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  • Canadian Real Estate Bubble Burst ?



    Home sales continue slide in June, could be accelerated by interest rate hikes

    TORONTO - Canada's housing market continued to slide in June in a trend that economists expect will be accelerated by an anticipated interest rate hike by the Bank of Canada next week.

    Seasonally-adjusted home sales fell 8.2 per cent in June from May levels, according to statistics released Thursday by the Canadian Real Estate Association.

    "With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010," Gregory Klump, the Canadian Real Estate Association's chief economist, said in the report.

    Yahoo Finance
    For the record, here is what happened in the US.
    Fed Fund went up, after a while new home sales declined :


    Real Estate ETFs and stock (like SPG) topped the same year then went down. Some new ETFs went down really hard really fast. Shorting the market after a death cross (200 ma vs 50 ma) would have been profitable. Here is a chart of VNQ, Van Guard Real Estate ETF :




    Here's a chart of a canadian etf :
    (no death cross yet, which means that with a collective effort we might all make a good investment)



    Dear Itulip active members, I know you are very smart (that's why you are here) and I am pretty sure most of you plan to short the hell out of the next leg down. Do you think that the Canadian Real Estate Bubble could crash like the American one ? I'd really appreciate it if we could use this thread as a canadian bubble watch We could share hard macro data, anecdotal evidence or trading ideas.

    Eric Jansen covers the US, Steve Keen Australia but I haven't heard of a single bubble watcher in Canada.

  • #2
    Re: Canadian Real Estate Bubble Burst ?

    Canada? Where's Canada?

    Comment


    • #3
      Re: Canadian Real Estate Bubble Burst ?

      Plenty of bubble watchers in Canada. I think Garth Turner is probably one of the more well known ones, but the guy is an idiot.

      If you want to short the Canada RE bubble, I suggest you short "MIC" Genworth, which is a company that has insured a lot of Canadian mortgages.

      Comment


      • #4
        Re: Canadian Real Estate Bubble Burst ?

        Originally posted by blazespinnaker View Post
        Plenty of bubble watchers in Canada. I think Garth Turner is probably one of the more well known ones, but the guy is an idiot.

        If you want to short the Canada RE bubble, I suggest you short "MIC" Genworth, which is a company that has insured a lot of Canadian mortgages.
        Blazespinnaker, this truly seems like a fantastic find. Do you remember all the bogus stocks, etf et al. that were created in 2007 at the height of the bubble ? Paulson and similar guys created them so they could short the hell out of the market, fleecing blind investors. It looks MIC.TO is one of these stocks. I don't have access (yet) to the Toronto Stock Exchange so I can not short it but this is a very good candidate !

        This is a new stock so now 200 moving average. Entry points might calculated as bearish divergences.

        Here's a chart of the beast :



        Meanwhile, the iShares MSCI Canada Index (EWC) is very near its death cross. I would have gotten sooner in this market but I didn't even think about shorting Canada before this news. Here's a chart :

        Comment


        • #5
          Re: Canadian Real Estate Bubble Burst ?

          Blazespinnaker, this truly seems like a fantastic find. Do you remember all the bogus stocks, etf et al. that were created in 2007 at the height of the bubble ? Paulson and similar guys created them so they could short the hell out of the market, fleecing blind investors. It looks MIC.TO is one of these stocks. I don't have access (yet) to the Toronto Stock Exchange so I can not short it but this is a very good candidate !
          I'm glad you think so. I'm up 20% already on my shorts. I'm having a hard time finding converts, though. Or maybe I am, but they're all keeping quiet until they establish their position.

          Interestingly enough, MIC has just announced a repurchase plan. Clearly they don't think the 'bubble' is about to burst .. unless they are somehow trying to buy shares so someone else can sell them off.

          Comment


          • #6
            Re: Canadian Real Estate Bubble Burst ?

            Originally posted by blazespinnaker View Post
            I'm glad you think so. I'm up 20% already on my shorts. I'm having a hard time finding converts, though. Or maybe I am, but they're all keeping quiet until they establish their position.

            Interestingly enough, MIC has just announced a repurchase plan. Clearly they don't think the 'bubble' is about to burst .. unless they are somehow trying to buy shares so someone else can sell them off.
            That only means that you got in at a sweet price and before any big move that would reveal what's really going on to the majority of investors. Did you make this call on a technical basis or were you thinking about bubble bursting ?

            Repurchase plans are for pump-and-dump stocks. That's a very good news and means we'll have another opportunity to make free money. For example in 2008 :
            NEW YORK, Jan. 29 /PRNewswire-FirstCall/ -- Lehman Brothers Holdings Inc. said today that it has increased the Company's annual common stock dividend by 13 percent, from $0.60 per share to $0.68 per share. The dividend for the first quarter of the 2008 fiscal year is $0.17 per share, payable February 22, 2008, to shareholders of record as of February 15, 2008.

            Lehman Brothers also announced today the continuation of its common stock repurchase program.
            We all know how that ended

            I don't want to indiscreet but you say that you are already up 20% on your shorts. Which would mean that you got in around 29-30 Or are you using leverage ?

            Comment


            • #7
              Re: Canadian Real Estate Bubble Burst ?

              Did you make this call on a technical basis or were you thinking about bubble bursting ?
              Actually, it's a hedge. I own a house and I want to make sure if house prices crash I get some upside.

              No leverage, no.

              I got in at 28 .. sorry, I haven't been checking it daily. I missed the 5% jump today. That must have been the repurchase..

              I closed a bunch of shorts at 23 as well, though, so this jump is an opportunity.
              Last edited by blazespinnaker; 07-17-10, 03:46 AM.

              Comment


              • #8
                Re: Canadian Real Estate Bubble Burst ?

                Meanwhile, in the country of weird accents :
                Condo sales in Toronto drop for first time in 16 years
                New condo sales in Toronto decreased for the first time in 16 years in the second quarter, as the market cooled along with the broader housing market.

                Sales of new condos have posted quarter-over-quarter sales gains since 1994, said Urbanation Inc, an information gathering company that tracks sales in the Toronto area. There were 4,991 sales in the second quarter, an eight per cent decline from the first quarter’s 5,415.

                The Globe and Mail

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                • #9
                  Re: Canadian Real Estate Bubble Burst ?

                  "With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010," Gregory Klump, the Canadian Real Estate Association's chief economist, said in the report.

                  Where did they get this guy?

                  Comment


                  • #10
                    Re: Canadian Real Estate Bubble Burst ?

                    Originally posted by cjppjc View Post
                    "With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010," Gregory Klump, the Canadian Real Estate Association's chief economist, said in the report.

                    Where did they get this guy?

                    They cloned David Lereah, mixed that DNA with Baghdad Bob and Don Cherry, and voila - Klump (sounds like a noise that would come out of a backed up septic tank, no - actually, more like the zombies in the original quake, when you hit them with the grenade.)

                    Comment

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