The Culture Proof: Canada’s Gonna Crash

Canada’s healthy credit score lead to a rise in real-estate prices wherein regular income earners were taking out ever bigger mortgages because they qualified. Furthermore, to get even more people into the rise real-estate market, income earners were told they didn’t need 750 to get a mortgage, aka sub-prime mortgages.

1. FICO score in Canada has improved over the last decade as more of the population is achieving an 800 credit score

2. Canada’s population 32.89 million 2007 to 35,151,728 in 2016, an increase of 7%.

3. Meanwhile the number of credit-cards in circulation has rise by 17%; 64 million in 2007 and 74 million in 2017 but the startling fact is that  transactions have risen 83% starting at $275.21 Billions Net Dollar Volume in 2007 to $502.78 Billions in 2017 with average transactions hovering around the same mark, $111.07 2007 to $97.77 2017. As a result, revolving debt, such as these, are 110% higher than take-home (aka net) income.

So far, this may seem as expected in an increasingly ‘gig oriented’ and ‘self-employed’ economy, BUT wait!

4. 17% of Canadians make $75K+ and 33% of mortgages are more than $400,000. And over 1/3 of mortgages are between $400,000 and $200,000, while the smallest portion left are less than $200,000. Of Canadian income-earners, 33% make between $35,000 to $74,999 so some of these people hold mortgages equal to the top 17% earners. The rest of the working economy, 51% make less than $35,000 a year.

I think income cannot keep up with the price of real-estate as it must also sustain life goals and a bit of leisure. That is why I believe the economy will crash due to real-estate prices. In addition, Canada’s five major banks are facing some global grief that I mentioned in my video.