We’re richer ’cause we owe more.

According to this canwest article “Home is where the debt is”. Canadians are wealthier than ever, but carrying a record load of debt. In 2005 average canadian net worth increased by 1.4 times what it was in 1999, while our debt load increased by 1.5 times in the same period.

So we’ve got more money, but we also pay more bills.

If the amount we owe keeps growing at its current rate compared to our incomes, we’ll have to invent new types of math to keep our economy going.

Home is where the debt is with three-quarters of this debt taking the form of mortgages. The median value of mortgages in 2005 was up 17.5 per cent from 1999, when it was $76,600.

The second largest contributor to the increase in debt load was lines of credit, which more than doubled during the six-year period to roughly $68 billion. About 3.3 million families in Canada reported having a line of credit debt in 2005 and the median amount has jumped from $5,800 in 1999 to $9,000 in 2005.

Cars and student loans were also big, and increasing, sources of debt, Statistics Canada said. Credit card debt also placed a burden on an estimated 11 million families.

I sure wish they broke those studies down into a smaller focus. I would be very curious to see what Vancouver’s numbers look like compared to other parts of Canada.

UPDATE: I just found this article in realtytimes from last April that talks about Vancouvers deteriorating affordability problem and mentions this little statistic:

..B.C.’s provincial savings rate hit an all-time low of -7.9 per cent in 2004 “and likely retreated further since then.”

Thats the average for the entire Province, not just Vancouver, and its the worst savings rate /debt load in the country.

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Anonymous
Anonymous
13 years ago

VHB,Since you are hanging around and we can't post on your site, I have a question.I don't know how they calculate savings rates, but if they use consumption somehow, shouldn't all the drug money be a wash?Not counted as income, but not counted as consumed either? Or maybe any money that isn't in a bank is considered consumed, but then people might keep it under their bed??

Anonymous
Anonymous
13 years ago

Hey VHB! Either you are on vacation or you not.

betamax
betamax
13 years ago

I like how the argument changes from 'prices never go down' and 'its different this time' to 'prices aren't dropping that fast.Exactly. And all these geniuses who claimed that you can't identify a bubble until after it's popped are now miraculously able to discern the bottom before prices rise again.

Van Housing Blogger
Van Housing Blogger
13 years ago

Here is my post on the personal savings rate, in case anyone wants to see the data.

Van Housing Blogger
Van Housing Blogger
13 years ago

"Together we'll all make it through a month without VHB."I prescribe a lot of hand-holding and group hugs.

Anonymous
Anonymous
13 years ago

The moral of the bellhop story is…Never trust Bob Rennie.

digi
digi
13 years ago

Obviously anonymous and Warren are correct: They paid 25, so the 2 dollars the bellboy took should be subtracted from 27 (3×9) not added to it. Its suprising how a simple misleading statement can obfuscate the truth.From freako's link:Clearly, the current real estate market is not experiencing the kind of precipitous drop in values typically seen when investment bubbles burst.Why would a housing market pop all of a sudden? Houses are a lot less liquid than stock which means a long slow grind down seems more likely.I like how the argument changes from 'prices never go down' and 'its different this time' to 'prices aren't dropping that fast.

Freako
Freako
13 years ago

If you want some comedy, check out this nutball from the "prestigous" BMI institute.http://tinyurl.com/y9ca7hHe rails against biased media. As in biased against real estate. There are so many manipulations and inconstencies that you will feel like a kid in a candy store.Here is a teaser:Williams punctuated his bearishness: “But here is the number that really got people's attention today. The median home price fell on a yearly basis by 1.7 percent.” "Horrors. 1.7 percent down in 12 months. To put this in perspective, when the stock market bubble burst in 2000, there were days when equity prices dropped a heck of a lot more than 1.7 percent. In fact, when the bear market began in March 2000, the NASDAQ plummeted by more than 30 percent – in just one week."

Anonymous
Anonymous
13 years ago

They checked into a hotel/massage parlour and were rousted by the police and lost the $1 sometime in all that action??

solipsist
solipsist
13 years ago

"..B.C.'s provincial savings rate hit an all-time low of -7.9 per cent in 2004 "and likely retreated further since then."Thanks pope. So much for my "ecyclopaedic" mind. I think it is a recycled mind, and is losing it's integrity with every cycle.I must discontinue eating aluminum foil, and get some treatment for my pica.

Lucky Lux
Lucky Lux
13 years ago

$30 – $2 = $28.The hotel guests paid $9.33 each. Well, one may have paid $9.34.

Warren
Warren
13 years ago

The bellboy's $2 should be subtracted not added, to make $25 paid to the manager.If I had $2 for everybody who got this wrong.. I could afford some real estate!

time2sell
time2sell
13 years ago

$30 – $29 = $1What happened to the extra dollar?..clearly the bellboy took another dollar that he neglected to mention.

Anonymous
Anonymous
13 years ago

They didn't pay 30 dollars, they paid 25.

digi
digi
13 years ago

Reminds me of this little brain teaser:3 people check into a hotel and are charged $30 for their room. Once they've paid and gone up to the room the manager realizes he overcharged them and the room is actually $25 for the night so he sends the bellboy back up to the room with the $5 to return to them.On the way up the bellboy figures he can't divide the 5 dollars evenly between 3 people so he takes $2 for himself and gives the customers a dollar each which means they each paid 9 dollars.$9 times 3 people = $27$27 + the bellboys $2 = $29What happened to the extra dollar?If you can't figure it out you probably shouldn't take out any large loans.

the pope
the pope
13 years ago

Solipsist: I just found this article on realtytimes that has this choice quote:"..B.C.'s provincial savings rate hit an all-time low of -7.9 per cent in 2004 "and likely retreated further since then."If that true then its WORSE than -6 percent, it may be close to -8%. And thats the average for the entire province, it wouldn't suprise me if things were even worse in Vancouver.How can that be sustainable?

the pope
the pope
13 years ago

Hey anonymous, you're welcome to post here with comments intelligent or not. Together we'll all make it through a month without VHB.

Anonymous
Anonymous
13 years ago

Just visitng and thank in advance for letting me read some posts. If I think of something intelligent to say I will. I too am addicted to VHB (and sadly all things real estate).

solipsist
solipsist
13 years ago

an encyclopaedic mind for a lot besides spelling, that is.just call me ecyclopaedia bown. I mean brown

solipsist
solipsist
13 years ago

I read some time ago (sorry, no link. I have an ecyclopaedic mind for a lot, but sources are details that annoy me.), that Vancouver has the lowest savings rate at – 6%. I think it is safe to infer that we are the most debt-ridden.

digi
digi
13 years ago

EVERYONE in the world will want to live here.Everyone except me if we have to house the population of the world here. Imagine the lines at the soup kitchens!

Anonymous
Anonymous
13 years ago

People in Vancouver are different. We all have six figure jobs and drive nice cars.We don't worry about debt!The good times that are happening in Vancouver will never end!Mark my words, soon as the Olympics are over – everyone, (I repeat) EVERYONE in the world will want to live here…we have the mountains, the ocean… (drones off)…

ken
ken
13 years ago

I guess that makes me poor.. I'm not interested in sinking up to my eyeballs in debt.