Canadian Speculators, Not Foreign Money, Are Driving up Home Prices

There’s a pretty straightforward reason why you can’t afford a home.

Real estate speculators are snapping up properties and selling them once the price rises. They earn a huge financial return, pay little in taxes and price ordinary people like you out of your city.

The common wisdom in Vancouver — and increasingly Toronto — is that the majority of these speculators come from overseas. Yet recent housing data suggests many, if not most, speculators may be Canadian.

These men profit from wild market swings

Wednesday was a good day for Fawad Khan.

He got up shortly before 3 a.m. and headed to a bank of computers in his Mississauga basement. While his family slept, he started trading.

One screen charted the euro in real time. It looked like the seismic readout for an earthquake. Trading in this kind of market, with one’s own money, is not for the faint of heart.

At 3 a.m., Khan bought euros, expecting the currency’s value to rise. When it did, he sold. Then he bought low and sold high, again. Within an hour he was up $750 (US). For his third move, he went short, predicting the euro would fall. It did, and he made another $300. It was 4:30 a.m.

“Then I went back to sleep,” says Khan, 62, a civil engineer who made day trading his full-time job after emigrating from Pakistan in 1999.

At 1 p.m., Khan was back in the basement of his modest bungalow. He sold short again, both the euro and the S&P 500 stock index. He called it a day at 2:30 p.m. — $2,935 (US) richer after three hours of trading.