Large Wall Street investors who made billions when the U.S. housing market collapsed in 2008 are now betting real estate values in Vancouver and other Canadian cities will crash, financial insiders say. Hedge fund investors, also called short sellers, believe that mortgage debt in Canada has reached unsustainable levels, and banks, mortgage financiers and private lenders are going to lose money because of unpaid debts when prices fall in the property market. Low interest rates, speculation and even money laundering are to blame for this state of affairs, and houses are now being traded like penny stocks.
Finance experts believe that real estate in Vancouver is now at peak insanity and several factors could spark a collapse. The Local realtors predicted that US investors could lose their money betting against property in Vancouver, describing it as a unique market thriving because of international demand. Major investors are now positioning themselves to profit against targets in the Canadian housing sector, and this fall, they are forecasting financial stress in the country being brought about by historically low US interest rates. All this is happening against a backdrop of rocketing housing markets.
Complex financial arrangements are used by short sellers to make quick profits when the value of stocks plummets in value. In this scenario, they’re betting against the businesses that are linked with property, real estate, and even against the Canadian Dollar, which will depreciate when the housing bubble bursts. The majority of short traders work for secretive investment funds that don’t want any publicity. Short-selling bets against large banks in Canada have now doubled in New York markets over the previous months. High household debts in Canadian households are likely to lead to a steep housing correction, and short sellers are looking to pounce. However, if Mainland China was to invest massively in Canada’s housing market, it is going to be impervious to a steep housing correction.