StatsCan released a major report Friday that outlines the overall debt situation of Canadians… It only measured what is owed by Canadians who carry any form of debt, not those that are debt free, and according to the report, the typical borrower owed an average of $114,400 as of 2009. That number, however,…is almost certainly higher today due to…[the fact that] low lending rates have been at 1% since early 2008…More worrisome could be that two-thirds of all Canadians who carry debt owe more than the average. Words: 585
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The report makes clear how different segments of Canadian society have taken on debt, depending on their geographic location, income, and education levels.
Location, location, location
Despite having some of the most expensive housing markets in the country, residents of British Columbia only had the second highest debt levels, averaging $155,500. Canada’s most indebted citizens are in Alberta, where the typical borrower owes $157,700. The least indebted Canadians lives in the Atlantic region and Quebec, with average debts of $69,300 and $78,900 respectively.
Statistics Canada says much of the average debt levels in each region can be explained by local housing prices and income levels. While British Columbia has seen home prices skyrocket over the past few years, Alberta has seen income levels rise due to expansion in the oil sands.
Because mortgage debt is often the largest amount an individual will ever owe, it is no surprise that Canadians with mortgages have the highest debts. Homeowners still carrying mortgages owe an average of $161,200 in all forms of debt. That represents 82 per cent of all outstanding debt in the country.
Conversely, renters in Canada owe significantly less with an average of just $36,200.
Higher education, higher debts
Canadians that attended post-secondary education were more likely to carry heavy debt burdens as well. The average university graduate in Canada who owes money has a debt burden of $145,400, while Canadians who attended post-secondary education somewhere other than a university owes $114,300.
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The typical borrower who did not attend post-secondary education owes $90,900, or nearly $25,000 under the national average.
Debt in the life cycle
Not surprisingly, Canadians typically carried less debt as they aged, largely due to paid-off mortgages, children who were no longer dependant, and decades of financial planning.
Canadians under the age of 45 make up just 45% of the population, but carry 54% of all debt, and on average owe $129,200. Individuals aged between 45 and 64 owe $102,800 on average, while Canadians over 65 hold the least debt with an average of $66,000.
Married couples with children not surprisingly have higher debt levels than the average Canadian. They on average owe $144,600. By way of comparison, unattached individuals without children owe less than half their married counterparts.
Statistics Canada points to a direct correlation between having children and carrying debt. While unattached individuals with debt owe on average $63,200, single parent debt loads are substantially higher at $100,800.
Big earners, big debts
Higher income levels also directly correlated with higher average debt loads. Canadians with a household income over $100,000 per year had the highest debts in the country, with an average of $172,400. Conversely, those earning under $50,000 had debts averaging $57,700.
The amount of self-assessed financial knowledge also played a role in how much Canadians owed. Individuals that said they were “very knowledgeable” about financial matters averaged $29,000 more debt than those stating they were “not very knowledgeable”.
Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Canadians are becoming increasingly vulnerable to a housing correction, exposing them to a perfect storm of high debt and falling assets, the Bank of Canada warns…suggesting that many Canadians have constructed their finances on a house of cards, with ever rising home values the key and vulnerable support. [Sound familiar?] Words: 770
The ownership premium in Canada’s largest cities is unprecedented, dangerous to new buyers, and unlikely to persist – and if analogies to the U.S. situation at its peak back in 2005 are at all valid, this is bad news. [Let me explain.] Words: 430
The following charts indicate relative performance of US home prices in Phoenix, Los Angeles, San Francisco, Chicago, Las Vegas, New York and Miami to Canadian home prices in Vancouver, Calgary, Toronto, and Montreal. US home prices are reflected in Canadian dollars for comparison purposes. Words: 240
Canada, France and Switzerland stood alone among nine markets measured in recording annual price gains, based on second-quarter data, with inflation-adjusted price increases of 5%, 5% and 4%, respectively, compared to declines of 6% in the U.S., the U.K. and Australia, 10% in Spain and 14% in Ireland. In fact, Canada’s home prices have escalated 44% since 2005 – with a high of 68% in Vancouver – and they are up 7.7% in the past 12 months! Words: 1244
The explosion of Australia’s mortgage debt is viewed by many economists and commentators as the key factor behind Australia’s unaffordable housing [and the primary] reason why Australia’s housing bubble is larger than that experienced in the United States in the mid-2000s. [Another factor is] the strangulation of fringe urban land supply via increasingly restrictive planning processes. [Let me substantiate that contention by comparing the two countries housing situation via a number of descriptive graphs. Words: 817
The rat-through-the-snake process of working down existing and prospective distressed properties is likely far from over, and how that process plays out will no doubt have an impact on how much housing prices will ultimately adjust. [Let’s take a look at some differing points of view in that regard.] Words: 497
There has been a deluge of articles recently about the upticks in the housing data…[yet, while] I do not dispute the improvement in the data regarding home starts, permits, pending sales, etc.,… [see graph below] these data points are still mired at very depressed levels so the assumption is that if home building is stabilizing then it is only a function of time until home prices began to rise as well. Right? Not so fast.. [Let me explain.] Words: 1100
According to both the Case Shiller and RadarLogic indices housing prices have been essentially flat for the past 2 years after having fallen by a third from their 2006/7 highs. [That being said, surely we can now rule out another collapse, can’t we? Words: 764
Yes, you read that right; get ready for the next housing boom. You’re probably thinking, “How could that be with all the mortgage delinquencies and foreclosures going on, and the record levels of housing inventory? Well, it’s not going to happen soon – [probably] not for several more years – but it’s coming. [Let me explain to you why it is inevitable.] Words: 589
One typically doesn’t look to government bureaucracies to receive hard-nosed, objective discussions on the economy so you can magine my surprise when the latest Financial System Review, published semi-annually by the Bank of Canada, landed in my inbox and I discovered that it contained a very sobering look at Canada’s economy and the many systemic risks the country is facing! It’s not surprising that this report was not picked up by the main stream news, because if they did the popular opinion of Canada’s invincible, recession-proof economy might begin to crumble. [Let me explain.] Words: 2400