Why Cautious Canadians Are Piling On Massive Household Debt

BY OLIVIA MILTNER

The property at 1005 East 22nd Ave. in Vancouver, British Columbia, looks like a nice little starter home — a one-story, two-bedroom, one-bath, 878-square-foot bungalow painted subtle pastel colors. In the yard is a garden with raised beds; downtown is a 10-minute drive.

The listing describes the house as move-in ready but perfect for someone looking to make some renovations. It notes that the property’s most important feature is its price: “Opportunities do not come around like this very often,” the listing reads. “This is your chance to own a move-in ready home in Vancouver at a price we have not seen for a long time.”

And that asking price? Try $1,099,000 CND ($873,820 USD at current exchange rates). It may not be a steal, but it’s definitely a good deal.

Canada’s extremely high housing prices, particularly in Vancouver and Toronto, where the average cost of residential property is $1,046,900 and $744,700, respectively, according to the Canadian Real Estate Association, are among the reasons why mortgages account for two-thirds of Canadian household debt, which reached $2 trillion CND by the end of 2016, according to a Fraser Institute report. When compared to GDP, a 2017 report from the Organization for Economic Cooperation and Development (OECD) found that Canada has the highest household debt of the 35 countries monitored by the OECD, with a national household debt-to-gdp ratio of 101 percent.

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