The scent of a fall

BALCONY modified

A few days ago Dean Gaziosi published the story below on his web site, beside all the come-hither promos for his books, newsletters and seminars on how to get hideously rich by investing in US real estate.

I sometimes give this homeless guy 5-20 buks when I see him. He said his name is William but to call him Bill. He hangs out near the Walmart parking lot entrance near Shaw & Peach but he’s not your typical druggie alkie transient. This guy is crippled and seems reasonably clean cut.

I asked him if he’d like to make some money and he looked surprised and asked “What can I do”?

I gave him my card and told him to find me vacant boarded up houses. In the last few months he’s sent prob about 20 addresses. Well, wudnt you know it, I just got one of his houses on contract for $25,000. I ran it past my buyer and he wants it. I wonder how the 2 Grand I’m going to give Bill will change his life?

The title Graziosi gave this was, “Crippled homeless bird dog is making $2,000.” It was posted under his videos such as, “Unleash Your Inner Brilliance.” If you see nothing jarring about this exploitative juxtaposition, then you’ll absolutely love it when this dream merchant makes a one-day-only stop in Canada, in Toronto, April 24th.

This dude is the latest in a long line of people who, for $99, or $399, or $999, will give you four easy steps to unbridled wealth that’ll make the guys in the neighbourhood implode with envy, and turn on their hungry wives. Lately he’s been hired by Tony Robbins, who decided he’d become a finance guru since we all found our self-esteem. So, to promote both their books and take advantage of the world’s biggest coming property crash, the Graz is traveling north.

“He will be forecasting a decline in the Toronto market similar to the US in 2006,” his publicist told me, hoping this pathetic blog would promote the event. He sent me a media release asking, “Is it ready to burst?”

I mention this guy because there’s a pattern developing here, to which most people are oblivious. Six months ago it was rare to find a single reporter, economist or organization waving a yellow flag over the Canadian real estate market. Today it’s a blizzard of caution. No wonder the sharks show up when there’s the scent of blood.

Just consider some of the stuff that’s just transpired. For example, massive mortgage defaults in BC. A report prepared for that province’s Financial Institutions Commission is warning this could become a reality – a housing crash leading to over-indebted families walking away from their mortgages.

Sent to BC’s lend-happy credit unions, like Vancity, it says: “Default risk is of particular concern given the continuously climbing housing price in the Greater Vancouver area. When the US last experienced a housing price run-up, what followed was a disastrous crash, the effects of which still persist today.”

How dependent are that delusional province’s credit unions on real estate lending? Massively. Almost 70% of all CU loans are for real estate assets. Think about that if you happen to have your retirement money sitting in GICs there, and what good your provincial deposit insurance might be if the Big One hits.

But it gets worse. Did you see the latest Teranet house price index report?

“There have clearly been corrections in some markets,” it says. No kidding. Of the eleven markets tracked, prices were up last month in just three – Vancouver, Victoria and (please sit) Hamilton. Despite what the realtors tell you, losing cities included Toronto, Calgary, Quebec, Montreal, Edmonton, Winnipeg, Ottawa and Halifax.

Here’s how senior economist Marc Pinsonneault summed it up:

“In some markets there have clearly been corrections in progress. The monthly retreat in Calgary was the fourth in a row, for a cumulative decline of 2.3%. In Winnipeg it was the fourth in five months, for a cumulative decline of 3%. East of Toronto the corrections have tended to be larger. For Ottawa-Gatineau it was the fifth retreat in six months, total decline 5.2%, for Montreal the sixth in seven months, total decline 5%, for Halifax the fourth in five months, total decline 5.5%. Quebec City prices fell for a fourth straight month, total decline 2.%.”

Remember what I told you about 60% of Canada’s markets being in stagnation or decline? Sorry. Make than 80%.

Then there’s oil. More losses this week, so it sits at $47. Sales in Calgary today are down almost 30% again, with 5,700 houses listed and days-on-market up almost 40%. Not a happy place to be a seller, while the buyers have simply retreated. There are still hundreds and hundreds of families who bought before they sold a few months ago, thinking the bull would rage forever. Now they’re in panic mode. So, significant price drops coming.

To make things worse, on Thursday morning a thousand construction workers employed by a contractor to Husky Oil’s Sunrise project were punted. Just like that. “Guys were just notified this morning as they woke up in camp,” a union rep said. “They were supposed to be there until June, July and August. It was supposed to be a gradual decline through the summer, so this was unexpected.”

Finally, seems Canadians just can’t keep out of the trough. Every day comes more evidence of a colossal debt overhang that’s simple unsustainable. In a year or two or three, we will look back on this the way people now view the US housing debacle and say, ‘how did we not see it coming?’

Household debt hit a record in the last few months of 2014, when measured against incomes. Together we have $1.2 trillion in mortgages. And this accelerated dramatically in January after the central bank goofed, and cut its rate.

Says credit-rating agency Equifax:

“It’s a cautionary tale what we are currently seeing in the Canadian economy. The rapid decline in oil prices caught many by surprise. And, that’s the point – consumers and business owners need to be more vigilant. When economic change happens, it can happen very quickly and can challenge previously observed stability of key economic and credit indicators.”

You bet. We’re just one homeless, crippled bird dog nation, awaiting its Messiah.