Canadian households and businesses are falling underwater, despite a booming real estate market. Office of the Superintendent of Bankruptcy Canada (OSB) data shows a big climb for insolvency filings in January 2020. The big jump in filings helped to push the month’s numbers to the highest level since 2010.
Canadian Insolvencies Rise To Highest Level Since 2010
Canadian insolvencies are rising very quickly these days. Across the country, there were 11,337 insolvency filings in January, up 8.7% from a year before. This brings the 12-month rolling sum to 141,930 in January, up 9.6% compared to a year before. A 12-month growth rate nearing double digits isn’t the only thing concerning here. It’s also the highest level 12-month rolling sum for a January since 2010.
Canadian Insolvencies Have Biggest Year Since Great Recession
The number of insolvency filings in the 12-months ending in January.
Source: OSB, Better Dwelling.
Ontario Insolvencies Rise The Fastest In Canada
Ontario is by far the busiest province for filings – by volume and growth. There were 3,735 filings in January, up a whopping 16.8% from the same month a year before. This brought the 12-month rolling sum to 46,290 in January, up 15.3% compared to a year before. The province is now home to the fastest rise for insolvency filings in the country.
Alberta Sees Second Fastest Insolvency Increase
Alberta insolvencies are doing just a tad better, with the second fastest increase. There were 1,452 insolvencies filed in January, up 17.5 from the same month last year. This brings the 12-month rolling sum to 17,114 in January, up 14.8% compared to the year before. This is the second fastest increase for the month and rolling sum, of any province. On the upside, a little better than Ontario.
Canadian Insolvencies – 12 Month
The number of insolvency filings in the 12-months ending in January, by province.
Source: OSB, Better Dwelling.
BC Insolvencies Fall On The Month
BC insolvencies actually fell on the month, and are moving with the national average. The province saw 834 insolvency filings in January, down 2.5% compared to the same month last year. The 12-month rolling sum reached 11,327 in January, up 9.9% compared to a year before. BC was one of the very few provinces to see January improve from last year. However, it’s still been much busier this year than last.
Insolvencies Are Rising In Every Canadian Province
The percent change in rolling 12-months of insolvency filings, ending in January.
Source: OSB, Better Dwelling.
Quebec Insolvencies Rise, But Slower Than Average
Quebec is seeing robust growth for insolvency filings, but not as fast as the national number. There were 3,684 filings in January, up 9.1% from the same month last year. The rolling 12-month sum reached 45,299 filings in January, up 3.5% compared to the same month last year. A 3.5% growth rate is significant, but looks pale in comparison to the national growth rate.
The rise for insolvencies is very unusual, especially given the real estate market. Typically, fast rising prices in real estate are accompanied by fewer insolvencies – since the economy is typically strengthening. Instead, what we’re seeing here is very fast rising insolvencies, reaching recession levels. This is another one of the few cracks appearing beneath the headline numbers.
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The real reason Canada received a rate cut is households can’t handle higher rates.
This is the death trap everyone was warned by analysts about two years ago. Even though certain segments of the economy are doing really well, we now have too many people dependent on the housing economy to make the correct decisions.
In order to prevent housing defaults, we’re going to have to weaken the dollar and send inflation higher. This creates an issue for people that *can* handle their bills, because they just saw their dollar drop in value by 3% against the greenback.
Unless you earn money in USD, then you just got a really nice raise 🙂
Very good , put billion of dollars in the pocket of big co operation and banks , and inflation goes up to the roof , the price of grocery and everything else double in few years Bank had biggest increase of mortgage , at the time we have highest insolvencies mortgage are secured by bank of Canada
so money goes out from average people to the bank . No risk for bank so many people with fake document they get big mortgage ,
Very good , put billion of dollars in the pocket of big co operation and banks , and inflation goes up to the roof , the price of grocery and everything else double in few years Bank had biggest increase of mortgage , at the time we have highest insolvencies mortgage are secured by bank of Canada
so money goes out from average people to the bank . No risk for bank so many people with fake document they get big mortgage ,
lolllllllllll, eyes open people…this is going to get nasty and for a long time, it has started…20 years of crazy housing prices in this country…straight up…all fake…record personal and government debt all across the country…this does not end well for most…stock market and housing crashes coming, all around the world…it has begun…and its about time…be patient now…opportunities coming…and lots
Not sure about that…rental envious hater here…. However, I look at the sales data in north shore Vancouver area and I am seeing sales OVER asking again especially for higher end detached. Not sure where the tons of money comes from pouring into the market. It may have to do with ‘smart money’ where RE is used to as a safe until the coming recession goes….yes, over asking prices in times like these, believe it or not.
Australian market is heating up too
Southern Ontario properties (not GTA specifically) are going for over asking too. It is a seller’s market right now. The irony is a client I had this week paid 5k over asking for a house foreclosed on by RBC and it wasn’t listed cheap either. I don’t see this ending well but I’ve been saying that for a while so what do I know.
In this situation instead of restricted rules, Goverment is pumping the housing market again.
It’s only when the tide goes out that you learn who has been swimming naked