Household debt: Canada digs deeper

Don sent in a link to this story in the Leader-post about the growth in Canadian household debt at a time when incomes are stagnant or dropping.

“Despite Canadian consumers’ high spirits, their recent consumption pattern has not been supported by an equivalent increase in income,” said Benjamin Tal, senior economist at CIBC World Markets. “In fact, growth in real disposable income has been trending downward over the past year and to a certain extent debt is replacing income as a major driver of consumer purchases.”

Household debt — mostly mortgage debt — is growing three times faster than income, he said.

The Conference Board of Canada reported consumer confidence reached a low at the end of 2008 and has since rebounded by 60 per cent, back to its long-term average, Tal notes.

“But while improved sentiment can provide a short-term lift to household spending, a sustainable boost in activity must eventually be backed up by improving consumer fundamentals such as income growth, falling unemployment and reduced debt burdens,” he said.

The good news: Canadians are feeling confident about the economy and are willing to spend money.  The bad news: When you look at the numbers they have less ability to spend, willing though they may be:

“Combining all of the above information into one index reveals that Canadian consumer fundamentals are weaker than they have been in almost 15 years,” Tal writes. Household debt is rising twice as fast as assets, personal income growth is “softening” and the gap between income and house prices is at a 20-year-high, which Tal says means real estate markets will stagnate or fall over the coming years as mortgage rates rise and increased housing starts bring prices down.

“Those minuses are moderated by the recent increase in the saving rate, and a low long-term unemployment rate, but overall the balance is still weighted to the downside,” he said.

That means that consumer spending will stall over the next 12 months, he said.

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oneangryslav2
oneangryslav2
10 years ago

@patriotz: I don't think chip is sick; I do think he's a little bit more partisan than he believes he is.

Kite towards moon
Kite towards moon
10 years ago

"Are we the only ones left?"

No,There are thirty six more in your team.

"WHY do you want us to buy?"

In hope to give you roller coaster free life,Dreaming about homes is keeping your life in uncertainity,Renting a place is keeping your life in uncertain mobility,and Only Buying will provide you stability.According to the Vancouver real estate future,something you love and able to afford today,you may won't be able to get it any other day.

chip
chip
10 years ago

Okaaay, now the minority Conservative government is responsible for the Canada housing bubble, and to disagree means I'm "sick."

Hey, maybe they caused the bubbles in Europe, the US, Australia and elsewhere or are those bubbles just a coincidence?

patriotz
10 years ago

@patriotz:

is worse than spending $460 million on a couple of boats that didn’t work very well?

Sorry, of course that should be:

isn't worse than spending $460 million on a couple of boats that didn’t work very well?

patriotz
10 years ago

@chip:

If there’s one thing worse than juicing the housing market it is juicing the fast ferry market.

Is this supposed to be a joke?

You think that creating a Canada-wide housing bubble, which has put millions of Canadian families up to their ears in debt, which will result in a lot of kids growing up poor and in broken homes, which will inevitably burst and lead us into a double dip recession, and which will ultimately cost the Canadian economy hundreds of billions of dollars, and lying about it, is worse than spending $460 million on a couple of boats that didn't work very well?

You are sick. There is no other way to say it.

space889
space889
10 years ago

@chip: Ok wouldn't be a popular opinion here but I think all things equal NDP did a fairly good job compared to the Liberals during their decade in power. Why? For two reasons: 1 – During their time in power, Paul Martin downloaded a lot of services to the provinces and cut transfer payments. BC is one of the few provinces that didn't make the corresponding drastic cuts to health care, education, etc compared to other provinces. Now granted it didn't feel that way and the media certainly weren't giving NDP any credit/help. As well BC do have a lot of retirees from other places who came here but pays no income taxes while consuming resources that's paid out of provincial coffers, it does make the provincial government's job extra hard. That's not to say I think they did a… Read more »

Anonymous
Anonymous
10 years ago

When the group ignored satv/browntown/kite/dave/john/kriis/never go down here went away.

the ny times had an article about trolling a few years ago, look it up. it's exactly what he wants. people to get upset.

Ignore it the troll it'll go away.

Back to sky high inventory, increasing interest rates, aging of population. the opportunity for investors to go to Florida Vegas or California for less than a storage locker here.

Inventory
Inventory
10 years ago

UPDATE*** 12:07 am, April 7 April 6, 2010 = 14832 ************* 1/1/2010 / 4/6/2010 / % change Bowen Isld 46 / 96 / 108.70% _Bby East 68 / 148 / 117.65% _Bby North 345 / 642 / 86.09% Bby South 362 / 624 / 72.38% Coquitlam 531 / 1002 / 88.70% Van.&Gulf 215 / 252 / 17.21% ___Ladner 65 / 133 / 104.62% MapleRidge 575 / 879 / 52.87% _New West 262 / 538 / 105.34% _North Van. 412 / 825 / 100.24% OutofTown 105 / 74 / -29.52% _Pitt Mead 121 / 180 / 48.76% _Port Coq. 237 / 424 / 78.90% PortMoody 213 / 376 / 76.53% _Richmond 893 / 1603 / 79.51% _Squamish 402 / 487 / 21.14% Sunshine C. 656 / 1006 / 53.35% _Tsawssen 98 / 156 / 59.18% __Van East 767 / 1228 /… Read more »

chip
chip
10 years ago

@patriotzed:

Eh, politicians lie and you're outraged?

My point is that to say a 'Conservative' government juiced the market is petty politicking when provincial debt levels are sky high and the Federal Liberals contributed to that by shifting health spending to the provinces.

As for Gordo if there was a sane choice other than that recurring trainwreck of the NDP I'd vote for them.

If there's one thing worse than juicing the housing market it is juicing the fast ferry market.

Prca
Prca
10 years ago

As much as I support freedom of speech it is disturbing and somehow sad at the same time to see that some fuckup so called Kite wastes time of some intelligent and polite people on this blog. I think it's time to let that brainless worm alone and have him go somewhere else where he can continue to sell his crap. Enough Is Enough

ulsterman
ulsterman
10 years ago

Tenants better off than homebuyers Say it can't be so!

http://www.homemove.co.uk/news/01-04-2010/tenants

"New research from Lettingsearch.co.uk aims to persuade potential first-time buyers that renting is a better option than buying a home.

According to the property portal, the cost of renting over a 25-year period is £11,342 less than setting out as a homebuyer with a 25-year mortgage"

Don't panic, don't panic, it's different here.

arit
10 years ago

Kite:

"i will make sure that every single bears with money in bag get in to grab atleast studio"

Why? Why do you have such an interest? I personally have been totally transparent with you, Now do share: WHY do you want us to buy?

Are we the only ones left?

Regards

arit

Kite towards moon
Kite towards moon
10 years ago

I love you too, that's why i am here.i will make sure that every single bears with money in bag get in to grab atleast studio or switch over their target to nearest affordable area before they cross the boundry or end up renting laneway housing.I will do my best to keep you here in Vancouver.

Inventory
Inventory
10 years ago

Update*** 10:41pm April 6

April 6, 2010 = 14,820

spitfires
spitfires
10 years ago

@Best place on meth:

">>>There are always new people coming into the market, such as kids moving of their parents place.<<<

Or conversely, people leaving the market. Such as kids moving back in with their parents.

That seems to be the bigger trend lately."

Don't forget that people die too. And correct me if I am wrong, but I believe that Canada would have negative population growth if it weren't for immigration.

paulb
paulb
10 years ago

Me:

I would not be surprised to see strong sales for a little while longer as buyers rush to purchase before all the rules come into effect.

I also see this market coming undone within a couple months prefaced by a huge flood of listings (which we are seeing now) and followed by a lengthy period of falling prices. The market was saved last year by the massive rate cuts that accompanied the global recession. Now local affordability is the worst ever and the only way rates can go is up.

Stick a fork in it…

me
me
10 years ago

your right Kite, I'll ignore you, your too dumb, just way too dumb

all the best

I love you

rp
rp
10 years ago

Carney: The housing market “is looking increasingly firmly valued,”

http://www2.macleans.ca/2010/04/06/too-big-to-fai

Got that? The problem of affordable housing lies with you. You need to make way more money. I suggest telephone scams.

Kite towards moon
Kite towards moon
10 years ago

Me,

You seems to be very disappointed and how could you not? I can see that inventory numbers turn out of you court thats why you have big reason to get disappointed.

me
me
10 years ago

PaulB

How do you see things playing out over the next:

30 days

90 days

180 days

365 days?

me
me
10 years ago

Kite!

I believe! Your work is done.

Now hit the road, you loser.

Kite towards moon
Kite towards moon
10 years ago

What type of education? If you are still not forming a line then look through your history on the blogs.Run buddy run,Small issue's and concerns are related to every single sector of life,these issue's will remain forever while we move forward and lower down our monthly payments and mortgage term.

Go buddy get out.

paulb
paulb
10 years ago

I think Kite is a clever bear, posing as a bull, to further weaken bullish credibility.

That or the tapeworm has made its way to the brain.

Animal Spirit
Animal Spirit
10 years ago

Kite – you honestly don't have a clue that you are writing to an educated audience, do you?