Vancouver Condo Info

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.

Johnny O pointed out this CBC feature on ‘the Monarchs of Money‘.

Central Bankers pulled the global economy back from the brink of a debt laden collapse by printing money.

Where does this lead and who benefits?

Quietly, without much public fuss or discussion, a new ruling class has risen in the richer nations.

These men and women are unelected and tend to shun the publicity hogged by the politicians with whom they co-exist.

They are the world’s central bankers. Every six weeks or so, they gather in Basel, Switzerland, for secret discussions and, to an extent at least, they act in concert.

The decisions that emerge from those meetings affect the entire world. And yet the broad public has a dim understanding, if any, of the job they do.

In fact, these individuals now wield at least as much influence over the lives of ordinary citizens as prime ministers and presidents.

Read the full article over at the CBC.

Many Franks pointed out this profile from CBC’s Sunday Edition on a bankrupt homeowner.

This isn’t really a tragedy.

It isn’t even just a story about personal responsibility.

This is actually a simple “here’s what” for all the policy makers who thought “what could be the downside of offering up government backed zero down 40 year loans?”.

Sure, it’s all ‘booming economy this’, ‘free money that’ for a while.

And who doesn’t like free money?

Seven times in the preceding two years I had approached the bank that held the lion’s share of my credit card debt and asked them to reduce the interest from 20 percent to something more manageable, something more like 10. I explained that I had been laid off, that I was now not only a single mom but a full-time student, living on student loans. I explained that I was trying my best to pay it off but I couldn’t even make a dent in it with interest that high. Seven times they turned me down. The last time I met with a bank officer, she told me to make all my payments on time for a year and then come back and she’d consider it. I shuffled off, head bowed.

And then the mortgage company told me they were calling the mortgage – a forty-year-mortgage with no money down, made back in the day when you could still do that. I have paid nearly sixty thousand dollars towards that mortgage. Nearly five years in, I have yet to touch the principal. Get a new lender, they told me or come up with the pay-out amount, the same amount of money I borrowed initially. Impossible. I cried.

The silver lining? Bankruptcy was a relief. The kids will be fine, their mother obviously loves them, and the bank made their money.

I paid that credit card debt four times over. The bank is NOT getting ripped off here. They’ve done just fine by me. And my house? We loved our little house, it has been just lovely for us. And now it will be just lovely for some other family who needs a home. We’ll find another little house, or an apartment, and we will make it fine for us, too.

Read the full story over at the CBC.

story submitted by iconoclast

Well, maybe not everything…

You can probably pay less for a computer or a house, but many of the day-to-day expenses of living are going up around here.

As the new year rolled over there was a spate of announcement for rising taxes, user fees, premiums and fares in BC.

In Vancouver, homeowners will pay about three per cent more in 2013 on their property taxes and utility bills.

The cost of health care premiums is set to rise in the province, from $128 to $133 per month for a family, adding up to $60 per year, according to the Canadian Taxpayers Federation.

“Most of us would say, ‘OK, we can squeeze out five dollars a month somewhere,’ ” said spokesman Jordan Bateman.

But, he added, this is the fourth January premiums have increased and “it’s really starting to weigh down taxpayers.”

Federally, Employment Insurance and Canada Pension premiums will also increase.

Workers who make over $47,400 will pay $891, up $51 from last year, and employers will pay $1,247 in EI premiums, up $72. Workers and employers will both pay an extra $49 in CPP premiums, with workers paying $2,356 in 2013.

The cost of getting around is also going up.

Yep, Translink fares are going up too – a one zone fare goes from $2.50 to $2.75.  Also Tolls and BC Ferry fare.

For the whole list check out the original article in the Vancouver Sun.

A relocation company has some Vancouver resident budget “case studies” to help people get over the idea that Vancouver may be too expensive to live in. Among their suggestions:

• $1225/month rent is not out of line for a $36,000/year salary.
• a single female can get a month’s groceries in Kits for $170
• interest rates never go up
• unexpected expenses only hit those who plan for them
• nobody has existing debt that needs servicing outside a mortgage

They’re like Peter Pan; if they just wish hard enough, Vancouver will be a great place for lower-middle class people to live.

Canadian consumer debt.  It’s not just growing, it’s growing faster.

Transunion has released their latest quarterly analysis and it shows Canadian household debt loads increasing 400% percent faster than inflation.

Statistics Canada pegs Canadian household market debt at an astounding 163% of disposable income.

For comparisons sake, the US housing bubble saw household debt peak in 2007 at 128% of disposable income.  By 2011 the US rate was down to 112%.

The good news? Credit card debt is actually down year over year and delinquencies across all types of debt remain low.

Transunion puts the average household non-mortgage debt at $26,768.  Do you owe more or less than that?

Higgins said the increase stands in stark contrast to encouraging signs from relatively stagnant debt growth in the prior three quarters.

He also points out that in the past five years, debt loads have increased 400 per cent more than the rate of inflation — with inflation as measured by the Consumer Price Index up nine per cent and consumer debt jumping more than 37 per cent.

“Debt’s outpacing us and continues to outpace us, so at some point in time there’s going to be a reconciliation,” Higgins said.

“Hopefully it’s not drastic and hopefully it doesn’t hit everybody, but there’s going to be a correction somehow along the way.”

Read the full article over at the CBC.

The more things change the more they stay the same.

The president is back in the white house and there’s rumbling of a fiscal crisis again.

Flaherty has said he’s not going to take another recession lying down.

Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney both pledged Wednesday to take action to support the economy if a shock from the U.S., or Europe, threatened to once again plunge the country into recession.

“We are a pragmatic, sensible government. If our economy goes into recession because of an external shock from the United States or the eurozone, or both, we will take steps to stimulate the economy,” Flaherty told the Commons finance committee in an evening session.

“What we have done before we will do again. We will not do exactly the same thing again…but we are not going to stand by and have the Canadian economy slip deep into a recession with high unemployment.”

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.

Looking for a bargain?

Why not buy a disgusting heap of a house that no one else wants and turn it into your dream home?

The Financial Post has an article about the pros and cons of buying a fixer-upper.

It’s a first-time homebuyer’s dream: Snag a rundown house in a terrific neighborhood, and then revamp it to your heart’s content.

But fair warning, that fixer-upper could become your worst nightmare.

“You have to really know what you’re getting into,” says Zillow.com real estate expert Brendon DeSimone. “It could be the case where it seems like a good price and then you dig deeper and find that the windows are off, the electrical foundation is messy, and so on.”

Translation: You could wind up spending more than you bargained for.

Read the full article here.

Thank goodness we don’t have a housing bubble in Vancouver!

Otherwise one might start to worry about these latest numbers on housing affordability.

The housing affordability index takes local family income and then looks at what percent of it would would be required to service the debt on an average benchmark bungalow.

The entire province of BC is at 69.7% and blows away the rest of Canada for overpriced houses. Only Ontario starts to come close with an affordability index of 43.9%. Even Toronto can’t compete in the overvalued housing arena, coming in at 54.5%.

According to RBC Vancouver is the champion of overpriced houses. To buy the benchmark bungalow here it would take 91% of a local families pre-tax income to service the debt.

From Macleans magazine:

Nothing, of course, could persuade condo king Bob Rennie that the Vancouver housing market is in a bubble (or, worse yet, a bubble that’s starting to let the air out).

For everyone else, take a look at this chart RBC put out today with its latest survey of housing affordability in Canada (which is deteriorating in most provinces, by the way)

No problem, just arbitrarily knock 20% off those Vancouver numbers and we’re not much worse than Toronto.

If you look around the world, you may be able to find a few markets that have an even worse affordability index than Vancouver, with lower incomes or higher house prices. But for some reason, most of those places seem to be able to pull in higher rents than Vancouver.