HawthorneVillager.com

I don't think this will help too much:

http://ca.finance.yahoo.com/news/Canada ... d=pf-sp14e

$26 000. Wow.

Demographics speak for themselves really

If anyone knows when the price of fences will drop 10% can you start a thread? Rick wants to know as well as we're both looking...

Schploing!

It's a one sided story unfortunately. It only shows that people are carrying debt (car payments, credit card, home improvements etc.)

It doesn't show the net worth of the very same individuals. It's also an average which can be taken with a grain of salt.

If these people are $26,000 in debt with zero net worth, look out! We have a major problem!

If these people are $26,000 in debt with more than $26,000 net worth (equity, savings, investments, etc) then what's the big deal?

My mother is one of those indebted people and someone who this article would put in a bad light.

$33,000 car debt
$10,000 new furnace/air conditioner debt
----------
$43,000 in debt! OH MY GOD! THE SKY IS FALLING. CANADA HAS A DEBT PROBLEM!

The reality is, the $33,000 is a 0% car loan. You would need to be an absolute fool to buy a car for $33,000 cash when the dealer is willing to lend you the money for free over 5 years.

The $10,000 new furnace/air conditioner debt was a "don't pay a cent for 1 year" deal through sears. Again, 0% interest for a year? Why would you pay cash?

You see, she is very smart. Using low interest debt while her actual savings is growing and making interest. You see, shes getting ready to retire and why would she pull out her savings, investments, home equity etc. to buy something cash when she can make interest for 5 years while paying none? Before the recession many Canadians were doing pretty good. No need to worry! I see a lot that took advantage of the low interest rates as a good time to finally make a move on replacing the old rusted beat up car or upgrading to a new home. I'd say that's a smart decision.

That's the other side of the story not being told.

Is $26,000 debt a big deal when you have $200,000 in home equity, $55,000 in your work pension plan, $75,000 in RRSP savings? Not really.

I would be interested to see a debt to net worth average for Canada.

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Yes it makes sense they are still recovering from the recession that we never had.



Who say's we have less savings? Or more debt.
In the US they all drive fancy cars, and huge SUV... In Canada we generally drive smaller SUV and mini vans and average cars

I also notice in the US, everyone has a Rolex or at least a Tag and the Purse's the women carry... Please Canadians do not spend our money like the Americans. So yes we may make less, but we do not spend and shop like the Americans.

When the last time you have been to the States, next time you go look at the mall parking lot, it is full - packed they are parking in the grass! Then look at the ladies purse's, nails, watches, rings... Have you noticed the restaurants their, again packed, no one eats at home. No wonder they have no money, they spend, spend, spend... Please Canadians are very conservative with their money and spending habits.

Here is an article from last year. Toronto doesn't seem as bad as Calgary for sure.

http://www2.macleans.ca/2010/07/15/hous ... ed-cities/



So given that, the average of $26,000 in debt doesn't seem to affect Torontonians much when they have an average savings of $118,388.

Like I said, many are taking advantage of low interest rates rather than just buying things like new cars with out right cash.

The old way was to never borrow to buy something when you can pay cash. Why pay interest? But now, it makes sense to borrow and save your cash.

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New York's prices seem to have rebounded. Doesn't look like too many $175,000 detached homes are available.

http://www.trulia.com/NY/New_York/#for_ ... HOME_type/

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I'll start out by saying I have no debt outside my mortgage and never will if I can help it.

Am I crazy to think that 26,000 really isnt bad... if its all on credit cards probably but low interest line of credits, car financing ? probably not.. Most families have a mortgage and a car payment(financing, leasing, line of credit) at any given time in their life.

Like some others have said that stat without context really doesnt mean much to me at the end of the day, blanket finance stats just dont work for me because personal finance is just that personal, its a case by case scenario with every person having different risk tolerances, budgets, willing to make different concessions and sacrifices....

If someone came to me today and said I need a new car over the next few years because my old clunker is dying.. i'd tell them to do it now while rates are low, and sell your old car now to put towards the new one. In two years your existing car will be worth less and rates will likely have gone up.

If you're going to be in debt now is a decent time to do it, assuming you can actually afford to be in debt.

And I think the above has a lot more to do with this "debt story" than is being discussed in the sensational headlines.

This is the reason the automotive industry took a massive rebound in Canada and also the reason the housing market went nuts right after we realized we weren't going to crumble in the same fashion as the United States.

Many people had been putting off decisions that now make sense. Lock in at the lowest interest rates in history? Why not! Even if you pay 10-20% more for the house than it might be worth (as some claim), you probably save even more than 10-20% in interest costs over the term of your mortgage.

Need a new car in the next few years? Do it now! 0% interest! That means that your car payment will likely be at least $100 less a month than you were probably paying on the last car you bought.

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That can't be a very desirable area. All the desireable areas I know of the houses aren't lasting more than a few days (after the agents put a hold on offers for a week). Most are going over asking with multiple offers. It sounds like those houses (if they are sitting for months) have issues. Way over priced, poor home design, bad location, etc. There isn't a shortage of buyers with money and low interest mortgage approvals right now for the right areas at the right price.

And yes, the next generation will buy in. They won't be able to afford 600-700k detached homes, but they will flood the condo market.

Yes, house sales are down (because high prices are putting first time home buyers out of the market), but condo sales are up (because that's where they are buying now). If you look at the total units including condos, you will see the market isn't falling, it's just changing.

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Population is growing. Everyone needs a roof over their head.

If they can't own, they will rent. So those 40-60% of condos owned by investors will do very well renting to all the 25 year olds.

If anything, the price of rent will go up once the interest rates do. Nobody rents a condo at a loss.

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I disagree. Rent is NOT established by incomes. Rent is established by how much money someone can make from their investment. Rent may lag the real estate market (like it is right now) but eventuallly it will correct. There was something called Rent Control that was abolished that used to protect renters from this.

You need 25% down to have an investment condo (or it has to be your only home). On a 320k condo with 25% down at todays interest rates you are probably looking at $1200 out the door with condo fees and still making a profit. That sounds about right for a 1br downtown condo in the heart of the city.

For a 30 year mortgage for $207,000.00 at the variable rate of 3.00%, your Monthly payment is $872.72

If people can't make money on a rental unit, they will dump it. These people are looking at the recurring income. They like to see positive cash flow at the end of the month. They either make it from letting repairs/maintainence slide or by raising rent. Either way, they are going to make money.

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Again, the are looking at the country as a whole and comparing it to places like the US and european countries where they have large population everywhere.

I want to see the rent to price ratio for Toronto. It's not going to look anything like that when you have high prices areas like downtown Toronto, Vancouver etc. pegged against rents in Sault St. Marie and Kanata.

Second if you look at the other graph on the same page with debt ratios, Canada is trailing both the US and UK even post recession.

I think yes, rent will increase. Just like houses increased. Guess you won't be able to live right downtown anymore for $800 a month -- time to move west/east/north where the rent will be cheaper and let someone else move into your place and get a little closer to the city.

You seem to think the population of the GTA has peaked and now there are just enough places to live for just enough people in the GTA. That's incorrect, we are adding 250,000 new people every year, where are they going to live? The demand for rental housing is already out of control. The thing that is going to decide who gets the limited rental units in the prime locations will be the price of the rent. Some will afford it, others won't.

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i cant be bothered spending hours on end quoting, cutting, pasting whats happening in Boise, Idaho or Australia. ive never once said a bubble wont happen, check my threads. there are 2 sides to a coin, look at both, your concentrating on one dabills. a bubble is cyclical, it will happen yes, to what degree? no one can tell for sure, there are MANY variables to affect prices. experts you quote are paid to put something out, wheather good or bad. look at the market now, its hot and milton is on fire. rents are dictated by demand, not peoples wages.

So what happens when it does go down 10%? Arent more people going to want to buy now that its cheaper and thus increase demand on that cheaper house and create a bidding war pushing the price back up at least 10%?

Only way I can see prices going down is if the GTA starts losing people like in Detroit. Can you give me an example on how this may happen?

I just dont see the GTA going down in population.