Aren't Canadians cute! Always copying Americans

[Hugh Conway]

http://www.theglobeandmail.com/report-on-business/canadas-brewing-debt-storm/article1537623/

 

Canadian borrowers are fast approaching a day of reckoning.

 

Lured by cheap money to buy up, buy in, expand and make over, families have pushed credit levels to a record high.

 

Now, mortgage rates are beginning to creep up and the Bank of Canada is poised to retreat from the record-low interest rates it adopted to fight the recession and spur recovery.

 

The end of the free-money era has left consumers more vulnerable than ever, and those who threw caution to the wind could soon face costs they can't handle.

 

Household debt has surged three time faster than income in recent years and now stands at a record high of more than $1-trillion. Put another way, Canadians owe about $1.47 for every dollar of disposable income. Even more remarkably, they took on more debt during the slump – a first for a recession – because borrowing was so cheap.

 

# 147%: Debt-to-income ratio in Canada, a record high

# 157%: Debt-to-income ratio in the United States

# 70%: Percentage of debt held in mortgages in Canada

[JayB]

The mortgage-to-income metrics have looked pretty alarming in most of Canada, Australia, and NZ for quite a while. Vancouver and the major cities in Australia look particularly bad on that front.

 

 

[mkporwit]

The mortgage-to-income metrics have looked pretty alarming in most of Canada, Australia, and NZ for quite a while. Vancouver and the major cities in Australia look particularly bad on that front.

To wit...

[jmace]

You think Vancouver is going to have a hard time with housing prices....next time your here tell me how many bugattis, murcialagos, porches, lambos, R8's, Bentley's to name a few are driving around

 

There will be no bust here, its just gonna cost more and more and more...

[JayB]

Sounds like Vegas.

 

Not sure that's quite as convincing an argument for Surrey, Coquitlam, Moose-Jaw, etc as Canada's answer to FNMA/FMAC rolling out the zero-down, 40-year mortgage.

 

IMO take a ruler to the slope of the line generated by plotting the mortgage-to-income ratio from 1965-1995, extend the plot for 20 years, and you get a pretty good basis for determining whether property values in a given major-metro area are under or over their sustainable long-term levels.

 

Not sure where that's at for Vancouver, but I doubt Vancouver was anywhere near the number one spot in the "least affordable city in the world," during that period.

 

"Vancouver most expensive place to own house

 

Vancouver, Jan 26 : Vancouver is the most expensive city in the world to own a house today, says a report on worldwide housing markets

released Monday.

 

The annual report

on housing affordability around the world by Canada's Frontier Centre for Public Policy said, "Vancouver is the most unaffordable of the 28 housing markets measured in Canada and the most unaffordable of the 272 metropolitan markets ranked in Ireland, the UK, New Zealand, Australia, the US and Canada.''

 

Vancouver is followed by Sydney, Melbourne, Adelaide, London , New York and San Francisco as the world's least affordable places to own a house today, according to the report.

 

Toronto and Montreal, two biggest Canadian cities, were "severely affordable'' and "seriously affordable'' respectively, the sixth annual report - titled Demographia International Housing Affordability Survey - said.

 

With the median sale value of a house at USD 540,900 and the median household income just at USD 58,200, Vancouver was the most unaffordable place on earth to own a house today, according to the report by the Winnipeg-based centre.

 

"The recent increases (in housing prices) to almost ten years' income are thus unprecedented in modern history,'' said the study.

 

http://www.newkerala.com/news/fullnews-38179.html

 

 

[Hugh Conway]

Sounds like Vegas.

 

Or other stolid real estate markets like Southern California and Florida!

 

will be interesting to see how real estate missile attack plays out in recourse Countrys like Canada and Australia

[rat]

http://www.crackshackormansion.com/

[JayB]

Sounds like Vegas.

 

Or other stolid real estate markets like Southern California and Florida!

 

will be interesting to see how real estate missile attack plays out in recourse Countrys like Canada and Australia

 

Darwin, Oz with a higher debt-to-income multiple than London...

 

[Hugh Conway]

Darwin, Oz with a higher debt-to-income multiple than London...

 

Darwins a shithole, can't understand that.

 

Very curious to see the dynamics of London as the Rich decamp to the next Abode of convenience and their service lackies follow leaving, well, jack shit for jobs in that gray shithole of bad teeth, meth, and lager

[JayB]

Never been there - but sounds like Australia's version of Bayou country, only hotter and muggier for most of the year. London has had it's ups and downs, but it's been a global hub of commerce for a few centuries, is right next to the most significant commercial block in the world, etc, etc, etc.

 

I also suspect that it has enough incomes on the right side of the distribution curve, in aggregate, to drive the mortgage-to-average-income metrics well beyond the averages that prevail elsewhere. Ditto for Tokyo, New York, San-Francisco, etc.

 

Same deal for resort cities/towns, although the money behind the loans that distort the ratio is imported from somewhere else. Not sure that either can explain Darwin, or most other cities on the list. I'm sure that's happening to a certain extent in Vancouver, particularly in the more glamorous/desirable neighborhoods, but I don't think there's enough commerce or glamor-chasing money to keep the party rolling indefinitely for the entire metro area and hinterlands.

 

 

33 Years of Price-History for Vancouver...

[Hugh Conway]

Never been there - but sounds like Australia's version of Bayou country, only hotter and muggier for most of the year. London has had it's ups and downs, but it's been a global hub of commerce for a few centuries, is right next to the most significant commercial block in the world, etc, etc, etc.

 

I also suspect that it has enough incomes on the right side of the distribution curve, in aggregate, to drive the mortgage-to-average-income metrics well beyond the averages that prevail elsewhere. Ditto for Tokyo, New York, San-Francisco, etc.

 

ex-gf was working in Darwin; said jobs were plentiful and better paying than the rest of Oz (at least in teaching), met plenty of other Aussies in Bali (closer than Sydney to Darwin) who also talked up the jobs, so unlike Bayou country that way but like it in weather, cultural backwater, etc

 

sure London has history but the past decade was financed by hedgies/financial professionals now decamping for elsewhere when England makes them pay for the damage they've done like all good louse; the other half being rich refugees from Russia etc.

 

don't believe NY/London/SF/ can remain competitive with city states like Singapore/HongKong/or effective citystates like Switzerland long term. NYC and London are subsidizing their respective countries; Singapore, HongKong and Switzerland are being subsidized by their neighboring countries. Always easier to have low taxes when others pay your obligations

[prole]