It seems falling home prices aren’t the only problem for broker clients out west, as recently released data points to poorer-than-average debt management habits as well.
Albertans have the highest average debt level, not including mortgage debt, according to recently released stats.
The average debt load in Canada is $21,312, according to the National Consumer Credit Trends Report, and the average in Alberta is $27,490.
This high debt level – perhaps coupled with hits to home prices – has led to an increase in bankruptcies, especially in Edmonton.
“Accessibility to credit and low interest rates certainly has been the trend. It’s been easier to borrow, it’s been cheaper to borrow. In a sense, we’ve been somewhat soothed into thinking we can take on more debt since the low rates appear to be never ending,” Freida Richer, licensed trustee with Grant Thornton, an accounting, business advisory and risk management firm, told the Edmonton Sun. “Now, people simply don’t have the funds. There is a material decrease to their income and that is affecting their ability to afford their basic living expenses.”
According to Richer, Albertans were lulled into a false sense of security during the oil boom, which helped create thousands of high-paying jobs and pushed home prices sky-high.
That obviously isn’t a case anymore.
Along with high-debt levels, Albertans are also struggling with a faltering housing industry.
CREA’s latest stats point to a sobering reality in oil country.
Home sale were down 21.5% year-to-date in October, and the dollar volume of sales was down 22.8%.
Prices have also declined, falling 1.7% year-to-date.