Through the course of this year people have accused me of spreading doom. Some political acquaintances suggested one reason (among countless) I lost in the last election was because people were irritated at me for saying their houses would fall in value. Interestingly enough, my former riding is turning into the Stockton of Canada, so I sure hope they listened to me, even if they voted for the other team.
As the year ends, thereâ€™s no satisfaction seeing my predictions materialize, because weâ€™re entering a real estate-based collapse just as middle America did. And it will get far worse in 2009.
More evidence of that came Tuesday with the latest Case-Shiller house price index showing real estate to the south is heading for Depression status. Prices fell 18% in the last 12 months, on top of the dive in 2007. Homes in Phoenix and Las Vegas declined by another third in just a year.
This is a disaster. Median prices are crumbling by the most on record. Fully 45% of all sales in the US are now foreclosures and bank deals, and the biggest homebuilder told analysts in a conference call, â€œweâ€™re in the midst of a downward spiral and the momentum is building.â€
Itâ€™s building here, too. Itâ€™s just that there arenâ€™t too many people saying what I am. And while Calgary is not Phoenix and the GTA is no Vegas, it is folly to think weâ€™re immune from the contagion now sweeping through western society.
But, the dangerous myth lives on. Just hours after the latest US numbers flashed, a story moved to most Canadian newspapers containing this:
â€œHouse prices continue to plummet in the United States, but the consensus in Canada remains that the impact of the downturn will not be as severe hereâ€¦Ted Zaharko, who owns Royal LePage Foothills Real Estate Services in Calgary, said Canadians are following the U.S. too closely and expecting the same market conditions to happen here. While prices and sales continue to fall in Calgary, he figures the market has bottomed out in the city that surpassed Toronto as the second-most expensive place to buy a home during this housing cycle. â€œWe have people putting ridiculous offers in on a home and nobody is selling. People are saying â€˜lâ€™ll wait for prices to drop.â€™ Itâ€™s not going to happen,â€ says Zaharko. â€œ
Well, Ted, I guess weâ€™ll see about that. So will your buyers.
But, such denials are not new. Iâ€™ve been showered with them for the past year. And as the ideas contained in my latest book and on my new site seep out, Iâ€™m girding for a new chorus of whatâ€™s-he-smoking?
Cue the squirrels.
Eric Sprott, of Sprott Asset Management in Toronto is worth listening to. Heâ€™s telling clients, â€œMake no mistake â€“ we are in a Depression. Thatâ€™s right, itâ€™s the dreaded â€˜Dâ€™ word. And we are knee deep in it right now.â€
Sprott points to car sales (down 37%), housing starts (down 47%), stocks (down 42%) and unemployment (250,000 jobs lost last month in the US, 66,000 here). Interest rates at zero are deathly worrisome, since they show central bankers are all out of bullets. Worse, the US deficit will hit $1 trillion, double any shortfall which came before. Massive bailouts now will mean a crash in the Yankee greenback later, followed by hyperinflation. America may well be in the process of bankrupting itself. And itâ€™s our largest customer.
â€œThis is a depression,â€ he says again, â€œone that has only just begun.â€Â Stocks will fall further. New unemployment will be massive. Real estateâ€™s a rathole. Sprottâ€™s safe havens: cash and gold.
It is against this background â€“ fears of economic Armageddon punctuated by cries of denial â€“ that the new year dawns, and that I raise my voice once again. Eventually opportunity will return. Houses and stocks will get too cheap not to buy. Markets will rally. But that could be a long time coming, and events in the meantime might range from difficult to extreme.
This is why my book deals not only with the growing odds of financial collapse and what to do about it, but also how to position for when morning finally arrives. Doubtless, there will be many â€˜expertsâ€™ who refute my every word, as they did a year ago.
Finally, xurbia. Now in preview mode, it will be operational next month, at which time I will have more to say. Let me just give this background: It took me months and months to source the tools and knowledge I needed to keep my family safe through the potential events ahead. I wanted to gain more control over whatever might occur, and now I have it. If you share my views, Iâ€™m providing you with a roadmap. If you don’t, move on.
And if you think this is survivalist fear-mongering, why not run for the Conservatives?