Canadian

Housing & Debt

 Bubble!

Canadian as of Q3 2017 House Prices to Income is 142.6%!

U.S. Q3 2017 House Prices to Income is 120.5%! 

Poloz Says Canadian Inflation Spike Doesn't Violate 2% Target

Bank of Canada Governor Stephen Poloz said he’s not worried about inflation temporarily rising above the 2 percent target this year, and the acceleration by itself isn’t sufficient to warrant an interest rate increase. 

Speaking Saturday to reporters in Washington, Poloz said a tolerance for temporary movements is exactly why the central bank uses a 1 percent to 3 percent range for inflation and doesn’t mechanically raise interest rates when price growth surpasses the 2 percent point.

 

2017 Canadian debt to Household Income 171% 

2017 U.S. Debt to Household Income 78.4% 

Canada’s debt-to-household-income ratio rises to 171 per cent, StatCan says

By CRAIG WONGThe Canadian Press

Thu., Dec. 14, 201

OTTAWA—The amount Canadians owe relative to their income hit a new high in the third quarter. 

Statistics Canada said Thursday that household credit market debt as a proportion of household disposable income increased to 171.1 per cent, up from 170.1 per cent in the second quarter. 

That means there was $1.71 in credit market debt, which includes consumer credit and mortgage and non-mortgage loans, for every dollar of household disposable income.

DYI:  Oh Canada Oh Canada’s debt and real estate bubble has been building for over a decade and appears to be in the process of popping as sales for homes are no longer brisk especially in the bell weather province of Ontario including the epicenter Toronto. 

Is Canada the possible start of a world wide downturn?  Anything is possible just as Iceland was the kick off [though very few realized it at the time] for the world wide Great Recession.  Whether this is or not [kick off] if I was Canadian I’d be selling my house yesterday and becoming debt free as quickly as possible.  For those who are ahead of the game, house free and debt free, with reserves to put to work here is an economic survivors list:

• Canadian Treasury Securities:  Either direct purchase or though a mutual fund.  Don’t forget Canadian Savings bonds an easy way to build reserves as well.

• Utility Stocks:  Canadian and/or U.S. Gas and Electric providers will survive the most vicious of downturns with their dividend stream intact.

• Precious Metals Mining Stocks:  DYI’s favorite is Vanguard’s Precious Metals and Mining Fund [VGPMX].  I’m certain there are many fine Canadian mutual funds to work with.  This is one of the few bright spots as most common shares either Canadian or U.S. valuations have been bided to the moon.

• Physical Gold and Silver bars and coins.  Same reason as before gold and silver are one of the few asset categories that are of reasonable value. 

This list works just as well for Americans all you have to do is substitute out Canadian for U.S.  U.S. real estate has gone bonkers but NOT every where it is mostly hugging our coastlines.  Our interior [or as some say fly over country (not me I grew up in Ohio)] is not in the crazy valuation stratosphere.  If HGTV is highlighting house flipping in your area then a sale would be advisable as speculation is back with the soon to be bust. 

Debt free and reserves invested defensively when bargains once again will rein supreme you’ll have the firepower to scoop up the bargains.  This has been a long wait all created by world wide central banks who have gone bonkers pulling interest rates down either negative (Europe) or sub atomically low thus pushing valuations to the moon.

DYI