June 7 2016
Canada’s real estate market is hotter than the rhetoric coming out of Donald Trump’s mouth; moving faster than the speed at which Hilary Clinton runs from debates; climbing higher than Bernie Sanders polling numbers with millennial’s. From Vancouver to Toronto, it’s not a bird, it’s not a plane, it’s the price of homes that’s flying through the air.
The price of a detached home in Vancouver increased 37% over last year, meaning that those in the city would need 1.5 million dollars on average to purchase a property. Toronto isn’t too much better, with the average home in May going for $782,051 dollars.
Much has been written about this phenomenon — its unsustainability, its proximate cause being cheap mortgages and the risk of a housing bubble, even the effect that foreign investors are having on housing prices.
Most of this is generally boring and has been exhaustively discussed, but what’s rarely mentioned, despite its enormous moral significance, is the extent to which international money laundering is fueling the real estate market in two of Canada’s most important, global cities. Marc Cohodes, former head of Cooper River Management (a hedge fund) says he believes it’s money laundering and other illegal activity that’s driving home prices in Vancouver.