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How to profit from a housing bubble

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The debate over whether the country is in a housing bubble continues. But Tim Lazaris, President and CEO at Red Sky Capital, tells BNN he's convinced home prices will decline.

"If you look at the global data on housing and you look at Canada, the Canadian market has had about a decade-long rise in prices and pretty buoyant housing starts -- we're talking across the country, not just Toronto and Vancouver," Tim Lazaris, President and CEO at Red Sky Capital, tells BNN.

"When you look at that data and you put it into a global perspective and you look at the fundamentals of why that happened and the fundamentals really aren't there."

Lazaris says the condo market is the most at risk for a pullback in prices, but single family home prices could fall between 10 and 15 percent.

The country's largest banks, which have been attractive to investors in recent years, are on Lazaris' list of companies that will be impacted by a crash in home prices.

"The banks have had stellar earnings through this global recession and a big chunk of how they have done this is through the consumer and through the mortgage side of the market," he says. "If mortgage originations slow down even 10 percent then the earning expectations for the banks -- which are super-sized at this stage -- [may be] a disappointment."

Lazaris is shorting all of the Canadian banks, as well as specialized lenders like Home Capital and Equitable Group.

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