The problem with low debt levels

We’ve seen lots of warnings about dangerously high consumer debt levels in Canada for years now, but here’s something new: Millennials lack of debt may be a sign of trouble.

Insolvency filings by consumers have started to edge higher after a long decline that began after the last recession. As has already been widely noted, the share of insolvencies accounted for by seniors is growing faster than any age group. What has not had much attention is the fact that the young-adult share is falling. Could this be a rare bit of good news for a cohort of the population that has been struggling financially?

Falling insolvencies among young adults definitely sounds good, but every silver lining must have a cloud right?  What’s the chicken-little take on this situation?

Hoyes Michalos recently produced an analysis called Joe Debtor that looked at people who make insolvency filings. The firm says 86 per cent of debtors ages 18 to 29 are working, but their average income is the lowest of all groups at $1,996 on a net basis per month. The average unsecured debt for the group is $32,229, also lowest of all age groups.

Personal loans are the biggest debt component at $11,841 for young adults making insolvency filings, followed by credit cards at $9,858. Almost 30 per cent have student debt, with the average amount owed averaging $3,716.

Their problems in today’s economy may have kept millennials from worse debt problems, Mr. Hoyes suggests. “If you haven’t been able to get a decent job, then it’s a lot more difficult to get into a huge pile of debt.”

In today’s debt-hungry world a lack of bankruptcies is indicative of a low income, how’s that for a bummer?

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southseacompany
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southseacompany
“Toronto, Vancouver home prices could plunge 30%, says economist who predicted housing crash that never happened”, Financial Post http://business.financialpost.com/personal-finance/mortgages-real-estate/economist-who-predicted-canadian-housing-crash-that-never-happened-says-toronto-vancouver-prices-could-drop-by-30 “David Madani, the economist known for his prediction of a 25 per cent correction in Canadian house prices, has a new forecast for the Toronto and Vancouver markets.” “His forecast from February 2011 has yet to materialize but that didn’t stop Madani, of Capital Economics, from forecasting a price correction of as much as 30 per cent in Canada’s two most expensive cities.” ““Lower mortgage rates have enabled Canada’s key housing markets to defy gravity for the past few years. But with prices rising dangerously high relative to household incomes, there is the potential for a large correction down the road,” said Madani, in a note out Tuesday.” ““The Vancouver and Toronto housing markets appear to be enjoying a revival of… Read more »
UBC in crisis mode
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UBC in crisis mode

“As we have outlined before, house prices have become detached from household incomes and rents. The risk is that housing is viewed as a one-way bet, prompting the classic market emotion of greed among investors.”

Dose this guy know anything about foreign money? Vancouver’s SFH price will be increase 10% per year for next 12 years.

VanRant
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VanRant

This is madness as we witness crash after crash. All these bubbles in the (housing, stocks, bonds, derivatives, etc) are the results of 0% interest rates. Greenspans once said the interest rates were too low for too long right after the great housing crash in the US in ’07 and to fix it, they lowered it to 0 and kept it since. You’ll have to have a balance with interest rate as a counter weight and there is no such thing as free money! Rise interest rates now!

Best place on meth
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Best place on meth

I’m glad I have zero debt, but is there a way to invest in these payday loan joints?

They seem to be doing a booming business.

Guy Smiley
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Guy Smiley

Anyone link to the evolving HCG story yet?

Home Capital Group biggest loser on TSX today ahead of earnings

“Sources familiar with the company said that the split occurred after an internal audit discovered improperly documented mortgages.”

This one is full of fun: director resignation; shorts> than %28 of all shares; etc

Bull! Bull! Bull!
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Bull! Bull! Bull!

Guy Smiley, when will HCG cause vancouver real estate to crash? should i sell ASAP?

Guy Smiley
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Guy Smiley

Sell what BBB? Usually you are a bit more clever with you responding quips. HCG is falling. It’s shows investor sentiment on the state of a mortgage lender – I never suggested it meant anything more. Potentially viewed as something of a leading indicator …. maybe. I know you’re just being trenchant, but if you own RE or HCG then yes, I think you’d be wise to get the fuck out either/ both.

Bull! Bull! Bull!
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Bull! Bull! Bull!

Guy, how are your friends doing now? my guess is better than you. keep smiling.

Guy Smiley Says:
February 3rd, 2012 at 1:59 am 12
@Chemguy

You have a good weekend too, Buzzkill 🙂

I have several friends who have bought in the last 2 years. Not speculators, just young(ish) couples who were whipped into a combination of fear and greed by the constant barrage of bullish media coverage of Vancouver RE. These will be the typical losers of the coming correction unfortunately.

Funny now how many commentators are rushing to joint the bear-parade. Everyone wants to be able to say they called it.

Bull! Bull! Bull!
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Bull! Bull! Bull!

can someone update the real estate roller coaster? it’s 5 years out of date.

http://vancouvercondo.info/coaster

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

when are we going to get a new battle map? the most recent one is from 2 years go.

http://vancouverpeak.com/showthread.php?tid=68

Guy Smiley
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Guy Smiley

Those friends are feeling pretty smug like you BBB. Unfortunately they still can’t afford much of a vacation, never eat out and don’t put their kids into organized sports. And the game isn’t over yet.

Bull! Bull! Bull!
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Bull! Bull! Bull!

>Unfortunately they still can’t afford much of a vacation, never eat out and don’t put their kids into organized sports. And the game isn’t over yet.

haven’t heard that old yarn in a long time :). look, you’ve made me a guy smiley too!

maybe this HCG thing will blow up wipe the smug look off all their faces, eh guy? those irrational buyers. why can’t they make sound economic non-decisions like you?

paulb
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Active Member

New Listings 205
Price Changes 72
Sold Listings 210
TI:12779

http://www.paulboenisch.com

Best place on meth
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Best place on meth

Wow BBB, you’re especially ornery today, almost as spastic as spaceshit.

You may want to switch to decaf in the afternoon.

Corrupt in Canada
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Corrupt in Canada

Look at those sold listings!

Kim
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Kim

Thank you BBB for ensuring that the discussion on here remains fair and balanced.

Without your input, the downtrodden developers, real estate agents, government departments, political parties, and speculators just wouldn’t have their voice represented on this site, and that just wouldn’t be fair – heaven knows the difficulties they must face trying to get their stories out on mainstream media each and every day.

I’m sure glad you are so generous with sharing your wisdom and compassion with everyone here. You really bring a lot of value to the comments section. I only wish you would comment more…

Best place on meth
Member
Best place on meth

Chinese farmer invested life savings in stocks, lost it all

http://www.cnbc.com/2015/07/28/chinese-farmer-invested-life-savings-in-stocks-lost-it-all.html

Tragic….so darned…tragic.

I guess this is the difference between an investor and a simpleton gambler.

I have to wonder though where a farmer in China came up with $164,000 USD in the first place.

History
Guest
History
w
Guest
w
w
Guest
w

>I have to wonder though where a farmer in China came up with $164,000 USD in the first place.

That’s probably more savings than the average Vancouverite. And right now 1.4 billion Chinese are learning that the Chinese government can’t be trusted and that China is not a good place to invest all that money.

>”I don’t know what to do. I trusted the government too much. I won’t touch stocks again,”

If a bumpkin farmer has almost $200k in savings how much do you think a Beijing office worker has?

Their property bubble burst, their stock market burst, where do you think all that money is going to go next?

midnite toker
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midnite toker

Meh.

Corrupt in Canada
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Corrupt in Canada

@17 go google “china stock market suicide” thats like your porn isnt it 😀

Best place on meth
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Best place on meth

@22

In China it’s pointless to jump out a window, you’ll just land on shitloads of people and have to get up again.

Oracle
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Oracle

Madani is an ignorant tool…or very clever and has ulterior motives.

Foreign money inflows from future and recent immigrants is driving this boom. And the immigrants are the highest number in the western world on a per capita basis.

Add to this record number of temps and students who don’t need a credit history to buy a house.

patriotz
Member

@20: “If a bumpkin farmer has almost $200k in savings how much do you think a Beijing office worker has?”

If he’s already bought his overpriced condo which he needed to get a wife, nothing. We’ve already had postings describing this.

Rural dwellers at least don’t have to go through this as housing is essentially passed down within families.

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