Fundamentals – “What Chart Is This?”

We often discuss fundamentals like price:rent and price:income. This chart reflects a ‘fundamental’ that is of central importance in understanding the Vancouver RE market.

Anybody care to guess?

[x-axis years; y-axis percent. I’ll post the source later.]

UPDATE and answer:

The chart shows Canada’s Household Debt to GDP Ratio.

It’s clear where the housing bubble came from.
Debt Increasing At An Unsustainable Rate.

It’d be fascinating to see the equivalent chart for BC alone.

[The chart is taken from a recent David Rosenberg commentary. ]

20 responses to “Fundamentals – “What Chart Is This?”

  1. Average % of disposable income going into housing

  2. Percentage of bulls in the market?

  3. Karl-> No.
    rf -> No.

    Interesting guesses, both vaguely correct in spirit but not specifics.
    No cigars yet.

  4. Odds that your house will sell in a bidding war.

  5. Odds that your friends will laugh in your face when you say you are “awaiting the crash”.

  6. Okay, I’ll bite…

    Looking at the first peak point occurring after ’93. I suppose that this can’t be an indicator of price action.

    Looking at the second major peak point it happens before ’00. After ’01 you can see an exponential growth from the trough. This suggests to me that there is an affect from the dotcom bust and boom.

    Looking at the pattern it suggest to me that this is a graph of
    % of wealth in Realestate per household vs. time

    97% seems quite high but seeing as how people have poured money into the markets pre dotcom bust and then subsequently lost their shirts. The retail investor portfolio probably shifted to pure real estate. With a high number of boomers still having real estate debt in either principle or investment properties. I would presume that a lot of their equity lies in real estate and they have encouraged everyone else to do the same. Cycle has fed itself with positive sentiment until everyone is overly exposed in real estate.

    Now that I think about it 97% does seem extremely high but i’ll just go with this educated guess anyway.

  7. How about debt to GDP?

  8. debt-to-GDP is a pretty good one actually, spitfires

    debt went high in the 90’s recession
    GDP went high in the tech boom
    debt grew steadily after the tech bust (it seems like this area would be more flat than at such an incline but i’m just assuming)

    i wish the graph went a few years before 89 so there’d be a bit more information.

    either way, thats a pretty good guess

    I’m anxious to see what it is….because whatever it is…if 60% or lower is a baseline…we are in some pretty ***cked up territory at 97%

  9. Percentage of first-time buyers with high-ratio/insured mortgages?

  10. Average mortgage to value ratio at purchase?

  11. I’ll throw out a guess

    -Renters vs Owners in a specific demographic group?

  12. Percentage of economic growth due to the housing sector.

  13. Bulls IQ relative strength against Bears IQ?

  14. VanCity Guy

    Average % of gross income going towards housing?

  15. roger smith

    Average age an average income earner will be once they’ve paid off their mortgage on an average house in Vancouver using their average income, after living expenses?

  16. Vancouver: household mortgage relative to personal income

  17. Loan to value

  18. Great guesses, and a few good laughs, too.

    ‘spitfires’ is correct.

    The chart shows Canada’s Household Debt to GDP Ratio.
    It’s clear where the housing bubble came from.
    Debt Increasing At An Unsustainable Rate.

    It’d be fascinating to see the equivalent chart for BC alone.

    [The chart is taken from a recent David Rosenberg commentary. ]

  19. Nice plot! And all this time I was thinking it was the plot for the percentage of Van homes with grow-ops as mortgage helpers ;-)

    Since Vancouver is mediocre at producing, but world class at taking on debt, I wonder what would the Plot look like if it were strictly greater Vancouver?

  20. Scarier than I thought actually.

    Parabolic growth is unsustainable, and is always a precursor to a crash. What is unsustainable will not be sustained.

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