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(Huffington Post Canada)   One in six Canadians will declare bankruptcy in their lifetimes because living on a plain of frozen tundra isn't cheap   (huffingtonpost.ca) divider line 40
    More: Interesting, Canadians, real estate investment trusts, investment decisions, insolvent, TransUnion, investment strategy  
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901 clicks; posted to Business » on 28 Feb 2014 at 9:48 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



40 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest
 
2014-02-28 08:48:47 AM  
Because a three six-pack a day beer habit is expensive?
 
2014-02-28 09:54:50 AM  
One in six Canadians will also declare that they found a mouse in a beer during their lifetime:

toldebytheweye.files.wordpress.com
 
2014-02-28 10:10:09 AM  
Aren't Plains and Tundras separate geographical descriptors?
 
2014-02-28 10:23:04 AM  
It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.
 
2014-02-28 10:33:22 AM  
My retirement plan right now is to just drop dead at age 67.
 
2014-02-28 10:38:50 AM  

shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.


This isn't wrong, but the average Canadian is carrying a sickening amount of non-mortgage debt on top of ridiculous mortgage debt. We avoided the American crash, and then reproduced the conditions which caused the American crash.

But hey, Toronto home prices are up another 10% this year! We're not making any more land!TM BUY BUY BUY

/We're screwed
//If you can figure out when the other shoe will drop, profit can be had
 
2014-02-28 10:55:23 AM  

shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.


Average house price here in Winnipeg is about $260 000. In most neighborhoods this will get you a generic 900-1100 sq/ft house, on an average size lot, that needs some updating, and built in the 60's or 70's. Heaven help you if you want to buy in the outskirts in East St.Paul or Headingly.

/$260 000!
/In WINNIPEG!
 
2014-02-28 10:57:21 AM  
Could be medical bankruptcy like here in the states.
 
2014-02-28 10:59:07 AM  

Maneck: shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.

This isn't wrong, but the average Canadian is carrying a sickening amount of non-mortgage debt on top of ridiculous mortgage debt. We avoided the American crash, and then reproduced the conditions which caused the American crash.

But hey, Toronto home prices are up another 10% this year! We're not making any more land!TM BUY BUY BUY

/We're screwed
//If you can figure out when the other shoe will drop, profit can be had


According to Garth Turner, it'll be this year.  http://www.greaterfool.ca/ The fed is finally raising interest rates which will cool the market.

I'm an American immigrant, and this completely reminds me of the pre-2008 American mentality. I'm so happy my parents stressed financial stability and I didn't jump on both the house and student loan debt bubbles.

I'm edging close to 30 and my husband and I are almost debt-free (he had some cc debt from his clueless days, his parents didn't teach him finances at all). I would like to buy a house soonish but it's looking like we'll have to wait a couple of years.
 
2014-02-28 11:11:11 AM  
Thank, Obama!
 
2014-02-28 11:11:55 AM  

Bondith: My retirement plan right now is to just drop dead at age 67.


Why wait?

blazintees.com
 
2014-02-28 11:12:25 AM  

Maneck: shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.

This isn't wrong, but the average Canadian is carrying a sickening amount of non-mortgage debt on top of ridiculous mortgage debt. We avoided the American crash, and then reproduced the conditions which caused the American crash.

But hey, Toronto home prices are up another 10% this year! We're not making any more land!TM BUY BUY BUY

/We're screwed
//If you can figure out when the other shoe will drop, profit can be had


Unless your banks are creating $50 worth of mortgage-backed securities for every mortgage $1, any real estate crash should have a (relatively) minor impact outside that industry.
 
2014-02-28 11:12:29 AM  

shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.


Don't forget the asbestos remediation.
 
2014-02-28 11:13:46 AM  
I thought their health-care system made bankruptcy LESS likely.  After all, it's FREE!
 
2014-02-28 11:23:51 AM  
Actually, the Canadian real estate market just got thumped by the feds about 20 minutes ago:

Feb 28 (Reuters) - Canada's national housing agency said on Friday it will increase its mortgage loan insurance premiums for homeowners and some rental properties as of May 2014.
"The higher premiums reflect CMHC's higher capital targets," Steven Mennill, CMHC's vice-president of insurance operations said in a news release.


http://www.reuters.com/article/2014/02/28/canada-housing-cmhc-idUSL1 N0 LX19N20140228

That's huge, because CMHC already eliminated homes costing more than a million dollars last year.

Garth called it yesterday:
As you know, any time a buyer closes a deal with less than 20% down, insurance is a must. The smaller the amount of money you have, the more that insurance costs you. For example, with 20% down the premium would be 1% of the mortgaged amount. With 5% down, it escalates to 2.75%. How much CMHC will be raising the bar is unknown (until 11 am tomorrow, if that in fact is the announcement), but it's likely to be a lot.
So will this deter the virgins from buying? Nope. That's because almost everybody takes the CMHC premium, ignores it, then folds it into the mortgage principal, meaning it adds a few bucks a month with no need for cash upon closing. Unless, of course, that's the news tomorrow - forcing new buyers to actually have the money to pay all closing costs. The impact of that would be substantial.

http://www.greaterfool.ca/2014/02/27/the-big-news/
 
2014-02-28 11:27:29 AM  
Everything I've seen from watching all of those Canada based home shows on HGTV with my SO has taught me that its farking expensive to buy a home there. No wonder they're going bankrupt
 
2014-02-28 11:34:26 AM  

JohnAnnArbor: I thought their health-care system made bankruptcy LESS likely.  After all, it's FREE!


That's a very good point. TFA did say that medical-related bankruptcies in Canada are much higher than they are in the USA.
 
2014-02-28 11:37:04 AM  

Snowrise: Actually, the Canadian real estate market just got thumped by the feds about 20 minutes ago:

Feb 28 (Reuters) - Canada's national housing agency said on Friday it will increase its mortgage loan insurance premiums for homeowners and some rental properties as of May 2014.
"The higher premiums reflect CMHC's higher capital targets," Steven Mennill, CMHC's vice-president of insurance operations said in a news release.

http://www.reuters.com/article/2014/02/28/canada-housing-cmhc-idUSL1 N0 LX19N20140228

That's huge, because CMHC already eliminated homes costing more than a million dollars last year.

Garth called it yesterday:
As you know, any time a buyer closes a deal with less than 20% down, insurance is a must. The smaller the amount of money you have, the more that insurance costs you. For example, with 20% down the premium would be 1% of the mortgaged amount. With 5% down, it escalates to 2.75%. How much CMHC will be raising the bar is unknown (until 11 am tomorrow, if that in fact is the announcement), but it's likely to be a lot.
So will this deter the virgins from buying? Nope. That's because almost everybody takes the CMHC premium, ignores it, then folds it into the mortgage principal, meaning it adds a few bucks a month with no need for cash upon closing. Unless, of course, that's the news tomorrow - forcing new buyers to actually have the money to pay all closing costs. The impact of that would be substantial.
http://www.greaterfool.ca/2014/02/27/the-big-news/


Canada just needs to use the rating agencies to accurately price these mortgage insurance premiums to reflect additional default rates that go with lower down payments. Rating agencies are very good at their jobs.
 
2014-02-28 11:43:24 AM  

WordsnCollision: Bondith: My retirement plan right now is to just drop dead at age 67.

Why wait?

[blazintees.com image 600x600]


35?  That's next year.  Why yes, I will go straight from grad school to retirement and skip that whole pesky "career" phase.
 
2014-02-28 11:57:24 AM  
Man, we export everything from America.
 
2014-02-28 12:07:47 PM  

ManateeGag: Thank, Obama!


Nice try but maybe you forget this little quote:

"How do we afford a war of aggression against the Iraqi nation? Simply lie to the American people about WMDs and bankrupt as many citizens of Canadia as we possibly can." - Dick Cheney

They played the recording of this on the Rachel Maddow show just last week.
 
2014-02-28 12:17:13 PM  
 
2014-02-28 12:33:26 PM  

Jekylman: Moopy Mac: JohnAnnArbor: I thought their health-care system made bankruptcy LESS likely.  After all, it's FREE!

That's a very good point. TFA did say that medical-related bankruptcies in Canada are much higher than they are in the USA.

"Despite universal health care in Canada, 16% of our clients cited illness, injury, and health related problems as a cause of their financial difficulties.
Generally this is due to time off work recovering from their health problems. During their convalescence they may use credit to survive and pay their day to day bills. Once they return to work, they are left with more debt than they can handle. Others may not be able to return to full time work and find that their disability income is not sufficient to pay their debts as they come due."


So...in other words there are no medical-related bankruptcies in Canada.

When we 'Murkins say "medical-related bankruptcy", we mean a $20,000 hospital bill for stepping on a nail and needing a quick visit to the emergency room because you can't afford insurance. Or you get cancer, have a baby or some other unprepared-for medical expense. Not the indirect effects.
 
2014-02-28 12:36:52 PM  

Snowrise: Actually, the Canadian real estate market just got thumped by the feds about 20 minutes ago:

Feb 28 (Reuters) - Canada's national housing agency said on Friday it will increase its mortgage loan insurance premiums for homeowners and some rental properties as of May 2014.
"The higher premiums reflect CMHC's higher capital targets," Steven Mennill, CMHC's vice-president of insurance operations said in a news release.

http://www.reuters.com/article/2014/02/28/canada-housing-cmhc-idUSL1 N0 LX19N20140228

That's huge, because CMHC already eliminated homes costing more than a million dollars last year.

Garth called it yesterday:
As you know, any time a buyer closes a deal with less than 20% down, insurance is a must. The smaller the amount of money you have, the more that insurance costs you. For example, with 20% down the premium would be 1% of the mortgaged amount. With 5% down, it escalates to 2.75%. How much CMHC will be raising the bar is unknown (until 11 am tomorrow, if that in fact is the announcement), but it's likely to be a lot.
So will this deter the virgins from buying? Nope. That's because almost everybody takes the CMHC premium, ignores it, then folds it into the mortgage principal, meaning it adds a few bucks a month with no need for cash upon closing. Unless, of course, that's the news tomorrow - forcing new buyers to actually have the money to pay all closing costs. The impact of that would be substantial.
http://www.greaterfool.ca/2014/02/27/the-big-news/


Meh, This is a total non-event.

They 'raised' the premium from 2.75% to 3.15%, but neglect to mention that, back when 30 and 35 year amortizations were available there was an increased premium (above the 2.75% premium on 5% down) for taking an amortization longer than 25 years.  Anyone want to guess what the premium amount was if you put 5% down on a 35 year amort was?

3.15%
 
2014-02-28 12:39:53 PM  

shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.


How hard is it to make an igloo?
 
2014-02-28 12:48:24 PM  

Cheron: shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.

How hard is it to make an igloo?


If you don't know what you're doing?  Pretty damn difficult.

/had one collapse on me once.
//bought a motorhome.  Took care of that.
 
2014-02-28 12:49:01 PM  
Because the price of cigareets, whusky and wild wild wimmen is 150% higher than the US with a currency that is 85% as valuable.
 
2014-02-28 12:58:55 PM  

Stone Meadow: Jekylman: Moopy Mac: JohnAnnArbor: I thought their health-care system made bankruptcy LESS likely.  After all, it's FREE!

That's a very good point. TFA did say that medical-related bankruptcies in Canada are much higher than they are in the USA.

"Despite universal health care in Canada, 16% of our clients cited illness, injury, and health related problems as a cause of their financial difficulties.
Generally this is due to time off work recovering from their health problems. During their convalescence they may use credit to survive and pay their day to day bills. Once they return to work, they are left with more debt than they can handle. Others may not be able to return to full time work and find that their disability income is not sufficient to pay their debts as they come due."

So...in other words there are no medical-related bankruptcies in Canada.

When we 'Murkins say "medical-related bankruptcy", we mean a $20,000 hospital bill for stepping on a nail and needing a quick visit to the emergency room because you can't afford insurance. Or you get cancer, have a baby or some other unprepared-for medical expense. Not the indirect effects.


Me, I got hurt at work, but my work comp carrier claims that my condition was preexisting, so they won't pay. My health insurance won't pay because they say that the medical bills are the work comp insurance companies responsibility. A year and a half latter, I still can't work, my medical bills are north of $500k, and no one is paying any bills. My lawyer assures me that I'll win in the end, but that's likely a year away. In the mean time, some of the billing services for the hospitals and Dr.'s are saying "fark you, pay us" when I try to explain my situation. Yea. I'm Farked, and I may have to declare bankruptcy for bills that should be paid by one insurance company or another.
 
2014-02-28 01:05:03 PM  

Jekylman: Moopy Mac: JohnAnnArbor: I thought their health-care system made bankruptcy LESS likely.  After all, it's FREE!

That's a very good point. TFA did say that medical-related bankruptcies in Canada are much higher than they are in the USA.

"Despite universal health care in Canada, 16% of our clients cited illness, injury, and health related problems as a cause of their financial difficulties.
Generally this is due to time off work recovering from their health problems. During their convalescence they may use credit to survive and pay their day to day bills. Once they return to work, they are left with more debt than they can handle. Others may not be able to return to full time work and find that their disability income is not sufficient to pay their debts as they come due."


In America, you get a 500k bill for cancer treatment and lose your house, declare bankruptcy, and die.

In Canada, you rack up a 20k credit card bill while in treatment to keep on top of bills, and have difficultly paying it back.

Conclusion, both sides are the same so vote Republican!
 
2014-02-28 01:13:01 PM  

Cheron: shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.

How hard is it to make an igloo?


When I was a kid there used to be a man in Moncton, New Brunswick, who made an igloo on his lawn each winter. It wasn't one of those small hunting igloos, either. This was the size of a small house. The Inuit build their winter homes about the size of a prehistoric hut, say 400 square feet (only round, like a circle).

My guess is that almost any one could learn to make an igloo. You need firmly packed snow, however, that can be cut into blocks and bear a weight, so that would make igloo building harder except during exceptional cold winters like we had when I was six.

What you do is cut the snow into blocks and then taper the size down. You cut the blocks down so as to make a spiral which you gradually move inwards, forming a dome. You need a good-sized machete type knife for this job.

If you can't build an igloo, you can dig a snow cave into a firm snow bank. This is called a quinzee. It's one of those words for things which you didn't know had names. It comes from a native american language somewhere out West.
 
2014-02-28 01:18:21 PM  
One in six Canadians will go bankrupt in their lifetime? What is the American figure?

I've been looking. I did find that 1 in 6 American single mothers will go bankrupt ... in the next decade.

8.6% of Americans who go bankrupt have gone bankrupt before.

60% or 62% of American bankruptcies are due to unpaid and unpayable medical bills.

According to some articles all Baby Boomers will go bankrupt.

Show me the numbers!
 
2014-02-28 01:25:51 PM  

brantgoose: Cheron: shortymac: It's because the housing market is completely out of control and a ton of Canadians have maxed themselves out to buy a 500k dilapidated bungalow in Toronto that needs to be taken to the studs.

How hard is it to make an igloo?

When I was a kid there used to be a man in Moncton, New Brunswick, who made an igloo on his lawn each winter. It wasn't one of those small hunting igloos, either. This was the size of a small house. The Inuit build their winter homes about the size of a prehistoric hut, say 400 square feet (only round, like a circle).

My guess is that almost any one could learn to make an igloo. You need firmly packed snow, however, that can be cut into blocks and bear a weight, so that would make igloo building harder except during exceptional cold winters like we had when I was six.

What you do is cut the snow into blocks and then taper the size down. You cut the blocks down so as to make a spiral which you gradually move inwards, forming a dome. You need a good-sized machete type knife for this job.

If you can't build an igloo, you can dig a snow cave into a firm snow bank. This is called a quinzee. It's one of those words for things which you didn't know had names. It comes from a native american language somewhere out West.


Yep. River banks and small hills with wind packed snow are great sources for igloo blocks.

If you're in flat terrain, you can pile the snow into a large mound, let it set up, and dig out the inside for a shelter.

If you're in a pine forest, using a tree well is great for a shelter.
 
2014-02-28 01:27:46 PM  
According to the following site, about 1.4% of Americans file for bankruptcy a year.

http://www.bankruptcylawinformation.com/index.cfm?event=dspStats

So I can use that to estimate how many will file in a lifetime, assuming I can swing the math:

0.996 **36 = 87.96

12% will file for bankruptcy in about 36 years if I did that right. Assuming that this covers the period from 20 to 56, that means more American individuals and households will file for bankruptcy than Canadian.

I assume, naturally that quite a few go bankrupt between age 56 and death.

Life is tough all over.

Most people who file for bankruptcy will be white, have a house and two cars and modest credit card debt ($2,500--if that is what you call modest. It would scare me because I know how interest works. I think. See above.)
 
2014-02-28 02:03:49 PM  

Moopy Mac: Unless your banks are creating $50 worth of mortgage-backed securities for every mortgage $1, any real estate crash should have a (relatively) minor impact outside that industry.


The problem with the Canadian real estate industry is its being propped up by outside money. Vancouver seems to be virtually crash proof because all the condos that flooded False Creek over the past 20 years are all purchased and inflated by Hong Kong investors. And the reason why they sink their money into Vancouver is because the Chinese economy is itself a speculative bubble and they're getting nervous.

No matter how nervous investors are, the most reliable commodity is always land.
 
2014-02-28 02:27:00 PM  

Ishkur: Moopy Mac: Unless your banks are creating $50 worth of mortgage-backed securities for every mortgage $1, any real estate crash should have a (relatively) minor impact outside that industry.

The problem with the Canadian real estate industry is its being propped up by outside money. Vancouver seems to be virtually crash proof because all the condos that flooded False Creek over the past 20 years are all purchased and inflated by Hong Kong investors. And the reason why they sink their money into Vancouver is because the Chinese economy is itself a speculative bubble and they're getting nervous.

No matter how nervous investors are, the most reliable commodity is always land.


Actually, that's a myth concocted by investors. The housing data doesn't reflect that.   http://www.greaterfool.ca/2014/02/12/r-i-p-ham/ (he has more articles on the subject)

Granted, you might see more Asians at these condo events because they prefer to invest in real estate rather than banks, but they are all legit immigrants.
 
2014-02-28 02:45:32 PM  

shortymac: The housing data doesn't reflect that. http://www.greaterfool.ca/2014/02/12/r-i-p-ham/


That's not housing data, that's a blogger with shiatty web design skills complaining about yellow-peril fear mongering in the media (which doesn't make the claim untrue) and then posting an anecdote from ONE realtor.

shortymac: Granted, you might see more Asians at these condo events because they prefer to invest in real estate rather than banks, but they are all legit immigrants.


I'm not saying they're illegal immigrants, I'm saying they have a lot of money and they like waterfront property.

No locals are buying these properties. Yet more keep getting built. So someone is propping up this bubble and it's not native Vancouverites.
 
2014-02-28 02:45:34 PM  
Don't over look the good news:

With low interest rates our average debt service ratio is at record lows. In 1990 Canadians used over 11 per cent of their disposable income to pay interest on their debt; today we only need 7 per cent of our income to pay interest. All is good.

Four elevenths is about one third, so that's a meaningful decline. If Harper is transferring the kind of money from the poor to the rich which the recession and tax cuts in the US have transferred, he's playing the game slow and sneaky. Also, Canadian home prices weren't nearly as inflated and banks weren't nearly as grabby and corrupt as in the US. Instead of sub-prime loans to people who could have afforded regular interest and thus avoided balloon payments on the back end, Canadian bankers have played conservatively and relatively more fairly.

Hey, maybe if you could loan money to Indians, they would have been right in there screwing away, but you can't because you can take out a mortgage on tribal land and thus over 1,000,000 young Canadians can't own a home but can't be screwed out of it either. Once the Government gives it to them, it is theirs. Too bad they have no more incentive to improve the property than a fly-by-night renter does, but hey, there's a flip side to every coin, especially Government or banker's coin.

I hope Canada continues to avoid US style recessions and panics. I also hope  we avoid US style tax cuts, government shut-downs, Tea Douches, and so forth.

Better a cold Heaven than a hot Hell, as the slaves used to say on their way to Canada. You can always put on a few sweaters and ski pants.
 
2014-02-28 03:19:42 PM  

BigBooper: Stone Meadow: Jekylman: Moopy Mac: JohnAnnArbor: I thought their health-care system made bankruptcy LESS likely.  After all, it's FREE!

That's a very good point. TFA did say that medical-related bankruptcies in Canada are much higher than they are in the USA.

"Despite universal health care in Canada, 16% of our clients cited illness, injury, and health related problems as a cause of their financial difficulties.
Generally this is due to time off work recovering from their health problems. During their convalescence they may use credit to survive and pay their day to day bills. Once they return to work, they are left with more debt than they can handle. Others may not be able to return to full time work and find that their disability income is not sufficient to pay their debts as they come due."

So...in other words there are no medical-related bankruptcies in Canada.

When we 'Murkins say "medical-related bankruptcy", we mean a $20,000 hospital bill for stepping on a nail and needing a quick visit to the emergency room because you can't afford insurance. Or you get cancer, have a baby or some other unprepared-for medical expense. Not the indirect effects.

Me, I got hurt at work, but my work comp carrier claims that my condition was preexisting, so they won't pay. My health insurance won't pay because they say that the medical bills are the work comp insurance companies responsibility. A year and a half latter, I still can't work, my medical bills are north of $500k, and no one is paying any bills. My lawyer assures me that I'll win in the end, but that's likely a year away. In the mean time, some of the billing services for the hospitals and Dr.'s are saying "fark you, pay us" when I try to explain my situation. Yea. I'm Farked, and I may have to declare bankruptcy for bills that should be paid by one insurance company or another.


Refer said bill collectors to the attorney.  Make him earn his money.
 
2014-02-28 03:39:29 PM  
brantgoose:

12% will file for bankruptcy in about 36 years if I did that right. Assuming that this covers the period from 20 to 56, that means more American individuals and households will file for bankruptcy than Canadian.

12% is about 1 in 8.  That's less than the 1 in 6 Canadians...
 
2014-03-01 04:39:18 AM  
Somehow, one of them is convinced it's America's fault.
 
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