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No, it wasn't mostly foreign investments, although that added fuel to the fire. You can see the Canada housing bubble represented in that Canadian households a

No, it wasn't mostly foreign investments, although that added fuel to the fire. You can see the Canada housing bubble represented in that Canadian households are among the most indebted on the planet (it's heavy with mortgage debt). Here's a chart showing the prominent split with the US, where they go different directions after 2007-2008 (Canada's bubble and debt accumulation kept going and the US began deleveraging and improving its household fiscal condition and debt to equity ratio in housing): https://i.imgur.com/gCAsd5Y.png https://i.imgur.com/gCAsd5Y.png

doopy-loopy2 6y ago
What are the implications (if any) of this?
gentleman11 6y ago
Canadians end up owning a decent amount of wealth by the time they retire compared to many nations. That debt isn’t like credit card debt. Median wealth per household is about 200k vs 77k in the USA. Edit: used per-household stats instead
IkmoIkmo 6y ago
Not sure if a disposable-income denominator is fair when there are such large discrepancies in taxation and public provision of big-ticket expenses. If you get taxed harder in Canada but then don't have to pay for healthcare or education privately than in the US, then it makes no sense to just say 'look disposable income in Canada is lower, thus debt:disposable income is higher, thus Canada is worse off'. You'd first have to correct for the fact disposable income is lower because taxes are higher, because healthcare and education are publicly financed and therefore individuals require less disposable income and could be just as well off. Second, just look at mortgage delinquency rates between the US and Canada for an impression on affordability.[0] Third, debt doesn't matter much, not all debt is made equal. A 15% creditcard loan for $10k is much worse than a $20k 3% loan, in terms of bankruptcy risk, even if the debt to income ratio is worse on the latter loan. You can't just look at debt to income, and again, especially not disposable income between countries which very different systems without correcting for it. Absolute debt doesn't say much, debt servicing does, and in particular servicing of interest rates. That's actually at historic lows for Canada [1], which is totally different from the US[2]. Canada's debt servicing ratios are much lower than in the US. And that's why, in part, the delinquency rates are much, much lower, and why it's not quite so simple to conclude that Canada is in a RE bubble compared to the US. [0] https://i.insider.com/596f5f88a47cb502028b4f17?width=750&format=jpeg&auto=webp https://i.insider.com/596f5f88a47cb502028b4f17?width=750&for... [1] https://www.macleans.ca/wp-content/uploads/2014/03/can_mort_debt_income_service_income-1024x453.png https://www.macleans.ca/wp-content/uploads/2014/03/can_mort_... [2] https://www.macleans.ca/wp-content/uploads/2014/03/us_mort_debt_income_service_income-1024x453.png https://www.macleans.ca/wp-content/uploads/2014/03/us_mort_d...

doopy-loopy2 6y ago

What are the implications (if any) of this?

gentleman11 6y ago

Canadians end up owning a decent amount of wealth by the time they retire compared to many nations. That debt isn’t like credit card debt. Median wealth per household is about 200k vs 77k in the USA. Edit: used per-household stats instead

IkmoIkmo 6y ago

Not sure if a disposable-income denominator is fair when there are such large discrepancies in taxation and public provision of big-ticket expenses. If you get taxed harder in Canada but then don't have to pay for healthcare or education privately than in the US, then it makes no sense to just say 'look disposable income in Canada is lower, thus debt:disposable income is higher, thus Canada is worse off'. You'd first have to correct for the fact disposable income is lower because taxes are higher, because healthcare and education are publicly financed and therefore individuals require less disposable income and could be just as well off. Second, just look at mortgage delinquency rates between the US and Canada for an impression on affordability.[0] Third, debt doesn't matter much, not all debt is made equal. A 15% creditcard loan for $10k is much worse than a $20k 3% loan, in terms of bankruptcy risk, even if the debt to income ratio is worse on the latter loan. You can't just look at debt to income, and again, especially not disposable income between countries which very different systems without correcting for it. Absolute debt doesn't say much, debt servicing does, and in particular servicing of interest rates. That's actually at historic lows for Canada [1], which is totally different from the US[2]. Canada's debt servicing ratios are much lower than in the US. And that's why, in part, the delinquency rates are much, much lower, and why it's not quite so simple to conclude that Canada is in a RE bubble compared to the US. [0] https://i.insider.com/596f5f88a47cb502028b4f17?width=750&format=jpeg&auto=webp https://i.insider.com/596f5f88a47cb502028b4f17?width=750&for... [1] https://www.macleans.ca/wp-content/uploads/2014/03/can_mort_debt_income_service_income-1024x453.png https://www.macleans.ca/wp-content/uploads/2014/03/can_mort_... [2] https://www.macleans.ca/wp-content/uploads/2014/03/us_mort_debt_income_service_income-1024x453.png https://www.macleans.ca/wp-content/uploads/2014/03/us_mort_d...