Vancouver real estate II

Follow up of part 1

There was something dangerous about the real estate bubble in Vancouver. Something I didn’t quite grasp but was singled out by my subconscious. Otherwise I wouldn’t have pursued the trails with such interest. Sure, houe price will rise and fall, people will get burnt and I will benefit because I sold at the top…

However, something omnious lurks beyond the edge of my comprehension. A “what if…” that I don’t think the government is capable of pulling. One of those “People aren’t that stupid” when I think about laws… then I remembered that politicians are just glamorized jocks outside of highschool, in my most cynical and dark description of the human society. A view I adapted as a safe way to evaluate potentials of political inteference in my stock investments.

“Yes they would.” The western democracy (Or any empire reaching its peak) is forever deadlocked into forcing everyone to bear the burden from the mistakes of the few and to spread the effort of the few able ones amongst the sloth of the lazy public.

I have not verified with detailed investigation by consulting with an actual lawyer, what I based most of my research on is whether or not the law I read exists on government websites. The interpretation of which is up to the court to decide. What I am relying on, is my years of experience, getting banned from any massive online multiplayer game where an active market of trading system exist. What I based my suspiscion on, is the fact that I see an exploitable bug in the economic system with no downside risk and I am tempted to exploit it.

Imagine, if I can figure out myself how to do this as a lone Asian who’s money hungry. What can a whole country of them figure out together?

Here are a few statements that make up the basis of the problem I see.

• CMHC insures all mortgages that meets certain requirements.
• Immigrants are allowed to get a mortgage as well as student loans like any Canadian citizen as well as having the mortgage insured by CMHC
• You can immigrated into Canada by bringing a $500k investment.
• People in Line ups to buy any condo developments are purely asian

Here’s how I think events will play out should interest rate rises and real estate falls

1. Asians immigrate with the $500k investment clause
2. Asians with 5% down only and 500k total investment buys up several houses per person
3. If prices fall, they walk away and return to China, if not, they make profit. This is evident from several comments made by them whereby they ignored transaction cost and real estate taxes
4. Canada sues to regain the mortgage loan. Tries to lock up the individuals because the loans are non recourse
5. Law inforcement agent discovers they cannot find these people
6. Like their person, the $500k original investment used for immigration dissappears through underground money laundering cartel
7. Loans default on bank’s books
8. Banks goes after CMHC for mortgage insurance money
9. CMHC, with only 5% capital out of $812 billion (2008 count)
10. For the wipeout of 5% capital only $40.6 billion needs to default.  That’s 101 500 houses out of 8 100 000 houses. A mere 1.25% default rate
11. How many mortgage out of the total is 5% down mortgage?
12. Taxes increase, interest rate rise to generate more income to cover the bailout of CMHC
13. Banks are asked to take a haircut for the good of the citizens. Blame game starts someone will have to take the blame.
14. Some banks who bought CMHC’s securitization of the mortgage insured fails
15. Canada steps into a recession.

Possible trigger: Destabilizationin China, USA economy fails to pick up when Canada has to raise interest rate to fight inflation.

Mini Series:

Vancouver real estate

Vancouver real estate III