The Vancouver housing market has been over performing for the past two years to what looks like a bubble. Foreign investment, over-bidding and slack mortgage lending criteria are all contributors to the 40% gains in June alone.
Well, one man wants to do you a favour, short-selling guru and ex-hedge fund manager Marc Cohodes has done the media circuit trying to warn Vancouverites of the impending real estate collapse that could happen at anytime. Mr. Cohodes says that real estate values could drop anywhere from 30% to 80%, completely wiping out a generation of savings and family wealth.
Why should one believe in such rhetoric? Mr. Cohodes is an expert at identifying bubbles, during his 23 year stretch as a professional in the markets, he battled with blue chip stocks while managing a $1.5 Billion hedge fund before retiring in 2008.
Mr. Cohodes has determined that the foreign investment flowing into the Vancouver real estate market is coming from illegally obtained and laundered funds from China. China has its own capital controls and only allows its citizens to send $50,000 out of the country. The Chinese government is not pleased about this and clearly efforts are being made to crack down on individuals engaged in the act.
Cohodes’ says Canadians should get angry about this before it looks like the 2008 US sub-prime lending disaster which crushed global markets and sent stocks into a downward tail spin. One suggestion is to add transparency to real estate dealings by opening all housing records and make them publicly available so people can be held responsible for fraudulent or misleading deals.
Mr. Cohodes enjoys living on a farm in Sonoma County, Calif., with his wife and 28-year-old son, who has cerebral palsy. He raises 500 chickens, selling the eggs for $13 (U.S.) a dozen in San Francisco.
Marc Cohodes can be reached by twitter https://twitter.com/AlderLaneeggs
Photo courtesy of Marc Cohodes