Wednesday, January 14, 2009

Canadians Are Better Off

Although Canadian consumers are in structurally better financial shape than U.S. consumers, dramatic spending cuts are shifts in behaviour this year in response to the recession than do U.S. consumers, according to research and Consulting Group (BCG).

“Compared with U.S. consumers, Canadian consumers are entering the downturn with more secure household finances, healthier real-estate conservative levels of credit and debt. Despite this structural superiority, Canadians are battening down the hatches and bracing for a tough year ahead" said Cliff Grevler, a BCG partner. “Canadian consumers are planning cutbacks in 2009 to a greater degree than their U.S. counterparts. We anticpate that the result will be a ‘cycle of thrift’ in Canada, and it will have self-fulfilling effects.”

Canadians Are in Better Financial Shape than U.S. Consumers

The BCG research – the first to compare Canadian, U.S., and European consumers in the current downturn – shows that Canadian consumers have entered the recession in a better structural position than U.S. consumers.

Canadians have higher savings rates: 3 percent in 2008 compared with about 1.5 percent among U.S. consumers. In addition, Canadian's have a lower debt to income ratios and bigger equity stakes in their homes. (Not only are U.S. residents’ equity stakes in their homes lower, but those stakes are also declining.)

The residential real-estate market is healthier in Canada than in the United States: Canada has a lower mortgage-delinquency rate; Sub Prime loans aren't nearly as common; and there is less securitization of mortgages, leading to more rigorous lending standards.

Canadians are more conservative with credit cards: Average credit-card debt per household in Canada is $3,100 compared with $8,200 in the United States. More than 70 percent of Canadian households pay off credit card debt each month, but less than half of U.S. households do. Canadians average 2 cards per household, while U.S. consumers average six. And the credit card delinquency rate in Canada is half of what it is in the United States.

Nonetheless, Canadians Are Responding More Dramatically to the Recession

Despite their superior financial position, Canadians express great economic concern and voice intentions to shift their behavior more dra say they will, according to a BCG survey of 1,000 Canadian adults in charge of household purchasing and a similar BCG survey of U.S.

Greater numbers of Canadians -- 62 percent – plan to reduce spending over the next year, compared with 58 percent of U.S. consumers and 56 percent in the United Kingdom, Germany, Spain, Italy, and France. Source Boston Consulting Group

David Pylyp; To put it simply, Canadians are battening down the hatches, looking for deals, but if you look at the graph at the top of the page, Power of Sale and Foreclosures do not number the news media press releases about complete postal codes vacant and berift of owners. There are no vacant abandoned communities within any of the Toronto west neighbourhoods that I serve.

There are homes being sold, just not in the numbers that were being bought in previous years, but I have yet to find a ratio from anyone as to what the number of homes for sale per thousand households should be within a city like Toronto. Checking the stats for sale vs population we are by far slower and have fewer Listings than centers like Chicago, Ill, or Houston Tx.

Your comments are always invited.

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