Short Canadian Real Estate
Updated
This short opportunity is based in fundamentals that the Canadian Real Estate Market is overvalued and house prices are already in the correction territory in cities such as Vancouver and Toronto.
Considering that REITs seems not be affected this year so far I believe that is about to change. It might be a just a small pull back and the prices can still be sustained for at least a year. However, the main principle is that upside is bigger than the downside if you are short Real Estate. In addition, REITs are risk averse for the most part, so the profit/loss exposure can be reduced.
Anyway, another point is if you look at Housing Bubble in US, one of the first signs of bursting it was the REIT falling apart before anything else.
Considering that REITs seems not be affected this year so far I believe that is about to change. It might be a just a small pull back and the prices can still be sustained for at least a year. However, the main principle is that upside is bigger than the downside if you are short Real Estate. In addition, REITs are risk averse for the most part, so the profit/loss exposure can be reduced.
Anyway, another point is if you look at Housing Bubble in US, one of the first signs of bursting it was the REIT falling apart before anything else.
Trade active
Considering 1st target hit, real estate looks like it's trying to hold. Recently news pointing home prices falling and low sales volume, as expected for the month of April. Other interesting articles pointing the slowest growth in mortgage debt by Better Dwelling.Considering technical, TD sequential continues to be towards lower prices. Also, 7 week MA started to point down
Looking forward 2nd target in the next 3 to 5 weeks.
Note
Note
My short position just got closed because my broker did not have have shares to borrow. I got around 2% profit realized - I hope that is not signalizing a market crash. By the way, I was using Questrade, so I DO NOT RECOMMEND them as a broker because of things like that. So just as as statement if someone else finds this post:
Questrade frequently covers your short positions automatically, they do not give you time for you to buy back so they buy-in in your behalf.
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