Credit problems in Canada

Mish Shedlock has an interesting post comparing the alarming jump in Canadian credit delinquency to the situation in the US.  More than 500,000 Canadians are now at least 90 days behind on credit payments, hitting a delinquency rate of 1.52% (compared to a US rate of 1.32%).

The Federal Reserve Bank of New York has Dynamic Maps of Bank Card and Mortgage Delinquencies in the United States that some may wish to consider.

In regards to mortgages, Canada has some “catching down” to do, and it will. All the bubble areas such as Vancouver, Calgary, Toronto, etc are going to get hit hard.

Hat-tip to Adrian for the link.

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deathspiral
deathspiral
11 years ago

Mish has the numbers of unemployed millions higher than is being reported. I suspect the same here. The 'unable to collect' numbers are the real story. The growing welfare rolls and the underemployed are a big number. This is a good read to get an extrapolation going as to what is happening in Canada.

http://globaleconomicanalysis.blogspot.com/2009/0

NO -LYMPICS
NO -LYMPICS
11 years ago

Pope:

I second BBY's motion.

Please return the numbering system for posts.

Thx !

patriotzed
patriotzed
11 years ago

Oh one more thing – you are also ignoring elasticity of supply. What happens when house prices go up to twice normal multiples of income? You get whole towns of empty houses, like in the US or Ireland, that's what.

patriotzed
patriotzed
11 years ago

It is possible to imagine an economy in which house prices are infinitely high in relation to incomes. How then could people afford to buy houses? They don’t; they inherit houses from their parents.

You are making the fatal mistake of ignoring the rental market. Who in their right mind would buy or continue to own a house that they could sell for, say, $10,000,000 but could only rent for $2000/month. The answer of course is nobody.

That is the reason why house prices always adjust to a competitive return on rental income regardless of how irrational owners are. Investors must become rational in the long run, otherwise they end up broke.

No Longer Looking
No Longer Looking
11 years ago

Just a clarification: I think the "one" billion dollar signal is maybe for all tax revenue, corporate and personal. Or it could mean a one billion dollar deficit.

Anyhow, I'll stop speculating when we get a straight-forward answer.

BBY
BBY
11 years ago

Hey Pope, the comments no longer seem to be numbered 🙁 Hope you can fix that. Thanks for your work 🙂

No Longer Looking
No Longer Looking
11 years ago

Colin Hansen raised his index finger, indicating "one". That's one billion dollars less revenue from corporate income tax than expected. Holy carp!!! He couldn't say it.

Olympimess
Olympimess
11 years ago

Oh boy, Vanoc desperate for eyeballs. Province cancels elective surgeries during O-Games so that patients " can watch the games". I thought forcing the schools and government buildings to close was scaping the bottom of the barrel. The reservation rate or (buyout) is only half of what we were told. This means few rich groups are planning on coming to Vanc for the games. El Nino is back ,that means no snow for the games, oh oh, can you say total bust. I don't doubt that the chidren will be forced at gun point to prove up the backdrops of the empty venues. Looks like North Flase creek is surrounded by shit on two sides. Homeless refuse to move and false Creek is reeking. Great investment dudes. Provincial deficit goes through the roof. The 500 milllion projection is falling away… Read more »

oneangryslav
oneangryslav
11 years ago

shitsinthefan Says:

July 9th, 2009 at 2:45 pm

I see that Warren Buffet is calling for a ’second stimulus’and predicting an 11.5% unemployment rate. I have been reading that approximately 15 million people in the US are currently unemployed. At 11.5% this represents 30.06 (or roughly double) million people from a population of 306 million. Is that right?

No, it's not correct; the denominator of the unemployment rate is not the total population, but some version of the total working-age population. 100 of 1 year-olds are unemployed, so it would be ridiculous to lump them into the unemployment rate. According to the US BLS, the total civilian labour force as of the second quarter of 2009 is about 155 million.

Girlbear
Girlbear
11 years ago

Does anyone here recall what the Woodwards units were originally sold for at presale etc – a range? There are a bunch of them for sale again now on craigslist.

BBY
BBY
11 years ago

grindingtoahalt: "This has to be the best enviornment to buy a house ever!!!!"

Correction, This will be the best…

I'm just waiting and keeping my powder dry. It's gonna unravel big time in this city…

Yalie
Yalie
11 years ago

Coming soon to a strata council near you… bankruptcy!

http://www.dailybusinessreview.com/Web_Blog_Stori

Just wait for it – we will be reading stories like this in the Sun 2 years from now.

grindingtoahalt
grindingtoahalt
11 years ago

"Bloomberg reported that the budget office, which is headed by Kevin Page, foresees economic contraction of 2.4 per cent this year, followed by 2.2 per cent growth next year and 3.5 per cent growth in 2011.

The budget office is also forecasting bigger job losses for the country, suggesting that as many as 530,000 jobs could be lost this year, and as many as 700,000 next year."

http://www.canadianmalcontent.net/forum/viewtopic

Flahrety is trying to shut this guy up but the bad news keeps coming. The jobs loss numbers are in the thousans a day category now and are expected to accelerate according to most independant experts.

This has to be the best enviornment to buy a house ever!!!!

factcracker
factcracker
11 years ago

100,000 Canadian Jobs Lost over the summer.

Big Bad Numbers come out in late edition of National Post

http://www.nationalpost.com/news/canada/story.htm

No recovery seen until 2012.

RennieWhereRU?
RennieWhereRU?
11 years ago

Why would the City of Vancouver invest tax payers dollars treating sewage when it can spend the money building Olympic Villages and market condos! 2050 until tertiary treatment complete, ha! We'll all be long dead before this is done because the city is going to lose its shirt on the Olympics.

NO -LYMPICS
NO -LYMPICS
11 years ago

I guess these people never heard of a land making machine

" Four nabbed in ghoulish scheme to dig up graves in historic Illinois cemetary"

Read more: http://www.nydailynews.com/news/us_world/2009/07/

shitsinthefan
shitsinthefan
11 years ago

I see that Warren Buffet is calling for a 'second stimulus'and predicting an 11.5% unemployment rate. I have been reading that approximately 15 million people in the US are currently unemployed. At 11.5% this represents 30.06 (or roughly double) million people from a population of 306 million. Is that right? Seems like that would also mean that Canadian unemplymnet has a lot of upside as well if we mirror the US by a 10-1 ratio. Get out the ugly stick.

http://www.reuters.com/article/businessNews/idUST

Why would I buy a house in an enviornment of rising unemployment again?

realpaul
realpaul
11 years ago

Ok VanBanker , I'll tell my kids they can get into the water anytime after 2050. Meanwhile, the political pressure is on to hide the 'shit' about a lot of things in Vancouver. The deniers and the apologists will have to look at, smell and have their dogs and kids get seriously ill because the COV 'shiity council' has decided to keep the issue silent and pretend it away. The problem we have in Canada is a lack of objective reporting, its all advertising based. So, if a reporter in the MSM writes a hard story about the city, RCMP, FED & Provincial government or major industry they immediatley get threatened with a 'loss of access'. Meaning they are threatened financially and the boss freaks out and pulls the story, whether its good or bad. The Conservatives pulled this stunt… Read more »

VanBanker
VanBanker
11 years ago

"realpaul Says:

July 9th, 2009 at 10:34 am

Refi madness has abated and precious nothing is selling over 500K"

Reapaul is right about one thing, we;ve heard from our clients that under $500k is the sweet spot, anything over that will have difficulty selling. Not surprising at all since that represents the maximum level of affordability for the average income earner with minimal down payment.

VanBanker
VanBanker
11 years ago

"The Pope Says:

July 9th, 2009 at 9:26 am

testing a new feature – there is a small x underneath each comment avatar. clicking this will hide the comment text. Next step is to automatically hide negative rated comments. Just need some free time to do some code crunching. As always feedback on this feature is welcome."

Hi Pope, I would make one suggestion: if you're going to have negative-rated comments disappear, I would suggest something like a minimum of -5 before they go, otherwise some of the trolls could make legitimate comments disappear.

Anonymous
Anonymous
11 years ago

More signs of the bubble bursting – I just saw a full page ad (back page) of 24 newspaper from (I believe it was) Quantum Homes in Coquitlam. Luxury 2 Bedroom Condos reduced from $389K to $294K ..

VanBanker
VanBanker
11 years ago

yaletowngirl Says: July 8th, 2009 at 5:19 pm “Victoria discharges about 21 billion gallons of raw sewage a year; Vancouver has primary treatment, but 38 billion gallons per year miss the treatment plants altogether and are spilled over through combined sewer overflows [sewage, storm water and toxic runoff–waste from Vancouver’s industries, which include electroplating:" I'd just like to point out two things: Victoria was ordered by the provincial government recently to have primary treatment of their sewage, and the City is hoping to have it in place by 2016 at the earliest. http://seattletimes.nwsource.com/html/localnews/2… Vancouver is slowly replacing all of their combined sewer pipes with separate sewage and storm water pipes, so there will be no more overflow problems once it is complete. Unfortunately, they only replace `% of the system per year, so they target completion by 2050. Burnaby is… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

oneangryslav. Re rents and rentals Good points. What I am now observing, and a phenomeon I hadn't seen before, are people advertising " rooms for rent" with signs and sandwich boards on or near their front sidewalk. Many of these "rooms for rent" are monster homes on good neighbourhoods. Rents are declining and vacancy is up, or vice versa. Many buyers had bought these monster homes, in fact, turn these monster homes into boarding houses, before the crash…this had been another phenomenon that likley added to the market demand. Now this class of landlord is seeing less demand and perhaps an inability to pay the mortgage. The expert you quoted is a classic example of missing the big picture. When the perfect storm hits of people who can no longer afford to keep their homes ….. an oversupply of homes… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

Canadian in Cali , Girlbear et al

Keep up the good work with you insider views of what goes on behind the scenes in the financial/investment sector and what their crystal ball is showing. Very enlightening. There are many ways to manipulate and tweak the truth, but it ultimately delays the same end result.

My view is the Feds see the tsunami is coming which has about a 2 year lag phase from its origins in the US.

On the political front, perhaps PM Harper sees its and yet still wants power, Iggy may also see it and says no thanks to being in charge now.

Shell recently anounced the possible closure of a major refinery in Quebec, Shells' largest in Canada, 75 years old.

Not much good news out there across the board.