people should be borrowing more with these rates.......I just question that many are not carrying any debt? which contradicts what we know.
Average Canadian household debt tops $90K
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- Jul 13th, 2015 9:48 am
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- 604nation [OP]
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- Anikiri
- Deal Guru
- May 1, 2012
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- Toronto
That guy would buy in a heartbeat if he could. Sounds like someone is trying convince himself that buying is a bad deal.Copper1212 wrote: ↑Uhm, yeah, do you even know my situation? I own a 2 story detached and pay under $1000 for mortgage, insurance and taxes. Upkeep is a floating number and may or may not put me over the cost to rent the same house. Eitherway I'm better off owning.
- Anikiri
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- May 1, 2012
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Cannot carry debt if no one is willing to borrow to you. This is the main reason why home ownership is not 100%. Not everyone allowed to service a mortgage
- FoFai2015
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- Jan 2, 2015
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- Toronto, ON
Sometimes it works out, sometimes it doesn't. In this case, it clearly works out. Is renting a house ever better than owning? I suspect almost never. I could certainly see situations where renting an apartment is a better idea.Copper1212 wrote: ↑Uhm, yeah, do you even know my situation? I own a 2 story detached and pay under $1000 for mortgage, insurance and taxes. Upkeep is a floating number and may or may not put me over the cost to rent the same house. Eitherway I'm better off owning.
Why? You probably shouldn't borrow unless you need to. The high price of schooling, vehicles, business start-ups, houses, etc, means that people trying to buy those things usually do have to borrow money, though. If I were Bill Gates and could literally write a bank draft for the price of a million dollar home, I'd do it and not deal with a mortgage at all. (Alas, only in my dreams.)
I think more people are responsible money managers than not, it's just that enough people can't deal with their money that it causes eye-catching problems. Probably most mortgage holders can pay their mortgage if their rates went up 1%, but some can't. The latter obviously bought as much house as they could possibly afford without thinking about the future. There's a lot of them, but they're not actually the majority.
In one year, I'll have no debt at all beyond revolving credit card debt (which I always pay in full every month, so effectively no debt). I live downtown in a small apartment (so no mortgage) and use public transit (no car loan). There are plenty of people who are in an even better position, perhaps those who have paid off their mortgage (a large percentage, I was surprised), student loans, car loans, etc. There are people who even refuse to use a credit card.I just question that many are not carrying any debt? which contradicts what we know.
Here are some stats on home ownership and mortgage holding:
Link: http://www.canadianmortgagetrends.com/c ... urvey.html
- coolspot
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- jeffreypen
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- Feb 1, 2007
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- Edmonton
How I read this is that it's all relative. It's pointless arguing on the Internet about what household debt level should be.
What I see is that the debt level is trending up.
What I see is that the debt level is trending up.
- zakarydoks
- Deal Fanatic
- Jan 14, 2009
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- Vancouver, BC
Their net worth is trending up too.jeffreypen wrote: ↑How I read this is that it's all relative. It's pointless arguing on the Internet about what household debt level should be.
What I see is that the debt level is trending up.
http://www.cbc.ca/news/business/canada- ... -1.3110720
- daivey
- Penalty Box
- Dec 27, 2013
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- Toronto
average house hold debt of $92,000...
That's actually a lot.... so I take it they define average by taking all debts, loc, credit card, mortgage, and dividing it by household.
That's alot when you facor in how many households there are - renters/onwers.... and it's an average....... take away the people with no debt and what does that average come to?
That's actually a lot.... so I take it they define average by taking all debts, loc, credit card, mortgage, and dividing it by household.
That's alot when you facor in how many households there are - renters/onwers.... and it's an average....... take away the people with no debt and what does that average come to?
- coolspot
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- Oct 6, 2005
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Considering housing prices are at an all time high in several cities, $92,000 actually doesn't seem that bad.daivey wrote: ↑average house hold debt of $92,000...
That's actually a lot.... so I take it they define average by taking all debts, loc, credit card, mortgage, and dividing it by household.
That's alot when you facor in how many households there are - renters/onwers.... and it's an average....... take away the people with no debt and what does that average come to?
- zilber
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- RMB
- arkroyal
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No point in debating whether $92,000 is 'bad' or 'not that bad'. It's pretty meaningless given its an average that includes everyone from a renter in their 20s to a retiree with a paid off mortgage.
Here's a much more easy to understand statistic (note the chart is not up-to-date... we're up to 164% now and climbing). Take a look at
1) how much more debt Canadians have in comparison to just 10 years ago
2) how the U.S has deleveraged and we have yet to deleverage (deleveraging wrecks an economy)
[IMG]http://static5.businessinsider.com/imag ... 2%20am.png[/IMG]
Borrowing stimulates an economy. A dollar borrowed is a dollar used to buy houses, cars, consumer goods. Lots of debt- so what? the problem is we can't keep borrowing indefinitely. Even if interest rates don't go up ever again, the debt bubble cannot keep growing... at some point maybe when debt to GDP os 175% or 200% or 300%, debt repayment will start to eat away at people's ability to go buy new things.. That's when we'll have a huge problem as the thing that's been stimulating our economy starts to disappear.. It's fun to call it "free money".. but it definitely isn't.
Here's a much more easy to understand statistic (note the chart is not up-to-date... we're up to 164% now and climbing). Take a look at
1) how much more debt Canadians have in comparison to just 10 years ago
2) how the U.S has deleveraged and we have yet to deleverage (deleveraging wrecks an economy)
[IMG]http://static5.businessinsider.com/imag ... 2%20am.png[/IMG]
Borrowing stimulates an economy. A dollar borrowed is a dollar used to buy houses, cars, consumer goods. Lots of debt- so what? the problem is we can't keep borrowing indefinitely. Even if interest rates don't go up ever again, the debt bubble cannot keep growing... at some point maybe when debt to GDP os 175% or 200% or 300%, debt repayment will start to eat away at people's ability to go buy new things.. That's when we'll have a huge problem as the thing that's been stimulating our economy starts to disappear.. It's fun to call it "free money".. but it definitely isn't.
- 604nation [OP]
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- Aug 31, 2014
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many boomers are going bankrupt apparently, across Canada
http://www.therecord.com/news-story/560 ... ankruptcy/
- FirstGear
- Deal Fanatic
- Nov 2, 2013
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- Edmonton, AB
Debt can be misleading, as some are much worse than others.
I'd be more concerned about the people who constantly feel the need to refresh their vehicle every 3-4 years with payments (especially the ones who finance them at 18% interest or something stupid like that), versus the 500k mortgage on a 200k income or someone who took out a LOC to buy stocks.
I just learned recently that you can finance cameras and stereos. Ok then...
I'd be more concerned about the people who constantly feel the need to refresh their vehicle every 3-4 years with payments (especially the ones who finance them at 18% interest or something stupid like that), versus the 500k mortgage on a 200k income or someone who took out a LOC to buy stocks.
I just learned recently that you can finance cameras and stereos. Ok then...
Accountant (Public Practice)
- coolspot
- Deal Expert
- Oct 6, 2005
- 16872 posts
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I'm waiting as well - to buy some investment properties!TuxedoBlack wrote: ↑The party will eventually come to a stop and that's when roughly 20% of the Canadians who have over-extended themselves by buying a huge home and a fancy car will have to face the music.
I'm looking forward to fire-sale of Canadian stocks amongst other things. Get your wallet ready, folks!
- AudiDude
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- zilber
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- RMB
- coolspot
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- arkroyal
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The current insatiable demand for real estate is about sentiment. The current sentiment is 'omg houses really only go up, buy and make 10k a month on appreciation!' or 'buy now before its too late!'. If real estate starts declining, sentiment will change over night. Why buy something that will be cheaper in a few months? Today the media is bleating about "smoking hot markets" and "prices set to keep rising", but when prices start to fall you'll see headlines like "experts predict prices to contine falling for the next 10 years" or "price declines just beginning" . We'll have to see who truly has the displine to go buy in such an environment. People buy high and sell low, that's been proven time and time again.
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