I was in Toronto most of last week. My wife’s aunts and uncle live there. The suburb they’re in gave me flashbacks to the housing bubble of SoCal. Anything for sale right now is going for higher than asking. They don’t even bother going through the whole offer/counter-offer process on a lot of places. They just open up for “bidding” on a single day, and the sellers take the highest offer.
New subdivisions going up on farmland have hours-long lines of cars to buy up all the lots before they have even broken ground. And the communities are designed like shit. No forethought to any commercial space within a reasonable distance to go buy groceries, take your clothes to the cleaner, get a haircut, stop at the bank. Just block after block of houses. And the detached houses are so close together that most of them have one whole side of the house with no windows. You may as well be living in a townhouse or condo.
The attached townhomes start at $400k and prices go up to about $1-1.5 mil for the McMansions that face a park or golf course. Your typical single-family mid-block, away from busy street, 3-4 bedroom, 2-3 car garage will run in the $800’s.
The only thing that will prevent Canada’s inevitable housing crash from being as bad as the U.S.’s is that they don’t do 30-year fixed rates. (I’m shocked that any bank in the U.S. still does this.) But in Canada, when they eventually jack up interest rates, the banks could still run into a problem of mass foreclosures if enough of these people bought houses with a monthly payment they could just barely afford.
Anyone know how I could “short” the Canadian housing market? Should I short sell the banks? Or is there another route to bet on the downside of this?
