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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June 8th, 2010 at 4:50 pm
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 ….
June 8th, 2010 at 1:37 pm
@gary:
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.
June 8th, 2010 at 1:33 pm
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 activity, the buyers will not be driven by conventional factors. In other words, whether the market runs up or down by 10% over a given period is far less important than laundering the illegal funds and parking them in a safe jurisdiction for future access. 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. What amazes me is that the Vancouver media has never felt compelled to explore this with any rigor. I’ve come to the conclusion that no one in the political or corporate establishment really wants to honestly discuss what keeps the local housing market levitating.