Canadians Saw Their Net Worth Fall By Nearly $1 Trillion, Biggest Drop In History

Easy come, easy go — especially during a credit driven asset boom. Statistics Canada (Stat Can) reported household net worth made a sharp drop in Q2 2022. The decline was actually the largest in history, coming in at nearly $1 trillion. It’s not you, it’s a lot of money to vaporize in a single quarter. Most assets are forecast to begin a recovery soon, with real estate being the exception. Home prices have been forecast to see a prolonged downturn, as rates continue to climb higher. 

Canadian Household Net Worth Dropped Nearly $1 Trillion

Canadian households saw the sharpest drop in net-worth ever. Stat Can reported a combined net worth of $15.22 trillion in Q2 2022, down 6.1% ($990.1 billion) from a year before. It still came in 1.89% ($282.12 billion) higher than last year. The quarterly drop was the largest on record, and annual growth was the smallest since 2018.

Canadian Household Net Worth

The value of assets held by households minus their liabilities. 

Source: Statistics Canada; Better Dwelling.

Real estate isn’t the only segment suffering from a downturn — it’s everything. “The value of wealth was weighed by a trifecta of sagging equities, bonds, and home prices,” said Shelly Kaushik, an economist at BMO.

Adding, “That caused household net worth to fall to 1,003% of disposable income, down from the all-time highs at the turn of the year but still above pre-pandemic levels.”

Household Net Worth Is Still Boosted From 2020

Most households aren’t hurting from the record drop, since it followed record gains. Last quarter’s net worth was still 26.9% ($3.22 trillion) higher than Q1 2020, when interest rates were first cut. We might have just exited the most profitable recession ever. How that was distributed is a different story for another day. 

It might not be a quick recovery for sagging net worths, according to experts. “While equity and bond markets may recover in Q3, the housing market will continue to cool from aggressive Bank of Canada tightening. The latter factor will continue to weigh on the value of household assets in the coming quarters,” explained Kaushik.

11 Comments

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  • Ron 3 weeks ago

    It was the biggest jump ever until last February 🙂

  • Average Man 3 weeks ago

    For 15 years, anyone who points out that this increase in net worth wasn’t real money got called a hater and a bear. But hey, the good news is that as long as you didn’t borrow against it, you haven’t actually lost anything. It was a fictional gain, and now it’s a fictional loss. You’re fine.

    • Yoroshiku 3 weeks ago

      Most of the increase in net worth was of course based on real estate. If you cashed out, you probably did well. If you bought a second, third, eighth property with the expectation that it would double in price in a month or two, you might have seen your net worth take a hit.

  • JCH 3 weeks ago

    Totally true – none of these gains are real, including real estate – it’s all borrowed money, borrowed “prosperity”.

    But how many homeowners took advantage of the equity increase and bought an ‘investment’ condo, a boat, a cottage, an RV? So much stuff bought on credit against the fictional real estate gains!

    I keep hearing ‘interest rate increases can’t fix supply-side causes of inflation’ but that idea completely ignores just how much unnecessary stuff was, and still is, being unsustainably bought on cheap credit, causing more inflation! In my Fraser Valley suburb, you can’t drive 5 minutes without seeing 5 Teslas — but did anyone actually pay cash for them out of savings? No way — all debt, assuming the good times would last forever.

  • AK 3 weeks ago

    It’s not in or out of your pocket.
    It’s your home.

  • richard stanbridge 3 weeks ago

    words of wisdom by mark twain

    it ain’t what you don’t know that causes all the trouble. it’s what you know for sure that just ain’t so.

  • Dan 3 weeks ago

    from paper millionaires to toilet paper scavengers. LOL

  • Stephan Luc Larose 3 weeks ago

    Only 2% of households or less saw an increase, the rest of us all lost. For most, wages have continued to stagnate as the cost of living went up, and our debts increased. Few are those whose assets actually exceed their liabilities.

  • KHURRAM JAMIL BUTT 3 weeks ago

    Home prices have increased 7.6x faster than income since 1965. In Toronto, the average home price was hovering around eight times the average local household income pre-pandemic. Now, it has reached 10 times the average Torontonian income. So, you’re not going to increase our incomes, you’re not going to reasonably lower prices, and you’re not going to give us affordable debt to enslave ourselves to a bank so we can buy a home. Basically, our economic managers WANT us to live on rent all our lives and never achieve the dream of owning a little matchbox in the GTA. Nice! Cuz whichever you look at the deck, its stacked against the little guy.

  • Mark O'Neill 3 weeks ago

    Unrealized gains are not losses.

    • J 2 weeks ago

      It’s a loss for anyone who bought at the peak – pretty much anyone from 2016 and onwards at inflated prices. The only winners here are the middle people and money launderers.

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