According to a study released by Environics Analytics, Our fair city surpassed Calgary in 2008 when it comes to net worth. This is due to a number of factors, including increased household debt and rapidly dropping houseprices in Calgary compared to a slower drop in house prices here.
Net worth, which measures someone’s assets minus debts, dropped 6.2 per cent for Canadians as a whole last year. But Calgary residents saw their wealth plunge 12.3 per cent, while Vancouver’s residents were able to hang on to much of their riches. There, net worth fell just 3.1 per cent between December, 2007, and December, 2008.
Though house prices in both cities continue to drop, they are dropping faster in Calgary which makes the Vancouver numbers look better by comparison. The report draws no connection between an economy based primarily on a real estate and it’s risk for a downturn in net worth, though it does mention the local obsession:
Vancouverite Sebastian Albrecht rode that Pacific wave. He has a lot of his money tied up in real estate. And it’s these investments – with prices down less than 10 per cent from their peak last year – that has made the city surrounded by mountains and ocean the richest in Canada, supplanting the country’s energy capital Calgary.
Mr. Albrecht bought his first condo a decade ago, after university. He stretched himself – and slept in a sleeping bag on the floor for a couple months in the unfurnished home.
A decade later, he lives in a $600,000 home that he bought two years ago for $500,000 and also owns – and rents out – a $350,000 town home and a $300,000 condo. He has some money in stocks, but only about 10 per cent of his net worth.
The three leading provinces for net worth also lead for household debt levels: BC, Alberta and Ontario. Each province has it’s own particular challenges. Alberta has a boom and bust economy based on energy prices, Ontario has been hit hard by a manufacturing downturn and locally we’ve seen job losses in resources, tourism and the entertainment industries.
As the recession and real estate market correction grinds on it will be interesting to see where the stats put us in a year as the report points out that it’s only current up until the end of 2008:
The survey doesn’t cover 2009. In the first six months of this year, prices for existing homes were down 8.6 per cent in Vancouver from the same period of last year, and 9.8 per cent in Calgary, resale statistics show.