The Debt Place on Earth

Vansanity pointed out this article in the Vancouver Sun.  Canada has the highest level of household debt amongst developed nations and right here in BC we have the highest willingness to go into debt in all of Canada.

“It’s difficult to make a simple judgment [that B.C. is] better off or worse off,” said Elena Simonova, senior research and policy analyst with the association, because provincial figures on household debt are not available.

Across Canada, however, the CGA association was able to observe that by 2009, consumer debt in Canada had more than doubled since 1989 to $1.44 trillion -$41,740 for every single Canadian. By the end of 2009,

Canadians’ debt-to-income ratio reached 144 per cent. And household debt, expressed as a ratio compared with household assets, ranked as highest among 20 countries in the Organization for Economic Cooperation and Development.

We’re number one! We’re number one!

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gary
Guest
gary

And yet, a CIBC study published a week or two ago by economist Benjamin Tal asserts that mortgage debt levels in BC vs total home equity are no higher than in Toronto …. so once again, the 'official' explanations do not wash …. something else is going on here ….

patriotz
Member

@gary:

I’ve talked to many economists and so-called experts who track the BC real estate market and not one of them has ever been able to account for the huge discrepancies between the modest local median household incomes and lofty house prices.

And what does Vancouver have in common with the US markets in California and elsewhere that had similar discrepancies between incomes and house prices 4 or 5 years ago?

Just one thing – EASY CREDIT.

gary
Guest
gary
I've studied the BC real estate market for years, both as a resident and (now) as a non-resident. All I can say is that every official explanation i've seen for Vancouver's sky-high prices makes no sense, and does not hold up under scrutiny. Clearly there is something going on here that the vancouver real estate industry and the banks are unwilling to discuss publicly. The illegal drug trade obviously generates a huge whack of cash that is laundered in part thru local real estate. But I'm starting to think wealthy foreign buyers — acting through local agents or representatives who have local addresses and thus qualify as "BC residents" per Landcor's data — are in fact a big part of the story too. Such buyers can buy multiple properties, and if the source of funds is derived from some illegal… Read more »
Purp1
Guest
Purp1

Anecdotal. When our home sold a few weeks ago, 4 offers, none from "Rich Foreign Investors". Price was bid up by crazy young local couples who wanted to get into the market before rates went up.

I have no doubt that foreign money and hot money is involved in this market to some extent. But take one look at those debt numbers for Canada and it's clear that most of it is driven by loose mortgages goosed by low rates and a CMHC guarantee.

This will not end well.

Anonymous
Guest
Anonymous

@chip:

Although I agree Canada is a joke as far as immigration and drug laws, its silly to attribute the run up in real estate foreign money. Consider that corrupt Hong Kong cop.. he embezzled his money in the mid 1970s! Look at those prices on those homes listed in that article.. 400k for a west side home!

Its regular folks that have bought into the hype, that have over-leveraged, that are greater fool landlords, these are the people that are the largest pool of buyers.

Bolid
Guest
Bolid

@chip:

I guess this is how local social architects think a world class city gets built. Bring in all kind of scumbags, gangsters, prostitutes, scoundrels,con artists take dirty money from them and pronounce them ELITE.

patriotz
Member
@No More Gordocracies: Now you want to seem to be superior in knowledge to the vast majority of Australians (78% in a recent poll) that already know that Asians that are NOT residents and have no right to own an existing home in OZ are a major reason why locals can’t afford a home. They don't "know" this, they BELIEVE this. The major problem is the same in Oz as in Canada – the government is deliberately inflating RE prices. That's what I'm sensitive about – attempts to let the real culprit, government, off the hook. The Australian Government has announced a boost to the First Home Owners Grant.You can now claim $21,000 from them if you enter into a contract to build a brand new home before 30th September 2009. http://www.first-home-owners-grant.com/ If the Oz government really wanted affordable house… Read more »
No More Gordocracies
Guest
No More Gordocracies

@Happy Renting:

I think you missed the point as so many seem to do.

If you were referring to my post I wasn't talking about immigrants was I? Maybe you were talking about another post? Just curious.

Immigrants as long as they have a right to be here legally have every right to buy.

Here is an interesting new aspect to the Aussie new enhanced FIRB rules…..Australian citizens are urged to spy on their neighbors and report any law breaking in this housing matter. Many Asian families send their kids to school in OZ and then buy a house for them to live in. The new rules are that after a students visa expires the parents must now sell their homes. They can no longer keep them as an investment.

No More Gordocracies
Guest
No More Gordocracies
@patriotz: Hi Patriotz You seem to always come out of nowhere when this issue comes up. Are you someone in the industry, someone like Michael Levy by any chance? Whoever you really are, you seem to be very sensitive to anyone suggesting that Asians have ANY effect here. Now you want to seem to be superior in knowledge to the vast majority of Australians (78% in a recent poll) that already know that Asians that are NOT residents and have no right to own an existing home in OZ are a major reason why locals can't afford a home. Rudd is to be commended for his new clamp down on Asians from abroad buying everything in sight. The truth is the truth and political correctness is the shield the real estate industry hides behind when some CANADIAN RESIDENT (any nationality… Read more »
patriotz
Member

@No More Gordocracies:

This is EXACTLY what needs to be done in Canada and I question the motives of anyone who says differently.

What EXACTLY needs to be done in Canada is for the government to stop guaranteeing mortgages and end all other programs that promote home ownership.

That is what is propping up inflated RE prices both here and in Oz. Rich foreigners are just scapegoats.

chip
Guest
chip
I travel to Hong Kong a fair bit and whenever there is a corruption case in the news I almost reflexively look for a Vancouver real estate angle. These are some I remember from the last few years: 1) corrupt cop: "A covert police study obtained by The Asian Pacific Post shows that Hon and his family had bought at least 11 residential and commercial properties and established a dozen companies in Vancouver, including a restaurant on Robson Street." http://www.asianpacificpost.com/portal2/c1ee8c441… 2) corrupt banker: "Gao Shan has been alleged by China for embezzling $150m from a Bank of China's small branch in Heilongjiang, where he was the branch manager. Apart from Gao, China believes his accomplice Li Dongzhe (李東哲) also lives in Vancouver. A national arrest warrant was issued against Gao in 2005. However, there was no "Red Notice" issued by… Read more »
patriotz
Member

@JDCans:

In Canada, he can buy in Vancouver tomorrow and then apply for citizenship. He knows even if he doesn’t get it immediately, he will eventually – and owning assets here just helps his case that much more.

That is complete nonsense. Owning RE in Canada is not in any way a qualification for immigration. BTW I don't know if "apply for citizenship" was just a slip on your part, but if you really believe it you're even more out of touch.

In 2008 BC received a grand total of 6,498 business class immigrants from all source countries. If it was so simple, obviously we would get far more.

http://www.welcomebc.ca/shared/docs/communities/i

Also statistics show that offshore RE purchases are in the low single digits in BC, even in Vancouver.

VHB
Member
VHB

The total new listings today is the highest we have seen this year, and likely for a number of years. THAT is a busy day!

See data here.

swirlyman
Guest
swirlyman

Mish talks about Canada, about 14 minutes into the interview:
http://www.howestreet.com/index.php?pl=/goldradio

Chilled
Guest
Chilled

@stupid flys:

So what you are saying, in a nutshell, is our federal government, with provincial and municipal governments in tow, sold us down the river?

As for the Italian / Chinese mix thingy, can I come over for dinner sometimes? I'll bring the beer.

Chilled
Guest
Chilled

@care bear:

care bear Says:

May 13th, 2010 at 3:05 pm

Found this interesting – 2 BR House in Point Roberts (30 mins south of bubblecouver) $154,0000 furnished!

http://vancouver.en.craigslist…..23581.html

You can’t even buy a batchelor apartment in Chilliwack for that price!

++++++++++++++++

Yeah, but can you imagine the angst when crossing the border everyday to come to work or go home? Your mind would be racing; "do I get the rubber glove today or not………do I get the rubber glove today or not………"

What you save in housing costs will be transferred to anti-anxiety medication. LOL

ulsterman
Guest

I'm glad the foreign rich asian buyer has come up for discussion. For years we've been told how little Vancouverites earn vs other parts of Canada and the world. What is the median individual full-time income – something like 40k? Ok, so then who IS bidding all these average Van bungalows up to 800k+

Let's assume it isn't average people with average incomes. The booming organized crime money laundering gangs and the rich asians theories appear no more far fetched than ordinary Joes magically bidding up prices into the 7 digits.

asp
Member
asp

@ibought3: Population growth for the Vancouver area is no greater than for other cities in Canada, and total housing units have been increasing at a greater pace than population.

BC Migration & Immigration

total BC population

1999 4,011,375

2000 4,039,230

2001 4,076,264

2002 4,098,178

2003 4,122,396

2004 4,155,170

2005 4,196,788

2006 4,243,580

2007 4,310,305

2008 4,381,603

2009 4,455,207

immigration from Asia

1999 27,414

2000 28,176

2001 29,045

2002 25,956

2003 27,020

2004 27,399

2005 34,653

2006 31,366

2007 27,894

2008 31,890

No stats for 2009/2010

arbitrage
Guest
arbitrage

geez not more of this rich xxxx bullshit.

re: buying for immigration – if i were a rich asian (who's to say i aint?) why wouldnt i buy in any other canadian city with better financial metrics than vancouver.

You dont have to own in vancouver specifically for canadian citizenship do you?

As for setting up the wife and kids in Vancouver – last time i checked, you can live in vancouver without owning.

Superfly
Guest
Superfly

Wow, that got voted down fast!

domus
Guest
domus

@paulb.: Damn, just over ten short!

By the way, this has got to be the biggest inventory in recorded history? Or close to it?

Frank
Guest
Frank

In any case China's RE is bursting as is their stock-market, so the whole isuue will be mute soon.

ibought3
Member
ibought3

The other day Larry Y's site showed ~700 listings. Was that an anomaly or several days worth rolled into one?

Re: the rich Asians. Does anybody have cold hard immigration numbers? Our city has always had a lot of immigration, and China has had many years of consecutive 9-10% GDP growth. Why do people think that suddenly in mid 2009-2010, that Asians got rich? Was there a spike in immigration? I doubt it.

Plus, Toronto and Montreal still get more immigrants every year.

Superfly
Guest
Superfly

That sales remain so high, long after April 19, lends some support to the "asian invasion" theory. 4000 per month is huge. At 20,000 listings MOI = 5, which is balanced, not falling prices.

After all, if there was no problem, the Aussies wouldn't have acted. Anyone know of any MPs looking into this issue / proposing bills etc?

paulb fan
Guest
paulb fan

@paulb.:

I don’t remember any days cracking 500 in 2008.

You are right. The maximum we hit in 2008 was 445 on May 09. Wowieeeeeeeeeeeeee.