How big can debt loads get?

It seems like every few months there’s more news about Canadians taking on record levels of debt – a recent story linked to by southseacompany is on this topic:

Evidence Canadians are on a debt-fueled spending spree.

Canada may have spent the first half of the year stuck in an oil-driven recession, but you’d never know it looking at Canadians’ spending habits.

Consumer spending was 6.68 per cent higher in the third quarter of this year compared to a year earlier, payment solutions provider Moneris reported in its latest quarterly report.

British Columbia and Ontario led the way in spending growth, with B.C. up 10.2 per cent and Ontario up 9 per cent.

Even in recession-ravaged Alberta, which lost 2.6 per cent of all its jobs in the past year, consumer spending is up by 0.3 per cent compared to last year.

Any one else getting bored with the repetition? Is it really different here and can Canada pull off this trick indefinately?

Here’s the full article.

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

>“With 70 per cent of Canadian households already owning their own homes and housing affordability declining … lending activity will inevitably slow,”

hmmm… how can it keep going? maybe if we bring in a bunch who don’t own houses into the country. does anyone know if this is going to be happening or not?

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

oh, look. a solution to the problem has already presented it’s self!

wow! and i thought everything was going to just collapse!

Royal Bank scraps size limit on newcomer mortgages to keep up with Chinese demand

http://www.cbc.ca/news/business/rbc-mortgage-limit-size-1.3299631

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

now if only we can take these two interesting facts and make them into a more general theory about how public policy and the economy interact with respect to the real estate market. then we can test this theory against new events and determine if it correct or not.

space889
Guest
space889

@Ulsterman – Cuz the supply of big lots & SFH on Westside Vancouver has kept up or even exceeded general population growth right??

Maybe you should read up on supply and demand elasticity first.

https://en.wikipedia.org/wiki/Price_elasticity_of_supply

space889
Guest
space889
@Vanco – Stop it Vanco, you are making too much sense and logic, it’s going to cause their heads to explode and they will blame you for it! And no, this isn’t a small % of the population…they are just more brave saying it anonymously online. I doubt they act nearly this tough in real time. Heck, some of them might even be working for a communist overload…hahahaha…. btw, the big mansion with 888 street number in my neighborhood was occupied by people of Southeast Asia or ME descendent. Needless to say I was absolutely shocked, SHOCKED! Since you know…only Chinese would be tasteless enough to live in a big tacky mansion with 6 bathrooms and a superstitious 888 number. Any normal rational person would only want to live in tiny old bunglow that requires constant work & repair. If… Read more »
space889
Guest
space889

@w – BUT BUT BUT BUT BUT every bear on this blog INSISTS that rental deals are everywhere in all nice neighborhoods!!! You just have to look around, grabbed the over-leveraged over-indebted landlord by the balls, and bargain HARD! The landlords are all begging for good tenants!

space889
Guest
space889

@Puzzled and Confused – Here is a good article giving an overview of how inflation numbers are calculated. Yes, this is for US but I doubt StatsCan would use any drastically different methodology:

Your own personal inflation rate – John Mauldin

http://www.mauldineconomics.com/frontlinethoughts/your-own-personal-inflation-rate

As for gas prices, well I’m noticing that they are now jacking up the price by around 5 to 10 cents Thursday night to Monday and dropping them back down on Tuesday and Wednesdays

southseacompany
Member
southseacompany
“This year’s fireworks will be from central banks”, CNBC http://www.cnbc.com/2015/11/03/this-years-fireworks-will-be-from-central-banks.html “Mario Draghi and his team at the European Central Bank last month gave more than a hint that its 1 trillion euro ($1.1 trillion) quantitative easing (QE) program will be extended or ramped higher in December. Within 24 hours, the Chinese central bank had cut its main benchmark rate for the sixth time since November last year.” “By the following Sunday, both Mark Carney, the Bank of England governor, and Vice Chairman Fritz Zurbruegg, from the Swiss National Bank, were both penning dovish messages in their country’s national newspapers.” “Last week, Sweden’s Riksbank decided to expand its own program. The Bank of Japan and the Central Bank of Russia, meanwhile, kept rates on hold. But, it’s only a matter of time.” “Will the U.S. Federal Reserve be the only central… Read more »
Oracle
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Oracle

Yup, keep those detached prices going up.

Time to tax wealth as brain drain 2.0 is about to happen. Say start at 1% a year.

$3 million dollar home = $30,000 tax.

What??? No?? Well where is the money going to come from? I sure ain’t paying any taxes …id rather leave the city. 🙂

vangrl
Member
vangrl
Diadora
Guest
Diadora
Meanwhile in Aussieland: …Our thesis is not that Chinese buyers have disappeared from the market completely. But the weight of evidence suggests that at the very least, there has been some cooling of Chinese interest in recent times, off an historically high level. The limited data available suggests that Australia could have experienced a significant pull-forward of Chinese demand over the past few years. …we suggest that the Chinese consumer is cyclically weak because the economy is struggling with exchange rate overvaluation and capital flight. It is the cyclically poor condition of the Chinese middle-to-upper-class which is driving the slowdown in property buying abroad. Leading indicators suggest that the slowdown has further to run globally. Even a flattening out of Chinese buying of Australian property is bad news for the housing market because supply is rising, and locals are being… Read more »
Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

learn mandarin ppl.

Guy Smiley
Member
Guy Smiley

That is a great article on mortgages BBB. Even the old limit of $1.25M to foreigners with no credit history seems crazy. Now it appears the sky is the limit. 88% of buyers with a last name typical of the Chinese mainland involved a mortgage? I thought these were all cash purchases? Andy yes yes yes Space – admittedly lots of these could be local Chinese, not foreigners. Keep your pants on.

Confucius
Guest
Confucius
Will the fleeing Chinese cause their own demise? Scared of their unstable economy at home, they are fleeing in droves. All that money leaving will add to China’s slowing economy and cause a hard landing. This will in turn hurt the global economy and cause a financial crisis and a freeze in credit markets. Frozen credit markets will cause a crash in asset prices worldwide. Here’s an old Chinese tale. Upon birth, a monk told the parents of a new born that this child will kill them when he grows up. Fearful for their lives, they gave the child away. The child grew up in an unhappy foster home and later became a thief. One day, the thief tried to steal from an old couple, but they would not let him, so he then killed them. The couple was his… Read more »
vangrl
Member
vangrl

If they were locals, why did Royal Bank feel the need to lift restrictions on people with no credit & income history?

Guy Smiley
Member
Guy Smiley

Well where is the money going to come from?

Property taxes are still a trifle but at least MSP Premiums are going up again. From $106/mth in 2009 to $150 in 2016 netting well over $2B for the province. The ONLY province in the country that imposes this bullshit tax. There’s one source.

Guy Smiley
Member
Guy Smiley

I propose a great big tax on the act of demolishing a house. Maybe a flat $250k fee or something like a 10% of the purchase price of the house and property.

vangrl
Member
vangrl

#17

I agree, as that would hit those that can afford it the most. Foreign money.

Yunak
Guest
Yunak

@11

Meanwhile in Aussieland:

It still needs some action and push-back internally, it can’t be all external/global. Sounds like they got a bit organized and heard…

https://www.partyforfreedom.org.au/2015/05/11/rally-against-the-chinese-real-estate-invasion/

ChinaOne
Guest
ChinaOne
Told you my cousin come and buy 2 house. I smart tan them. I come students visa 11 yr ago. My 2 parent now here. My 4 grandparent here. my 4 grandparent get GIS lots of money every month. They go back 5 months to China every year. No need to get BC driver licence as reset for 6 months. My Father run company back in China so he in and out. My grandparents have lot land in Shanghai. Lots rental income we get here Union Card. No report to Canada. We more smarter. Me getting married soon. Lots white girl want my money but not giving them. My kid go to private school. Then UBC. I want best hospital and education. Toll roads I want. Take too long. Poor people should not have car. We want like China here.
ChinaOne
Guest
ChinaOne

My cousin dad friend like person still in China. He want white girl and then he pay her rent. He say his friends doing it like back in China. helping out poor girl.

Yunak
Guest
Yunak

@19

This almost sounds funny compared to Vancouver…

“Australia is experiencing its worst housing bubble ever having the most indebted housing sector per capita in the world. An insatiable Chinese appetite for limited residential property has created a debt bubble as local families increase borrowings in the hope of securing a home. National mortgage and household debt has skyrocketed to over $1.9 trillion making the US sub prime collapse look like a walk in the park when our housing bubble bursts.

In particular, the Sydney property market has reached new unsustainable highs with the median Sydney house price now standing at $914,000 smashing local home ownership rates and creating more unproductive debt.”

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

@Guy Smiley

>I propose a great big tax on the act of demolishing a house

we can call it the “sour grapes because i missed the boat when everyone was screaming at me to get on board so now i spend my time proposing fantasy taxes tax”

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

i propose we bring back serfdom

RFM
Guest
RFM
The VANCOUVER REALTOR HUNGER INDEX is the percent of realtors who earned no commission income for the stated month. For October 2015 the VRHI was 45%. How does this compare? The 18-year average for October is 50%. At 45%, the 2015 October VRHI was higher than 7 years, the same as 1 year and lower than 9 years since 1998. Continued lower-than-average inventory and strong demand forced already high prices higher, especially in single family homes, where the HPI increased a whopping 20.1 % from October 2014 to $1,197,600. Endlessly-low interest rates, clueless BOC leadership, a flood of foreign investment money and knee-jerk buying by uninformed and delusional buyers, the October sales prices are extraordinary! And unsustainable. My official opinion of all this is available 24/7/365 for US$0.05! Call now! Operators standing by! However, for a more detailed and scientific… Read more »
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