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How to long or short the Toronto housing market by stocks?

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  • Jan 25th, 2017 7:20 am
Member
Nov 25, 2013
262 posts
38 upvotes

How to long or short the Toronto housing market by stocks?

Hi Everyone, I am extremely bullish on the Toronto housing market right now. I think the 15% foreign purchase tax in Vancouver is fuelling and will continue to do so for Toronto home prices. I am just wondering are there any stocks (such as REITS) that I can buy to take advantage of this? In particular, I am looking for stocks that is highly correlated to the residential housing market in Toronto.

Much appreciated!
8 replies
Deal Fanatic
Feb 15, 2006
9183 posts
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Toronto
No such stock. REITs usually deal with commercial RE.
Member
Nov 25, 2013
262 posts
38 upvotes
Arrgh wrote: No such stock. REITs usually deal with commercial RE.
That is such a pity. I really wish there is a stock that can do that.
Deal Fanatic
Nov 9, 2013
5882 posts
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Edmonton, AB
bookmate wrote: That is such a pity. I really wish there is a stock that can do that.
Why would a stock (which represents fractional ownership of a publicly traded corporation) exist for the sole purpose to short residential real estate? That doesn't make sense.

On the long side, you could look at apartment REITS with high exposure to the areas you are interested in. Most publicly traded ones would be geographically diversified however.
Buy right, hold tight. Keep calm and go long.
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Dec 14, 2010
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You could look into alternative lender stocks (like HCG), Canadian Banks and Residential REITs. To me, a REIT is an alternative to a rental property. There's the argument that Toronto will become a renter market because only those with equity from another property (or lots of money from other sources) would be able to afford buying anything in Toronto. These stocks don't track the housing market price, but they would be severely affected if we have a real estate crash.

Few examples of residential REITs with presence in Ontario:

Canadian Apartment Properties Real Estate Investment Trust (CAR.UN) operates as an open-end real estate investment trust. It owns interests in multi-unit residential rental properties, including apartments, townhouses, and land lease adult lifestyle communities located in Canada. Ontario is its biggest market, wiith 1,733 suites (52% of their total). Last earnings report show that Ontario has a 99.3% occupation rate with an average rent of $1,202.

Boardwalk REIT (BEI.UN) engages in the acquisition, refurbishment, management, and ownership of multi-family residential communities in Canada. They have a small presence in Ontario (7.7%), owning 2,585 units via 16 properties in Kitchener and London. Their biggest market is Alberta, with 19,752 units via 144 properties.

InterRent Real Estate Investment Trust (IIP.UN) engages in the acquisition, ownership, and operation of multiunit residential properties, focusing primarily on larger population centers, such as London, Kingston, Ottawa, Toronto, Hamilton and Burlington and Mississauga in Ontario. Ontario represents 30% of their portfolio with 2,458 suites via 18 properties. Their occupancy rate is 94.2% and average rent is $1,057.

List of all REITs in Canada and their types


Rod
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Member
Nov 25, 2013
262 posts
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Hi Rod, you are really in the know. I noticed the price history of CAR.UN is pretty correlated to home prices in Toronto.

Thinking outside of the box, is there any stock other than REITS that is highly correlated to home prices in Toronto?
rodbarc wrote: You could look into alternative lender stocks (like HCG), Canadian Banks and Residential REITs. To me, a REIT is an alternative to a rental property. There's the argument that Toronto will become a renter market because only those with equity from another property (or lots of money from other sources) would be able to afford buying anything in Toronto. These stocks don't track the housing market price, but they would be severely affected if we have a real estate crash.

Few examples of residential REITs with presence in Ontario:

Canadian Apartment Properties Real Estate Investment Trust (CAR.UN) operates as an open-end real estate investment trust. It owns interests in multi-unit residential rental properties, including apartments, townhouses, and land lease adult lifestyle communities located in Canada. Ontario is its biggest market, wiith 1,733 suites (52% of their total). Last earnings report show that Ontario has a 99.3% occupation rate with an average rent of $1,202.

Boardwalk REIT (BEI.UN) engages in the acquisition, refurbishment, management, and ownership of multi-family residential communities in Canada. They have a small presence in Ontario (7.7%), owning 2,585 units via 16 properties in Kitchener and London. Their biggest market is Alberta, with 19,752 units via 144 properties.

InterRent Real Estate Investment Trust (IIP.UN) engages in the acquisition, ownership, and operation of multiunit residential properties, focusing primarily on larger population centers, such as London, Kingston, Ottawa, Toronto, Hamilton and Burlington and Mississauga in Ontario. Ontario represents 30% of their portfolio with 2,458 suites via 18 properties. Their occupancy rate is 94.2% and average rent is $1,057.

List of all REITs in Canada and their types


Rod
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Dec 14, 2010
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bookmate wrote: Hi Rod, you are really in the know. I noticed the price history of CAR.UN is pretty correlated to home prices in Toronto.

Thinking outside of the box, is there any stock other than REITS that is highly correlated to home prices in Toronto?
A stock is a representation of a business. And stock price follows earnings (or cash flow, depending on the industry). Which kind of business (besides these REITs) would be able to grow or earnings or cash flow at the same ratio than house market prices? I can`t think of any besides REITs. They buy, manage and take advantage of appreciation price when appropriate.

Rod
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Newbie
Aug 2, 2015
63 posts
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Nepean, ON
rodbarc wrote: Canadian Apartment Properties Real Estate Investment Trust (CAR.UN) operates as an open-end real estate investment trust. It owns interests in multi-unit residential rental properties, including apartments, townhouses, and land lease adult lifestyle communities located in Canada. Ontario is its biggest market, wiith 1,733 suites (52% of their total). Last earnings report show that Ontario has a 99.3% occupation rate with an average rent of $1,202.

Boardwalk REIT (BEI.UN) engages in the acquisition, refurbishment, management, and ownership of multi-family residential communities in Canada. They have a small presence in Ontario (7.7%), owning 2,585 units via 16 properties in Kitchener and London. Their biggest market is Alberta, with 19,752 units via 144 properties.

InterRent Real Estate Investment Trust (IIP.UN) engages in the acquisition, ownership, and operation of multiunit residential properties, focusing primarily on larger population centers, such as London, Kingston, Ottawa, Toronto, Hamilton and Burlington and Mississauga in Ontario. Ontario represents 30% of their portfolio with 2,458 suites via 18 properties. Their occupancy rate is 94.2% and average rent is $1,057.
Hey Rod, is IIP.UN not in your dividend portfolio because they didn't manage 2008 well, specifically having cash flow drop and more importantly, the dividend?
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Dec 14, 2010
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wussok wrote: Hey Rod, is IIP.UN not in your dividend portfolio because they didn't manage 2008 well, specifically having cash flow drop and more importantly, the dividend?
Yes. I believe that the combination of AP.UN, BEI.UN, BOX.UN and REF.UN gives one a decent exposure to all kinds of REITs.

Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:
Investing strategy based on dividend growth

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