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A man passes a home for sale on Sumach Street in Toronto's Cabbagetown neighbourhood on May 21, 2020.

Fred Lum/the Globe and Mail

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The days after the last recession turned out to be an awesome time to get into the housing market.

History will not repeat. Whether the housing market goes up, down or sideways when the pandemic fades, the opportunity for major price appreciation in the years ahead is limited. All the borrowing people did in the past dozen years doesn’t leave room to fuel another housing boom.

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If we use the Toronto market as a proxy, home buying sentiment looks strong. On real estate blogs and social media, there are stories this month about bidding wars resuming. But there simply isn’t enough juice in the economy to sustain the kind of housing rally we saw in the years after the 2008-09 recession.

Here are five statistics that build this case:


For every dollar of household after-tax income in Canada, there’s $1.77 in debt. Although this is a widely used indicator of national indebtedness, it’s kind of abstract. Maybe this will help add some context: At the end of 2007, there was $1.44 in debt for every dollar of income.

Countries with lower debt-to-disposable-income ratios than Canada include the United States, Germany, Britain, Italy, Spain, Japan, France, Brazil and New Zealand, according to the Organization for Economic Co-operation and Development. A few countries have higher household debt levels than us – but do we really want to be in that group after a pandemic that has exposed how vulnerable the indebted are to economic disruptions?


That’s the number of people who had arranged with their bank as of June to either defer or skip mortgage payments as a result of the pandemic. It represents 15 per cent of mortgages issued by banks.

These deferrals were initially offered for up to six months, but they could be extended. Even if they are, it seems unlikely that every deferred mortgage will resume payments in due course. Some people won’t be able to afford their houses as a result of job or income losses, and may be forced to sell. Are there enough eager buyers to soak up all these distressed sales and drive prices higher? Read the next stat to find out why this is unlikely.

67 per cent

In a late May survey commissioned by the credit-monitoring company TransUnion, two-thirds of people said they were concerned about their ability to pay their current bills and loans.

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The economic lockdown used to fight the pandemic has hit younger, lower-income people hardest. But TransUnion’s survey results suggest the pandemic has had a broad enough effect to create financial uncertainty in a majority of households. The same survey found that 55 per cent of people feel their household income has been affected by the pandemic.

Yes, some buyers are actively looking for houses now. But how many people are lined up behind them to buy in the months ahead? The TransUnion data suggest the queue might not be very long.

5.86 million

That’s the number of Canadians assessed as being financially resilient by a consulting firm that specializes in analyzing anxiety levels about money. Seymour Management Consulting said there are 25.8 million Canadians between the ages of 18 and 70, so the financially resilient cohort represents 22.7 per cent of the total.

Another 27 per cent were approaching resilience and the rest were either financially vulnerable or extremely vulnerable. Not an inspiring base for building a multiyear rally in home prices. A topic for future discussion: What role have big mortgage payments played in undermining our financial resilience?

42.1 per cent

This is the unemployment rate in May for 20- to 24-year-olds returning to school – it compares with a rate of 10.8 per cent in May, 2019. Not many people in the age bracket buy houses, right? But they will, later on.

The question is, how much later? Even with the Canada Emergency Student Benefit of $1,250 per four-week period from May through August, many students are going to be financially disadvantaged by a jobless summer. Some will need to increase their student loans as a result or delay completion of their degrees, measures that could postpone future home buying by a few years. That’s a momentum problem for a housing market that needs first-time buyers to keep things moving.

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S1 E2
Stress Test

Why you got into debt, and how to get out

This week on Stress Test: Even before the pandemic, debt was a huge problem for Canadians. Rob Carrick and Roma Luciw explore our strange relationship with debt and the factors that contribute to it. We hear from a millennial saddled by her debts, and her journey to find a way out. Plus, Roma speaks to Shannon Lee Simmons, a financial planner about tangible steps to manage debt.

Listen and subscribe:

Read the transcript in English or French.

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