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Discussion Starter · #1 ·
Heather Scoffield and David Ebner
Ottawa/Vancouver — Globe and Mail Update
Last updated on Sunday, Jul. 19, 2009 08:28PM EDT
http://www.theglobeandmail.com/globe...rticle1223946/

Vancouver ranks first for net worth

Vancouver has stolen Calgary's crown as the city with the highest net worth.

In a soon-to-be-published database that looks at how Canadians handled their wealth during the rapid change of fortunes that marred 2008, Environics Analytics exposes profound changes in the way people approach their wealth.

Canadians have seen their nest eggs shrivel, beefed up their savings, scaled back their borrowing, and embraced caution, an abrupt change in attitude that will likely persist, says Catherine Pearson, vice-president of Environics Analytics in Toronto.

Generally, the research, which crunches and dissects numbers from 80 different sources and goes into deep local detail, found that the richer Canadians were, the harder they fell.

“The more money you have, the more you have to lose,” Ms. Pearson said.



In Calgary, net worth fell as the value of household investments plunged and debt climbed.

In Vancouver, though, consumers saved more and real estate fared better last year.

Net worth, which measures someone's assets minus debts, dropped 6.2 per cent for Canadians as a whole last year. But Calgary residents saw their wealth plunge 12.3 per cent, while Vancouver's residents were able to hang on to much of their riches. There, net worth fell just 3.1 per cent between December, 2007, and December, 2008.

Now Vancouver's residents have taken first place for household net worth, while Calgary has fallen to second place.

Vancouverite Sebastian Albrecht rode that Pacific wave. He has a lot of his money tied up in real estate. And it's these investments – with prices down less than 10 per cent from their peak last year – that has made the city surrounded by mountains and ocean the richest in Canada, supplanting the country's energy capital Calgary.

Mr. Albrecht bought his first condo a decade ago, after university. He stretched himself – and slept in a sleeping bag on the floor for a couple months in the unfurnished home.

A decade later, he lives in a $600,000 home that he bought two years ago for $500,000 and also owns – and rents out – a $350,000 town home and a $300,000 condo. He has some money in stocks, but only about 10 per cent of his net worth.

Born in the city, an entrepreneur at heart, the 34-year-old worked in IT and then started a clothing import-export business and dabbled in real estate – until he became a realtor himself three years ago, a perch from which he sees a cross-section of Vancouver and the people who generate the city's wealth. From movie makers to junior mining players, it is a diffuse mix.

“The difference in Vancouver is it's more diverse than a lot of areas in Canada,” Mr. Albrecht says. “Calgary has oil. Toronto is finance. Here, there's a lot of creativity. I'm amazed how some people make money here.”

Vancouver's net worth per household is an average of $575,826, while Calgary's is $569,926, the research shows.

Compare that with Newfoundland, where household net worth is typically $140,706, or even to Ontario, where average household wealth is $354,968.



Most of Calgary's losses stemmed from a plunge in the value of investments held by households, such as stocks, bonds and mutual funds. At the same time, Calgarians took on large liabilities in the past year, and Calgary is now the home of the most heavily indebted people in Canada. Albertans in general have 30 per cent more consumer debt than the average Canadian, the research shows. And the mortgage debt of many young people has soared.

“Perhaps they simply haven't realized the fact that the heady boom days are now over,” the researchers said in their analysis.

Vancouver residents, on the other hand, were able to mitigate their exposure to the ravages of the recession by increasing savings, and by benefiting from more stability in the housing market in 2008.

The survey doesn't cover 2009. In the first six months of this year, prices for existing homes were down 8.6 per cent in Vancouver from the same period of last year, and 9.8 per cent in Calgary, resale statistics show.

Perhaps because they're less wounded than the rest of the country, British Columbians are piling back into the stock market faster than elsewhere.

But people in Quebec and Ontario are gun-shy, and are stashing away any extra money they have in safe places. Quebec households in particular have low credit card debt, and boosted their holdings of sure-thing guaranteed investment certificates by 5 per cent over the course of the year. Deposits in banks and credit unions have risen 4.9 per cent.

People in Ontario, where the recession has hit hardest, increased their term deposits by 15.3 per cent and increased their debt loads by just 3.0 per cent – much less than the national average increase of 8.1 per cent.

“Hats off to Ontario households for being fiscally responsible,” the researchers said.

Still, Ontarians were paying dearly for such debt. Residents were using 7.1 per cent of their disposable income to pay interest charges – 20-per-cent higher than the national average of 6.3 per cent. In Alberta, servicing non-mortgage debt ate up just 6.1 per cent of discretionary income, despite the rising debt loads.

Indeed, Albertans' discretionary income was higher than anywhere else in the country, at $53,237 per household. That was 29-per-cent higher than second-place Ontario.

The oil-rich province may have been hammered by the global recession, but households still have plenty of wealth. “Alberta's got the spending power,” the researchers conclude.
----end of article----

Wow, and I thought that all the luxury cars and restaurants here are just hippies/yuppies living beyond their means. Of course, the SSC demographic is a bit different from SSP so it should be no time before the credibility of this study gets torn to shreads. But the moral of the story... maybe a service-dominated economy ain't all that bad afterall... :baeh3:
 

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I wondered how long it would be until this article was posted ... :)

I may have missed something in the article, but does the study include the worth of the house in with the individual's net worth, or is it investible cash only?
 

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Ah well, we all love our home towns, don't we? And we are all proud when they do well on the national or international stage. Vancouver has been on fire this past decade, and I think we are all proud to see it get some acknowledgement! :cheers:
 

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Discussion Starter · #6 · (Edited)
You people are so predictable, heh. As much as I like to take credit for digging this up, it's a 5 day old article that I saw on SSP's canada section, sorry :)

I may have missed something in the article, but does the study include the worth of the house in with the individual's net worth, or is it investible cash only?
The article said that these are net-worth numbers as in "assets minus debts", but my gut reaction is that the average canadian household does not have $200k, let alone upwards of $500k, to invest.

But I thought about it and the numbers aren't that ridiculous... Home ownership in the GVRD is 65%, average home is over $500k. Of a region of 2 million, half a million live in the West Side and North Shore, areas where the average house costs $1-1.5M... people who own properties like that aren't servicing a massive mortgage to do so.
 

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I may have missed something in the article, but does the study include the worth of the house in with the individual's net worth, or is it investible cash only?
The chart shown would be similar to one showing average property values as distributed across Canada, so the answer must be yes. I don't think it should be confused with a real standard of living or quality of life index though. Also, the charts show provincial values while the article talks about cities; again the stats would not be the same for both.
 

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Discussion Starter · #10 ·
^^yes, property values are included (minus the outstanding debt from a mortgage). And indeed this is for once not a quality of life index, but just a simple ranking of household net worth. This is probably the only economic survey that Vancouver can do well in since it doesn't take into account our low incomes and lack of economic activity, but rather bought assets and immigrant savings. I wonder if cars are included...
 

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I'd be interested to see what the median and the quintile and decile distribution is, but I doubt those numbers are forthcoming. In any case, B.C. (or indeed any other province's) numbers are nothing surprising, with the possible exception of Alberta.
Save your breath. On SSP I made a similar comment that it is medien networth {or income for that matter} is a TRUE indicator of wealth and income but to no avail. Vancouver has the largest gap between the rich and poor in the country but somehow it doesn't register with a lot of the Vancouver crowd or it would show the massive gaps in Vancouver.
 

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Discussion Starter · #12 ·
You've made this point numerous times, but have yet to come up with any numbers that show where this "gap" actually happens. Most Vancouverites are probably right in assuming that the demographic consists of a sizeable upper and upper-middle class and a very concentrated homeless population in one corner of downtown, rather than your suspected handful of super-rich in the midst of general poverty (as if we have too many CEO's and business leaders here :lol:)

But yes, the distributed averages would have been much more insightful.
 
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