in S. Surrey alone and how much of it remains pastoral acreages and tell me we still have a shortage of greenfield development land. Hundreds of new houses are being built or are under application in Surrey alone with hundreds of acres of land still to pave to your heart’s content. Plans for West Clayton, Anniedale-Tynehead, Abbey Ridge, Redwood Heights and more are all still to be built out and all call for swaths of single family housing. Then there’s all the unplanned acreages I mentioned above. And that’s just Surrey.
yeah, as I said a few hundred a year. Which is small compared to the 50,000+ people arriving here annually. Not everyone loves condo living, especially if you have more than 2 folks living there. Hence: SFH prices will remain skyhigh.
There are perhaps 75-100 km2 of land locked up in the generous open spaces of single-family lots with detached homes. You don’t have to look any further than that for the next half century to achieve moderate and comfortable densities.
Beyond that, increasing density further using transit in full partnership could lead to 10,000+ people per km2 on the existing land base. That is the lower end of perfectly reasonable Chelsea-Kensington densities chock full of two and three-storey terraced houses, and low & mid-rise buildings. That discussion needs to happen now.
If you allowed Manhattan or Hong Kong densities, then the Burrard peninsula and the Surrey and Coquitlam rises could accommodate 10+ million additional people. We’re 100 years away from having that discussion.
The only excuse for considering filling in the ocean and gobbling up our food-producing land for further development is to continue building auto-dependent and unsustainable single family subdivisions and malls based on discredited, outdated and inhuman 1950s planning principles.
Book titled: The Most Dangerous Trade – Chapter 10 – Cohodes: Force of Nature, Market Casualty.
Some of Marc Cohodes quotes:
“I’ll never be in the business again. Underline never”.
“I’ve never met an honest Indian CFO or CEO.”
“I think the securities lending market is just like the mob. I think it’s completely rigged. It’s a completely manipulated black-hole, non transparent market.”
“I think Goldman Sachs is like the mob. I think Goldman Sachs is a racketeering entity that does whatever they can do to make a dime without conscience, thought, foresight or care about ramifications.”
The irony is that he played with these bad boys for years – like birds of a feather. It’s like sparring with an Ultimate Fighter and then realizing you’re facing them in the Octagon.
Their are characters in this chapter like O’Brian, the Easter Bunny, and Lord Sith – reputedly the notorious Michael Milken. Stunning to think that these monstrous egos are playing with billions of dollars. Remember how Leeson brought down Barings Bank.
My takeaway from this read is that I kind of liked the guy – larger than life at 260 lbs; driving a V10 Viper pickup; raising chickens. And I have respect for his financial mind in the arena in which he played.
Is he right about the one mortgage lender he’s shorting? Probably. Does he know more about the SFD market in Vancouver than some of us posting here? No.
Do I trust him? No way.
Typo: there, not their.
More about short sellers in the book – a misfit breed of investor – an assortment of loners, firebrands, cynics, liars, and losers.
Matt Taibibi on the Goldman Sachs Group: a blood-sucking “vampire squid”
Rising home prices + stagnant wages = crisis.