‘Joe Debtor’ gets older

The age of bankruptcy in Canada is growing.

There’s a troubling move towards more debt later in life.  Many Canadians are now going through their 50s with an increasing debt load rather than using that time to pay off debt.

But between 50 to 59 is usually the time when a person is trying to reduce debt and prepare for the golden years, says Douglas Hoyes, a trustee with the Ontario-based bankruptcy and consumer proposal services firm.

“We found, nope, in fact it’s the opposite. It keeps building and building,” says Hoyes, referring to debt loads.

The surprising thing is that the majority of these bankruptcies aren’t occurring due to unemployment:

A common stereotype is that the average bankrupt person is unemployed, but the study shows that 81 per cent of insolvent debtors were employed at the time of filing. The average take-home pay for Joe Debtor was $2,366 per month on a net basis, while the average household income was $3,058.

Read the full article here.

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Democrass
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Democrass
From the Globe: House price appreciation in Canada is believed to have dipped to its slowest rate since 2009. The Canadian Real Estate Association is expected to report Wednesday that the Multiple Listing Service home price index gained just 1.7 per cent in April from a year earlier, according to BMO Nesbitt Burns. Based on numbers already reported by several local real estate boards, Mr. Reitzes projects CREA will report that home sales slipped by a “modest” 4 per cent in April from a year earlier. That would be the smallest decline in six months, but he notes a “wonky calendar” because Easter came early, thus pushing down March levels and driving up those of last month. “Perhaps a better gauge of the softening market is the anticipated year-to-date drop of 10 per cent (assuming our April call is correct,”… Read more »
VultureBoy
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VultureBoy

Have to (roughly) agree with troll. In my neighborhood at least housing is moving and when stuff sells it is at about the highest prices ever. I understand that there are some problems in Richmond and so forth, but local buyers seem happy to buy at these prices so long as rates are low.

Many Franks
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Active Member

@Democrass:
Jesse has just posted a continuation of his analysis on MOI/price correlation. He’s using Teranet IIRC, which has a built-in delay since it’s released late, but it does relate.

Andrew
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Andrew
This past year has been quite boring for real estate, but it’s crazy to act like there haven’t been some price drops. Check out these two charts to see what’s been happening. From Brian Ripley (RE Bear): http://www.chpc.biz/vancouver_chart.html From Yattermatters (Real Estate Agent): http://www.yattermatters.com/wp/wp-content/images/2013/05/2013-04-30-Average-Price.jpg They have a bit different data, but both show prices have dropped from their peaks. Yattermatters (the more conservative of the two) shows: DETACHED – $1,152,091 – Down 6.7% in 14 months from all-time high in Feb, 2012 ($1,235,244) APARTMENT – $417,460 – Down 13.6% in 24 months from all-time high in Apr, 2011 ($483,424) ATTACHED – $549,447 – Down 7.4% in 13 months from all-time high in Mar, 2012 ($593,139) The thing for me that has made this year so boring is that sales/listings has been following last year almost exactly until the last couple… Read more »
Green Thumb
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Green Thumb

Furthermore, I think Dix should pass a law that any tanker off the BC coast that does not have a double hull should be torpedoed.

Mr Qwality
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Mr Qwality

we’re right on the Cusp of Green Party breakthru.. if you want to know what a Deflationary political party looks like… just take a look at Southern Vancouver Island. This is the area of the country the Deflation bomb goes off first… and it’s because of Age of Population.. nothing else… Study your demographics, grasshoppers..

Democrass
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Democrass

Lower Mainland Residential Composite HPI One month Change

February 0.4
March 0.5
April 0.7

Ok, so it looks like HPI increases have been accellerating each month of the spring season. Last year May was the peak. I expect the same this year. But are these increase enough to erase the decline of the previous 7 months? Moreover, as the bust gathers steam, subsequent springs are likely to be wearker. Next year, spring may be totally flat, for example.

/dev/null
Member
/dev/null

Interesting tidbit in the Globe story on OSFI:

48 per cent of all outstanding mortgages, both insured and uninsured, in the portfolios of the country’s six largest banks have remaining amortization periods of longer than 25 years

Burbs Boy
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Burbs Boy

#16 Bull Bull Bull – gave you a thumbs up because what you say is true, there is always need to re-evaluate when a business plan does not work out as expected. But I would like to have seen you expand upon this to see what happens when you DO re-evaluate. When the numbers are reviewed, and the assumptions challenged, it still seems to put us back to a point where a person would say “it has to go down, it doesn’t make sense where it is”. How do you reconcile that with the fact that it is only very slowly going down now? It is a question we would all like to know the answer to.

Democrass
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Democrass

This graph shows that our small spring bounce won’t meaningfully erode the preceding price drop:

http://vancouverpricedrop.files.wordpress.com/2013/04/chart.png

Moreover, the graph shows that many US markets had bounces along the way, including a few at roughly this point in the life of the bust. Busts take years to play out and a big picture view is required. Buying now during a typical bear market rally is a huge mistake.

tracker
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tracker

CNBC tracking you to the Nth degree.. dead give-away they are primarily a Main Stream Media manipulation Pusher outlet

Comscore Beacon
Foresee Results
Gigya
Omniture
Quantcast
Netratings Site Census

Who’s tracking you?

Not much of a name...
Member
Not much of a name...

@Democrass #32

Another way to look at the spring numbers is that the YOY decreases are accelerating too…

Apr – -3.9%
Mar – -3.9%
Feb – -3.3%
Jan – -2.8%
Dec – -2.3%
Nov – -1.7%

FYI – Apr 2013 vs Apr 2011

Down 0.4%

I guess it all depends on how you spin the numbers.

space889
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space889
Went to a SUCCESS RE purchase/sell info seminar for new immigrants put on by SUCCESS, Realtor and a TD mobile mortgage specialist. There are the usual arguments for purchase/investing in RE and why you should get a mortgage even if you can pay the whole thing in cash. However there is a new bit info about special program from Fed government for banks to lend to new immigrants (> 30 days and less than 5 years in Canada). If you can show the bank (or at least TD) funds in a bank accounts (preferably Cdn bank) for 35% down payment + 1 year total mortgage payment + property tax and the money has been in the said account for at least 30 days, your mortgage can be approved to a maximum of $1.25M with no check for jobs or income.… Read more »
Democrass
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Democrass

“Another way to look at the spring numbers is that the YOY decreases are accelerating too”

I like that. It takes seasonality into account.

jesse
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” if the market ends up rising back to where it started dropping in June, and this happens “every spring” then we really have a flat market or at worst a ‘soft landing’”

Indeed, in real terms that’s -2%. Also, say if prices are 30% overvalued, it will take 13 years of “flat” conditions to revert prices. I know it might be unpopular but that’s a possible outcome. 13 years is a long time to avoid “unexpected” shocks though!

And in terms of sales volumes, given what we know about what level MOI it takes to elicit price drops, that means a “new normal” for commission-based incomes.

jesse
Member

” the YOY decreases are accelerating too”

The change in YOY gains (ie the derivative of YOY price changes) will depend upon month-on-month price change differentials. It should be no surprise: spring prices are slightly weaker than they were this time last year so that would mean decreasing price changes YOY. Math wins again!

It's the Economy stupid
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It's the Economy stupid

Re: Green Thumb #23

Tanker traffic is under federal jurisdiction, nor can the province stop oil transport by rail which is a far more dangerous alternative.
Seems to me that the biggest accomplishment would be the loss of much needed tax revenue.

VultureBoy
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VultureBoy

The feds can’t do a thing without a social licence. If BC says “no” then the feds can do nothing. The “jurisdiction” is irrelevant.

Dead Heat
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Dead Heat

” Dix should pass a law that any tanker off the BC coast without a double hull should be torpedoed ”

Yup, and let him build some more Fast Ferries to serve as his navy.
After all, he has great experience as Glen Clark’s advisor.

Don't get it
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Don't get it

What is the point being made by Jesse?

jesse Says:
May 13th, 2013 at 1:21 pm 40
” the YOY decreases are accelerating too”

The change in YOY gains (ie the derivative of YOY price changes) will depend upon month-on-month price change differentials. It should be no surprise: spring prices are slightly weaker than they were this time last year so that would mean decreasing price changes YOY. Math wins again!

mosesupposes
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mosesupposes

Price have been stickier that I would have expected but that shouldn’t detract from some huge signs that we are in a very weak market.

In particular keep in mind that we are seeing incredibly low sales volume despite the lowest interest rates in decades.

Any bull that suggests the market is “good” or better in this situation is not very credible.

East Village
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East Village

I happened to wander into the London Drugs at 2600 block East Hastings on the weekend. This location had been slated for demolition and will be relocated in a new building at the same location that would house condos on top and other retail stores at the bottom. The condo sale signs had been up for months and there were signs of pending construction.

While at the customer service counter, I noticed a memo from London Drugs advising customers that the new store will not be built. Chatting with the LD employee manning the counter, I found out that condo sales had not been going well and the developer had decided to delay the project until market conditions improve. I’m thinking there will a long wait.

jesse
Member

“he has great experience as Glen Clark’s advisor”

Interestingly, Glen Clark has great experience as Jimmy Pattison’s advisor.

Short'em High
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Short'em High
HPI Panic and Confusion A refresher. HPI up or down, a mortgage is still not a good investment unless it is for a home that is near the rental equivalent price, not double or triple. HPI up or down does not change the fact the owner is liable for the entire mortgage amount no matter what prices do. If banks, OSFI, or CMHC to name a few start limiting mortgages to the rational rental equivalent amount, there will be no future buyer to rescue those who over overpay. If the lack of instant HPI correction to fair value still has readers of this forum house horny, consider moving to the US or other jurdisdiction where homes are now priced at rental value. To Canadians abroad who have done so already, please write in with tips on how to start and… Read more »
N
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N

Flat prices do not make sense in an environment where owners lose money by holding. Every non-owner-occupied home bought recently in Vancouver is losing money. That situation can hold for as long as: a) the owner has the funds to cover the losses; and b) the owner assumes that it makes sense to hold because prices will come back.