BC has the highest personal debt loads

We’re number 1!

The province of British Columbia has the highest level of personal debt anywhere in Canada and it’s still growing.

With incomes low and house prices high, it’s not an entirely unexpected result.  But even if you remove house debt we have very high levels.  Not including mortgage debt, simple consumer debt averages $37,879 in BC.

And that of course has led to a rising number of bankruptcies. In the last four years bankruptcy rates across Canada have gone up 11%, here in BC the number is up 42%.

That Province article also talks about the ‘elation’ of declaring bankruptcy, but that usually only occurs after some one has used up all their other options and burnt up money they could have kept:

“People often come to see a trustee as a last resort, when credit is turned off and they can no longer borrow from one card to pay another,” Mantin says. “They come in and say ‘I regret that I didn’t know about these options sooner. All I’ve done over the last two years is tread water.'”

Frantic people make decisions that will compromise their future, Mantin says. One of the worst is cashing in RRSPs.

For one thing, only the last 12 months of RRSP contributions need be surrendered in a bankruptcy. And those who sacrifice an RRSP without learning to live within a budget are not facing the underlying issue, Mantin says.

“Unless they’re forced to make a behavioural change, I often find they’re in the same position a year or two later,” he says. “They’ve dealt with the short-term debt but haven’t solved the budget problem so they run their debts up again.”

Read the full article here.

Sort by:   newest | oldest | most voted
More Data Please
Guest
More Data Please
According to BCStats there are roughly 2 million households in 2012. 2M x $40K debt = $80 billion, probably an underestimate. On the bright side, just one year of illicit outflows from China could reset this debt with plenty of spare change for the other provinces. Source financialtaskforce.org: China has had massive problems with bribery, corruption, and illicit financial flows for years. In fact illicit outflows from the People’s Republic of China have ranged from an annual US$169 billion in 2000 to US$344 billion in 2008. The country is also, by far, the largest transmitter of illicit financial flows in the developing world. And in case it’s not already obvious, let me clarify that these numbers are unbelievably large. For a point of comparison, the PRC’s stock of total external debt in 2008 was $378 billion, just slightly greater than… Read more »
patriotz
Member

@More Data Please:
“Mr. Liu has been accused of receiving bribes in excess of $100 million during the years he oversaw the expansion of the nation’s high-speed rail system. ”

Lui wasn’t expelled for taking bribes, but because the Party needed a scapegoat for that fatal crash a while back.

Same sort of thing as Bo Xilai. His transgression was not keeping it quiet rather than being corrupt.

Devore
Member
Devore

Nearly $38k in consumer debt… mind boggling. What categories are included in that? I can’t imagine carrying that much debt. How can you possibly spend so much more money than you bring in? I mean, I can understand how one can, but this is average.

Boombust
Guest
Boombust

I think some of those idiots could use a heavy dose of Gail Vaz-Oxlade-ization.

crabman
Guest

I drove by a new development in North Van over the weekend called the Kimpton. They’re offering crash insurance – a $100k price-drop guarantee.

http://tinyurl.com/bhuz54o

victoria
Member
victoria

Well when housing is 11 times the average salary of course people are going to get into debt. When the mortgage is paid but the kids need shoes and the water tank is broken you are going to get into debt. Then the dog has to go to the vet so you can’t pay off the water tank and it builds and builds and before you know it you are only paying interest.

Of course there are people that over-spend like crazy – restaurants, Louise Vuitton, BMWs but for the average joe living in a city like Vancouver or Victoria (7 times the annual salary) … yup it would be easy to get into debt.

It don’t think either city is worth it.

patriotz
Member

@crabman:
“They’re offering crash insurance – a $100k price-drop guarantee.”

What means what? “New guaranteed prices are what you will pay today and are net of the $100,000 price protection guarantee provided by the developer and registered on the title on closing”.

I don’t know what that means exactly, but I’ll bet it means you don’t have any recourse if you simply can’t sell your place for the pre-sale price.

Bo Xilai
Guest
Bo Xilai

@patriotz:

Bo Xilai corruption…

Hey leave me out of this conversation. I’m trying to lead a quiet incognito life on my West Vancouver estate.

boogeybear
Guest
boogeybear

@Devore:

Especially when you could just have rolled that $38,000 of consumer debt into your CMHC guaranteed mortgage.

Brian
Guest
Brian

@devore

How? By buying luxury cars they don’t need. By going on vacations because they feel they’ve “earned”. By eating out all the time.

People in BC are idiots. They have to keep up with the Joneses even if it means sacrificing their future and being bankrupt. Does driving a luxury car make you feel better? Only if you can pay cash for it.

jesse
Member
But why so glum chaps? Apparently speculation is limited in BC: http://www.rew.ca/articles/property-flipping-in-the-metro-vancouver-market-353 We wanted to know, is flipping is as prevalent as it seems to be in the real estate markets of Vancouver and the Lower Mainland? And was it ever? We asked Landcor Data Corporation to do what they do best and sift through their stats for the answers. They tracked eight years of data on houses, townhouses and condos that were bought and sold within short periods of time: under 6 months, 6 months to 1 year, 1 year to 18 months, and 18 months to 2 years. The findings were intriguing: Flipping activity peaked in 2005–07 and never returned to those levels after the 2008–09 recession Six-month flips practically disappeared this year Yields also peaked in 2005–07, despite large increases in home prices and low interest rates… Read more »
Mars
Guest
Mars

from the article:

“has cut his spending to the point he only works in law halftime.”

so he is in prime time, 46, works in highly paid field and have opportunity to save for retirement, he decides to work only part time. What a fool. and somehow we should feel sorry for him as article suggest. fool

More Data Please
Guest
More Data Please

@crabman: Price guaranteed to drop $100K.

That offer still makes me laugh as a factual admission about the true current value of the property by the seller.

If even one person buys one of these gimmicks with CMHC insured financing, it is surely grounds to immediately freeze all CMHC insurance going forward. It means there are buyers who are simply so stupid or beyond hope that they can no longer be trusted to act in good faith.

Anonymous
Guest
Anonymous

@jesse: “Six-month flips practically disappeared this year”

Yes because those flips have been listed for longer than 6 months. They can’t sell them.

southseacompany
Member
southseacompany

Nice headline in the post:

“Canada braces as housing slowdown takes hold”
http://business.financialpost.com/2012/11/05/canada-braces-as-housing-slowdown-takes-hold/

Lead line;
“Sellers will commonly say, ’I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse”

More Data Please
Guest
More Data Please
@southseacompany: re: FP slowdown takes hold The quoted interview with a “bag holder” really struck me: “With the economy, I’d like to sell now. I worry about selling because it’s a condo, and that market is cooling even faster than houses,” said the newly married sportscaster. “We can’t sell it for a ridiculous amount of money any more.” If this is CMHC insured, CMHC should go after this person for fraud. She has admitted on the record in a newspaper that she financed a property for an amount which in her estimation “ridiculously” exceeds the true property value. How is this “ridiculous amount of money” any different than the excessive mortgage fraud perpetrated by organized criminals a little while ago? http://www.cbc.ca/news/canada/calgary/story/2010/05/13/mortgage-fraud-bmo-alberta-calgary-rcmp-police-investigate.html BMO alleges ringleaders of the fraud network would buy properties at market value but convince the bank they were… Read more »
Anura Femur
Guest
Anura Femur

@More Data Please:

“We can’t sell it for a ridiculous amount of money any more.”

The next time we see this Caucasian On Credit he’ll be saying “the government needs to do ‘something’ to help us.” And of course, something always means money.

bullwhip29
Guest
bullwhip29

Regarding the point made in the article about the “euphoria, tears of joy and relief”…

This is sending the wrong message and is precisely the reason society today is in such a f’in financial jam. As long as people think the system will bail their a$$es out at the press of the “easy” button, the reckless, irresponsible behavior will continue unabated. This certainly makes one question whether or not it makes any sense whatsoever to stuff your life savings into the mattress anymore when jacka$$es all over are essentially blowing all the money for you.

Anonymous
Guest
Anonymous

@Crabman

Kimpton!? Seriously? “Kimpton” is a terrible name for a condo development. It sounds like “Compton”! And this is being marketed as “luxury” real estate!

crabman
Guest

@patriotz: The details of that price drop guarantee are pretty vague. I imagine it means that if the developer sells a similar unit for less in the next 2 years, they refund the difference up to $100k.

Of course, I’m sure they won’t try to weasel out of it by offering “incentives” to future buyers instead of an outright price drop.

Here’s a picture of the sign. Check out the big red print.

http://i46.tinypic.com/2w6uhec.jpg

Patiently Waiting
Member
Patiently Waiting

@Anonymous: First I thought of Gimpton. As in “Bring out the Gimp.”

Then I thought of Kimpton=CrampedDump. I know its less obvious, but that’s what came to mind.

pricedoutfornow
Guest
pricedoutfornow
I see this a lot with my clients. They are drowning in debt and just keep liquidating things like RRSPs to pay the bills. It’s ridiculous! I think a lot of people would be best served by going bankrupt strategically. I mentioned this to a friend of mine, her husband’s run up a huge amount of debt in the past five years (real estate flips gone bad) and he now owes about $500k-or more if his business partner backs out, he’ll be on the hook for a million. I urged her to see a bankruptcy trustee, otherwise they could lose everything. Did she? I have no idea. I saw her about two years ago and she told me they have two years left before there’s no credit and or money left. And these are people who were financially comfortable before… Read more »
jesse
Member

@Anonymous: “Yes because those flips have been listed for longer than 6 month”

I want to know if they include newly completed units then sold in their numbers. In other words people buying presales have their purchase date booked on completion, then sell. Look at the CMHC starts and completions: graph

Completions increased starting in 2005 and kept high through the balance of 2009. Leading up to 2008 there would be no trouble selling a newly completed unit.

I think looking at “flipping” activity is the wrong approach. These guys are looking for symptoms, but the absence of the symptom does not mean there isn’t a huge bubble.

VMD
Member

Looks like the RE advertising revenue is still flowing for the Sun:
This just appeared in “Business News”
Vancouver Special sells in one week

“Forty-year-old five-bedroom home has been completely renovated”

– These transactions were compiled by Nicola Way of BestHomesBC.com and AssignmentsCanada.ca.

Realtors — send your recent sales to nicola(at)besthomesbc

900kCrackHouse
Guest
900kCrackHouse

@pricedoutfornow: The tide rolls out and we see who is swimming naked. If just a few people don’t have their trunks on it makes for interesting stories. If its a lot of people it screws the rest of us as well.

wpDiscuz