What Is The Government Doing To Tackle Consumer Debt?

There were virtually no new listings last week, and it’s still too early to a have an identifiable “market” just yet.  So this week, I want to take the time to talk about debt, and tie this into a conversation about the new mortgage regulations.

Over the Christmas holidays, I thought a lot about the new rules, and I just couldn’t figure out why the government was going after this “kind” of debt, when other, far worse debt, still reigns supreme.

Today, I’m going to tell you two stories this week about simple, every-day interactions I had over the break, both which highlight how many people in society approach debt, and how people refuse to gain a better understanding of the value of a dollar, and interest rates…


One late-December day during my every-day-blends-together “break” from work, I found myself in Canadian Tire, diligently shopping for a snow brush.  I know, right?  What a life!

Out of the corner of my eye, I could see “that guy” approaching.  You know the one.  He’s got a clipboard, and a smile, and he wants you to sign up for some low-end credit card that very few people possess.

As he approached, he launched into character and said, “Nice!  That’s a great brush!  And you’re going to pay for that today on your Canadian Tire Mastercard?”

He was good.  That was a decent opening, and you can take this from a guy who used to approach girls in bars and say, “I just hate conforming to accepted social norms, don’t you?”

I looked up, and he was just a kid!  Barely old enough to grow stubble on his chin, but it didn’t stop him from trying.

“I’m not your guy,” I told him plainly, hoping he’d tell me to have a great day and back off.

“Oh I certainly don’t want to intrude on your holiday shopping” he said, perhaps thinking that once you’re married, a snow-brush is the most coveted of Christmas gifts.  “But I just wanted to know, if you don’t already have a Canadian Tire Mastercard, then what’s stopping you from signing up today?”

He asked.

So I answered.

“Well, I came here to buy a snow-brush, not apply for a credit card.  I have a credit card already, from my bank.  If I needed more credit, I’d increase the limit on my existing card.”

He nodded, and motioned his clipboard toward me.

“But you can have a second card today to supplement your existing card,” he said, and with a smile, added, “And I just know from looking at you, you’ll qualify.”

Not a bad sales pitch, I suppose.  Telling me I’d “qualify” for something that I don’t want, don’t need, and that everybody on the planet would “qualify” for.  I get it; act like I won something, and maybe I’ll feel special.

“I don’t want to sound repetitive,” I told him.  “But I’m not in the market for a credit card.  You could tell me I ‘qualify’ for a deal on a truck being sold in the parking lot, but if I’m not in the market for a truck, then what good is it to me?”

I turned my attention back to two particular snow-brushes that had made my short-list; a grey one, and a red one.

“Okay, okay,” the young man told me.  “I’ll tell you what – I know you’re not going to sign up for one of these cards today, but can I tell you why you should?”

I explained, “There’s no reason why a person “should” impulsively sign up for a credit card that two minutes ago, they had no idea existed, which will lower their FICO score, and put a massive red mark on their credit report, when they could walk into any of the Big-5 banks and get recognized credit card.  But sure, what the hell, go for it.”

He smiled, and proudly said, “Because if you sign up now, you get eight percent cash back of the value of the goods you purchase, today.”

“I don’t follow,” I told him.

“Whatever you buy today, you get eight percent back!” he reiterated.

“No, I get that,” I told him, “But you said that there’s a reason to sign up for this card.”

“Yeah,” he replied, “Eight percent, cash back!”

I held up the snow-brush I was settling on – the grey one, and said, “This costs twenty dollars.  What’s eight percent of twenty dollars?”

I didn’t give him a chance to crunch the numbers; “A dollar, sixty,” I told him.

He wasn’t smiling anymore.

“A dollar and sixty cents.  That’s what I’d get, today, for signing up for a credit card, that I don’t want, which would lower my credit rating.  Is it worth it?”

He tried to come up with another ‘reason,’ but since we were just two guys, having fun, I said, “How about this: what if I purchased, say, $1,000 worth of goods today.  Would I get 8% of that in cash back?”

He smiled, and said, “Yes!  You would!”

I said, “Okay.  So in order to get eight percent, $80 back, I’d need to purchase $1,000 worth of stuff that, only five minutes ago, I didn’t really need.  I would find it hard to believe that I could actually find a thousand dollars worth of wares, in here, today, that I would value at the sticker price, and actually utilize.”

At this point, I actually felt bad.  I didn’t know if he realized I was trying to be helpful, or if he just thought I was an asshole – the way some of you, reading this, might assume.

I asked him how old he was, and he said he was nineteen.

I asked him where he went to school, and he said Seneca College.

“What’s the interest rate on that credit card,” I asked him.

He said he didn’t know, but he could ask a manager and find out.

“Have you ever looked up your credit score before?” I asked him.

He said he didn’t know what that was.

“Equifax, Trans Union – have you heard of these?” I asked him.

He shook his head.

So I thought, since he was still standing there listening to me, I’d give him a few thoughts he could take home with him.  I explained the basics of “credit” and “debt.”  I explained what interest rates were, and then went on to describe how credit scores work, and how they affect what an individual can borrow.

“Go home, go to www.equifax.ca, pay the thirty bucks,” I told him, “And find out what your credit score is.”

Thirty dollars?” he exclaimed.  “Just to find out your score?”

I asked him if that was a lot, and he said, “Hell yeah!”

“Says the guy that just wanted me to sign up for a credit card with a $10,000 limit and a 30% interest rate so I could save $1.60 on my snow-brush…”

He threw his head back in laughter.

“You got me!” he said.

“I want you to go home, and download a movie called ‘Maxed Out,'” I told him.  “It’s from 07-08, or somewhere around then.”

“07-08?” he asked.  “Where’s that?”

“The year,” I told him.

“Oh, right.  2007-2008!  That’s what you mean!  Okay.  Right.  Well, I was like ten-years-old, he told me.”

“Okay, just download the movie,” I told him.  “Whatever torrent, Pirate-Bay, rip, MPEG, Napster-thingee you kids are using today,” I said, channelling my inner old-man.  “The movie is about predatory lending practices in the United States, and the impact it can have on a person’s life.  It also showcases, I’m sorry to say, how naive, uninformed, and stupid the average borrower is.  Watch that movie.  You’ll learn more than you learned in school.”

“They’ve never mentioned any of this in school,” he told me.

And I just about puked in Aisle 7 as I thought, once again, about how the public school system has been bastardized and watered-down, but I digress…

“You know what I’m gonna do tonight?” the young man asked me.

“Go home and watch videos of other people playing video games in this insane thing your generation calls E-Sports?” I asked, as matter-of-fact as possible.

“No,” he said, “I play Call of Duty,” he said, to which I nodded in agreement.

“I’m gonna watch that movie, man.  Seriously, I will.  But like, I still have to sell these cards.”

He had a job to do, and that, I understood.  “How many have you sold today?” I asked him.

He suddenly regained his confidence, smiled and said, “Three, man.  Three of ’em.  And nobody asked about the, what did you say, the rate?”

“The interest rate,” I told him.

“Yeah.  So whatever.  They got their 8% cash-back, right?”

Good for him.  A hard-working kid, paying his way through college.

A fool and their money are soon parted.  His job is to sell those cards, not to educate people about the associated interest rates and credit risks.

But who’s job, if anybody, is that?

As many of the long-time readers know, my mother lives in Scarborough, and has since around 2000 when she moved out of ‘the big house’ in Leaside.

Over the Christmas holidays, our family gathered there for a very informal dinner, as she likes to call it.  I swear, I could wear a tank-top at the dinner table, and she would just smile.

Upon arriving at the house, my wife informed me that we forgot our daughter’s bag – the one with the diapers, baby-wipes, creams, sippie-cup, et al.

My solution, being a typical man, was to “just wing it.”  Deal with problems as they arise.  But with the entire family looking at me, and with my 7-year-old brainiac niece saying, “You need to go get some diapers,” I got back in the car, and headed out to Shoppers Drug Mart.

At Kingston Road & Midland, I found a Shoppers, and although it goes against my frugality, I paid the sticker price for small packs of everything we have at home in bulk.

I got to the cashier, and the woman in front of me was checking out.

The cashier said to the woman, “That’s $80.72, in total.”

And then she added something that drew my attention: “If you spend $100 today, you get 300 bonus Shoppers Optimum Points.”

Now I’m paraphrasing here, because I don’t know how many points it was, or what they were called – but I believe it’s “Optimum.”

So in my mind, I’m thinking, “There’s no way somebody is going to spend another $20 here to “achieve” a bunch of virtual points.  This isn’t exactly Bitcoin they’re getting.”

But the woman in front of me said, “Oh, awesome, okay,” and then looked around her.

Looked around, where?

At the cash.  You know, where they keep all the items referred to as impulse buys.

Rather than walking through the store and picking up a 36-pack of toilet paper that’s on sale, she merely looked around, and grabbed the first thing she saw.

Pot of Gold,” she said, as she placed a box on the counter.

The cashier rang it through, looked at her screen, and said, “$88.15, I think it’s on sale.”

The woman laughed.  “Damn sale!  Ha!  Okay, what else, what else,” and began looking around.

She grabbed about 3-4 small bags of Doritos, placed them on the counter, and said, “Somebody in the house will eat these!”

“We’re up to…..let’s see,” the cashier said, as she waited for a new total.  “$94.84.”

“Oh Lord,” the woman said.

She picked up three packs of gum, placed them on the counter, and the cashier rang them through.

“$98.55,” the cashier said.  “Almost there!”

Exhausted, the woman then picked up a high-end lip-balm, and smacked it on the counter.  “This oughta do!” she said.

The cashier rang the item through, and smiled.  “$106.22,” she said.  “We made it!”

I couldn’t believe what I had witnessed.

I don’t know how many “points” this woman scored, or what their cash value is.

But I’m willing to bet those points aren’t more than $1-2 of cash value, and my mother – a frequent Shopper’s customer, tells me that’s being optimistic.  On $100, you’re not getting more than 1-2% from Shoppers, even with their “bonus-days” or other promotions.  The banks pay you less than one-percent on your savings.  The best VISA’s out there offer 1.5% in cash-back, travel, etc.  So what was this woman really getting back via the Optimum points?

She just spent $26.22 on crap she didn’t need.

Pot of Gold chocolates, Doritos, Trident gum, and lip balm.  She didn’t want any of that stuff when she went inside, and yet she exited the store with it – much like those who sign up for credit cards when promoted at Home Depot or Canadian Tire.

And at no point was this woman able to do the math: that she spent $26.22 to achieve maybe $1.00 in redemption points.

Allow me to jump to a conclusion here and suggest that maybe this woman couldn’t do the math, because she didn’t understand it.

Maybe she can’t figure out that $26.22 in after-tax dollars takes her $34 in gross income to generate, which could be two hours of work for her.

And not everybody does understand this.  Not everybody’s strong suit is math, taxation, interest rates, or personal finance.

So the take-away from these two stories then, is what?

That I’m a jerk for writing them?

Or I’m pointing out that (gasp!) some people in society don’t possess the education or understanding to make decisions regarding their own personal finances, especially when it comes to debt.

A government’s role is to serve and protect the people.

And often they enact legislation to protect people from themselves, like making it the law to wear a seatbelt in a car.

But while credit card companies offer frisbees and hackey-sacks on college campuses to kids who sign up for MBNA Mastercards, and the Money Marts, Payday Loans, and Cash Moneys of the world are allowed to prey on the most susceptible members of society, the government has done……what?

They’ve made it more difficult for people who have scrimped and saved a 20% down payment to purchase a home?

It makes no sense to me.

Not when there are so many other areas of the lending world that are predatory, and where annualized interest rates top 7,000% (that’s not an exaggeration – we’ll talk about that on Wednesday).

So while today’s two stories merely demonstrate what goes on in the world of lending/borrowing, debt, and interest on a daily basis, on Wednesday, I’d like to come back to this theme and differentiate between “good debt” and “bad debt,” and discuss how and where the government should focus their efforts…


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  1. Sardonic Lizard says:

    Government created the conditions that allowed Canadians to binge on massive debt (historically low interest rates, CMHC and 5% down payment on homes…). And then Canadians did what they do best; spend money! When it comes to real estate, Canadians are nothing but house-horny beavers! We cannot be trusted with money!

  2. Cecilia says:

    The Can Tire MC actually has one excellent feature that no other credit card has: it has the ability to do bill payments (like property tax, enbridge, hydro) and earn 0.8% cashback in Can Tire dollars. You are essentially earning cashback on bills where you normally cannot pay on a credit card and earn rewards. No, it is not a cash advance. When you do the bill payment, the payment is made directly from CTFS to the bill company. That’s the only reason I have this card! I bet that also 99% of the store employees or even mangers do not know this fact!

  3. Kyle says:

    “Yes, I believe what I’m writing. I suspect you’re being purposefully confrontational in an effort to elicit a response”

    Bingo! And that response is to stop resorting to those cheap tactics of yours. You’re always begging for a debate. Well, if you actually want to debate then debate instead of arguing with cheap responses. Do so by putting forward substantive arguments, that amount to more than:
    – nit picks
    – taking it to subjective-ville
    – pointing out obvious exceptions to the rules and then insisting that those exceptions are more than they unless presented with exact data showing the size
    – false equivalent comparisons
    – irrational comparison that may be semantically valid, but not logically valid in any rational person’s mind
    – throwing out some ridiculously improbable alternative scenario


    It’s like you need to respond for the sake of getting in the last word, regardless of whether you have any substantive argument or not. Seriously if you don’t have a substantive rebuttal, it’s ok to step away from the keyboard. Until you can do that no i won’t waste my time with you.

    1. Chris says:

      Sorry you feel that way, Kyle. You’re entitled to your opinion on my debating style. I respectfully disagree.

      It’s unfortunate that feel the need to be purposefully confrontational and resort to bully-like tactics. After all, it’s just an internet blog. Hardly seems worth getting worked up about.

  4. Sardonic Lizard says:

    Dave, your recollection of these impromptu conversations is remarkable. Do you record them with your phone, or make them up?

  5. Chris says:

    “When he links to his posts in social media i believe it says, “From the Desk of Brad Lamb”.”

    I’m afraid I don’t see anything to that effect on his blog posts? It just states a number of opinions as fact, such as B20 being a “terrible idea”, a “country killer” and that we must “call or email our federal representative”. On his website, he also lists his blog posts as “articles”, with subheadings of “Real Estate Business News”.

    BetterDwelling does refer to themselves as both a blog and news source, in different places. Under their google heading, it states:

    “Toronto’s fastest growing real estate blog. Featuring the latest in Toronto real estate news, listings, and opinions.”

    While we could debate the minutiae of what constitutes news or a blog until the cows come home, this is all a bit besides the point. My overarching assertion remains that discussion of content is typically better than a denunciation of source.

    1. Kyle says:

      Minutaie? OMG, you are reaching so far you can’t even so your own arm anymore. Do you honestly even believe the stuff you write, or are you just arguing for the sake of it now? If Sarah Huckabee Sanders gets fired, man you would be a shoe-in.

      Brad’s blog is clearly his own personal blog. For god’s sake there are huge glamour shots of him and his bio taking up the top half of the screen. He does not pretend to be reporting news. Anyone who lands there knows they are reading HIS opinions and would expect nothing less.

      Better Dwelling formats their site like a news site with articles by date. Nothing about it is personalized or is meant to give the impression that you are getting opinions, it is meant to look like a news outlet. They have headlines (which are actually just their slanted conclusions) formed into a statement. They organize their articles by Geography the way a newspaper would. It is very clear they are trying to appear like a legitimate news site.

      1. Chris says:

        Kyle, can you please try to avoid resorting to ad hominems and other unnecessary comments? Your entire first paragraph could have been discarded, without the rest of your post suffering.

        You stated that the other bloggers share their conclusions and back them up with data. In the example I showed you of Brad’s post, where is the data to back up the conclusion that B20 will be a “country killer”? There is nothing there but Brad’s personal opinion on the matter.

        As to BetterDwelling, I would put them in the same category as BuzzBuzzHome, and the like. To expect strict adherence by these news/blog websites to journalistic standards is, in my opinion, setting the bar too high. They are not the Globe and Mail, the Financial Post, etc.

        But you keep skirting around my overall point; regardless of your opinion of BetterDwelling, or my opinion of Brad Lamb, we would, ideally, focus discussion on what they are presenting.

        Discourse suffers when you yell “fake news!” at sources you don’t perceive as reputable, while ignoring content. A quick look south of the border shows where that kind of attitude leads; angry people with deep divisions. Not exactly a great result.

        1. Kyle says:

          I’m not skirting around the point at all. I’ve addressed it already. Given that they are fake news, there is no point in discussing their content. It’s like sitting around debating what Sean Hannity says, what is the point?

          Is the point for me to blow huge gaping holes into every one of their arguments, and then for you to come up with sad excuses for them?

        2. Kyle says:

          “Kyle, can you please try to avoid resorting to ad hominems and other unnecessary comments? Your entire first paragraph could have been discarded, without the rest of your post suffering.”

          While it may sound like an ad hominem attack, I really actually want to know. When you pick a nit and twist it to try to infer some sort of equivalence between two very, very obviously different situations. Do you actually believe the stuff you write or are just arguing for the sake of it?

          1. Chris says:

            If I were to bring up Sean Hannity talking about a US jobs report where hs says something along the lines of the economy firing on all cylinders thanks to Trump, what do you think results in a better discourse? To talk about the jobs report, the data, how it has been growing since Obama was president, other possible causes for US economic expansion, etc.; or to simply yell “Hannity is fake news! Fake news!” and refuse to debate any further?

            If BetterDwelling is of such a low calibre, as you claim, you should have no problem refuting their opinion, when it is raised here.

            And given that you are willing to spend the time and effort to repeatedly craft ad hominem attacks, I would expect you to have the time and energy to defend your position against a BetterDwelling conclusion.

          2. Kyle says:

            I have no problem refuting them (as i already have), like i said doing so any further is a waste of my time. Especially with Sarah Huckabee Sanders-level apologist.

            So do you actually believe what you write or are you just being argumentative? I strongly suspect it is the latter. This is another example of the cheap annoying tactics you use, which makes debating any contents, whether from a reputable source or fake news source like Better Dwelling, utterly exhausting and pointless.

          3. Chris says:

            Kyle, I would appreciate if you ceased the ad hominem, antagonistic, and frankly, unnecessary comments. Yes, I believe what I’m writing. I suspect you’re being purposefully confrontational in an effort to elicit a response, but I can assure you I won’t be giving back what I am taking. I would much prefer we both talk with civility.

            It’s disappointing that you’re unwilling to debate further posts, and seem to be set in resorting to yelling “fake news”. But, such is your right.

            I’ll keep posting them, you can keep shouting about it, and I will keep asking you to refute the content (which you can refuse to do).

  6. Kyle says:

    “Again going on about “bearish views that I love”? Come on, I thought we had moved past those comments that, quite frankly, add little to the debate.”

    Well, you’ve yet to ever demonstrate (even just once) the capacity to exercise the slightest amount of criticality to anything bearish (i.e. what i’ve said is absolutely true), so you tell me have “we” moved past this?

    Also, to be clear i have no interest adding to the debate with you. Debating with you is a waste of my time, for that exact reason – that you’ve never met a bearish view that you didn’t unconditionally love. You went from a rabid defender/attacker of anyone who would challenge the article on unoccupied homes to a rabid apologist for it. Instead of acknowledging that they shamelessly misrepresented the data and blatantly attempted to mislead people, you instead make claims of how it was a “misinterpretation” and how difficult it is to assess the number of unoccupied homes (ummm are we forgetting again that many astute readers of the blog immediately realized what they were saying was very obviously nonsense?), or claim well they disclose the dates and sources, so people should be able to do their own analysis – those are cheap Hannity level arguments, and i’ve resolved not to waste my time trying to reach the unreachable who resort to cheap, flimsy, arguments or whose arguments *might* be possible, but represent the *highly* improbable .

    1. Chris says:

      Sorry that you feel debating with me is a waste of your time, Kyle.

      If that’s the case though, why do you continue to respond?

      1. Kyle says:

        If you haven’t noticed i’m not actually debating with you, i’ve given up trying to convince you. Like i said if you don’t consider Better Dwelling to be a sham, that’s your prerogative, or if you want to continue to be a sham shill by spamming their links that too is your prerogative.

        I’m simply responding so that others who read the thread, can be fully aware that these links you’re spamming the board with and presenting as “data” are actually blatantly misleading articles that purposely misrepresent actual data.

        1. Chris says:

          As I said, I concede that they erred in their assessment of the census count of unoccupied homes. I also feel it would be prudent of them to re-run their analysis on homes that have never been occupied at a different time of year.

          That being said, if Vice, or CBC, or the Financial Post, or BuzzBuzzHome, etc. posted something that I disagreed with, or found error in, I don’t think I would condemn the entire publication in perpetuity. I’m sure you, and I, and every poster on this blog has been mistaken in previous comments, yet we are not (or should not) be cast aside because of it; rather, our present comment should be weighed on its merrits.

          It would be far more interesting to have a discussion about facts, statistics, data and the subsequent conclusions, regardless of source. However, if you wish to simply yell “fake news!!” and attack the source rather than the content, well I suppose that is your right.

          1. Kyle says:

            Nice try, but the obvious difference is in their intentions. Is their intention to report the truth, or is their intention to get clicks?

            – When reputable people/outlets make errors they correct them – When Better Dwelling makes an “error” they make no attempt to address it and simply mine new data to fabricate new stories about

            – When reputable people/outlets make a statement they intend it to be broadly true and representative of reality, and they qualify anything that may be anomalous. When Better Dwelling makes a statement about the market, they wait until the most anomalous time of the year to take a snapshot and then make a statement without any qualifications as if it were broadly true.

          2. Chris says:

            Whether you or anyone considers a source reputable or not, I maintain that a better discussion is to be had when the focus is on the content and its merrits.

          3. Kyle says:

            Again it has nothing to do with what i consider reputable. Please quit dragging every single argument into subjective- ville. It’s another cheap and annoying tactic that you really need to stop using. None of my arguments have ever been based on what i consider…, or what i agree with… or what i believe…. So please stop trying to re-frame as such.

            My argument have all been very objective, there is a very real thing called journalistic standards. Better Dwelling has none, because they are a sham. So no i don’t intend to waste my time, focusing or discussing on the contents of a sham.

          4. Chris says:

            Reputation is, by definition, a subjective assessment. Further, BetterDwelling is not a journalistic source, they are a blog. I wouldn’t apply journalistic standards to this blog, or blog posts from Ben Myers or Brad Lamb. I may disagree with things they say, but I try to focus on their content rather than who is saying it (although I concede it is difficult with Mr. Lamb sometimes…my bias is showing).

            You aren’t obligated to discuss the contents of any article. You are free to shout down and dismiss any source or poster as fake news, a shill, a sham, whatever else you like. I’m simply saying it makes for a better discussion when it is focused on the contents rather than the source.

          5. Kyle says:

            Your comparisons are false equivalents.

            Just because something isn’t a journalistic source, doesn’t mean they can’t apply some journalistic standards. Better Dwelling, literally does the opposite.

            Those other bloggers/commentators that you mentioned, are very transparent when they are providing their opinions/conclusions which they support with facts or data. Unlike Better Dwelling who tries to pass off their slanted opinions/conclusions as facts or data.

          6. Chris says:

            Does this recent blog post by Brad Lamb adhere to journalistic standards, in your opinion?


            It is chalk full of opinion and conclusion, without any data, or exploration of the other side of the argument.

            But, if we were to discuss this post, I strongly believe it would be far more productive to debate the content (is B20 a good or a bad thing), rather than just dismissing Brad Lamb as a sham shill fake news peddler.

          7. Kyle says:

            “It is chalk full of opinion and conclusion, without any data, or exploration of the other side of the argument.”

            Again nice try, but…

            Brad’s blog is very clearly his editorial platform. He often starts his blog posts with a statement of opinion. When he links to his posts in social media i believe it says, “From the Desk of Brad Lamb”. He does not pretend to be a news source, or a data source. He does not try to veil his opinions as anything other than what they are.

            Go ahead and google “Better Dwellling”. And you will see that they bill themselves as “Canada’s Fastest Growing News Source“.

          8. Kyle says:

            Oh lookie here at what they call themselves…

            From Better Dwelling’s Facebook About page: “Canada’s largest independent source for real estate news“.

  7. Kyle says:

    “You can always skim over their slanted commentary and focus exclusively on the data? ”

    Seriously think anyone is buying that, Chris???

    Let me paraphrase what you’ve said here:

    When i post an article that contains blatantly misleading lies + some data, I’m not intending for anyone to be influenced by the misleading stuff, i’m just doing it because i like how they present the data.

    1. Chris says:

      You can believe and interpret what I say however you like, Kyle! That’s your right to your opinion.

      When BetterDwelling makes a claim you disagree with, feel free to debate against it. Simply shouting down all their articles as “fake news!!” on the back of their mistaken interpretation of Statistics Canada’s count of unoccupied dwellings (which I concede, was an error) doesn’t quite pass muster though.

      1. Kyle says:

        Let’s not forget the time (which by the way you also defended their conclusion) when Better Dwelling took a snapshot of the market to show there was a disproportionate number of listings that are not lived in….right before the holidays. And then tried to make it sound like this isn’t an anomoly.

        1. Chris says:

          Link to the article please? If you’re going to dredge the past, I’ll need some help with my memory!

          1. Kyle says:

            Sorry, i won’t be posting links to their garbage. They don’t deserve anymore clicks.

          2. Chris says:

            Ah that’s alright, I looked through some of their articles, and I think this is the one you meant?


            Sorry if I’m misremembering, but your concerns with this were that it was approaching the holidays, correct? And you felt that unoccupied homes would be a larger pool of the listings at that time of year? I do agree that it would be quite interesting to see them re-run this assessment during a busier time of the year (Spring or earlier Fall come to mind), and compare the results.

            That being said, I wouldn’t lean on this as a reason to shout them down as “fake news”.

          3. Kyle says:

            How many times does their credibility need to be blown?

            For someone who can cling to the tiniest of nitpicks in any argument you disagree with, you sure are giving them tonnes of benefit of the doubt.

          4. Chris says:

            Why does that blow their credibility in all other discussions? They’re upfront with the data they found through their analysis, when and how they performed it, etc.

            I agree with your assertion that the timing could skew results, and thus ideally would be re-run again at a different time of year. I do not agree with your assertion that this timing “blows their credibility” and permanently relegates them to the category of “fake news”.

          5. Daniel says:

            Chris, i always appreciate your even demeanour in these debates, however, better dwelling is undoubtedly the absolute worst and routinely misrepresents housing data to paint a bearish outlook on the market.

            Take this gem


            Read the headline – clearly Toronto condos are completely hooped. A growth slide, oh no!

            Oh, wait, TO condos had their best year ever. They’re just presenting the stats!

          6. Kyle says:

            “I do not agree with your assertion that this timing “blows their credibility” and permanently relegates them to the category of “fake news”.”

            I have no intention of going through their many other articles, and pointing out what an obvious load of garbage they all amount to, just to make the point that these are not isolated occurrences. Not that any of that would change your mind anyway, cause like i’ve said before, you have never met a bearish view that you didn’t love. As Daniel and many other followers of the market can tell you Better Dwelling is widely viewed as rubbish. Even more moderate bears can’t take them seriously.

            If you want to believe they are not a sham that’s your prerogative, or if you want to be a sham shill and keep spamming their links that too is your prerogative, but please don’t pretend that you are trying to just share “the data”.

          7. Chris says:


            Appreciate the kind words. BetterDwelling does have a bearish lean for sure. But the headline of “Condo Prices Continue to See Growth Slide” seems to be accurate to the data. They delve further into the statistics in the article, explaining that prices are up, but growth is slowing from earlier in the year. Is the headline negative in connotation? For sure. Is it inaccurate? Not from what I can glean from the data.


            Again going on about “bearish views that I love”? Come on, I thought we had moved past those comments that, quite frankly, add little to the debate.

            I don’t expect you to comb through every single BetterDwelling article and pick it apart. However, if data is presented from them, or really any other source, I would hope discussion centers on the merits of the data and conclusions, rather than just dismissing the entire topic due to a sources label as “fake news”.

  8. Appraiser says:

    It’s not all about debt levels – it’s also about debt service and total assets as well (household balance sheets).

    Canadians have a remarkably low level of mortgage arrears, a trend that has been declining steadily over the past 20 years, especially in Ontario. In January of 1997 mortgage arrears in the province were running at .61%, as of January 2007 it had declined to .29%, by January of 2017 it had shrunk to .12%.

    The latest data for Ontario from the Canadian Bankers Association (September, 2017) indicate that arrears are now a miniscule .10% https://www.cba.ca/Assets/CBA/Files/Article%20Category/PDF/stat_mortgage_db050_en.pdf

    1. Chris says:

      Canada’s Debt Service Ratio is at very high levels. Perhaps you meant to refer to the Interest Only Debt Service Ratio?


      That’s low, so long as interest rates remain low.


      If low delinquencies are a good prognosticator for real estate market health, why did the USA’s hit a low in 2004-2005, shortly before the housing crash of 2006?


      1. Appraiser says:

        @ Chris. I did not write debt service ratio – I wrote debt service. In other words are Canadians servicing their debt obligations? The answer is unequivocally yes. And as I’ve previously illustrated they are paying off the principal portion of their debt at an accelerating rate.

        Nowhere did I state or imply that low mortgage delinquencies are useful for prognostication purposes.

        Your propensity to regurgitate worn-out bear talking points by repeatedly making reference to the real estate meltdown in the U.S. without examining context or providing even a cursory level of analysis is irrelevant and tiresome.

        If you really want to know what caused the great financial crisis and the subsequent real estate fiasco in the U.S. a decade ago, I suggest reading “Reckless Endangerment” by Gretchen Morgenson and Joshua Rosner.

        1. Chris says:

          And yet, while they service their current debt burden, they accumulate new debt at a faster rate. Hence, record high and rising household debt loads.

          You’ll forgive me if I interpreted your trumpeting of low delinquency rates as a positive prognosticator. Given your propensity for market cheerleading, I didn’t think it was quite such a stretch to assume this as your intention. My apologies if I was mistaken in this view.

          “If you really want to know what caused the great financial crisis and the subsequent real estate fiasco”

          This quote betrays your deep lack of understanding regarding the USA housing bubble and financial crisis. It is fairly rudimentary knowledge that the USA housing bubble (peaking in 2006, declining through 2007) preceded, and is widely considered to have acted as a catalyst to the subsequent financial crisis (2007 through 2009).

          As such, I think I may pass on your book recommendation. Thank you anyways.

          1. JustChill says:

            Yup, Lehman Brothers and Bear Stearns had absolutely nothing to do with it, nor did deregulation of the financial services industry, credit default swaps, etc. And certainly do not read “Reckless Endangerment” or any other book attempting to explain the financial crisis, particularly if it’s recommended by someone you have hissy fit fights with.

          2. Chris says:

            Not sure how you gleaned all of that from my correction to Appraiser’s timeline.

  9. Potato says:

    You need to go, right now, and put 2 diapers in her current size, and 2 in the next size up, a pack of wipes, a plastic bag, a roll of paper towel, a disposable change pad, and a change of clothes (baggy is better) in the car. Keep ’em in the seat pocket, glove box, or even down with the spare tire, but those live in your car now for the next half decade, and every time you change your winter/summer tires, you check the sizes of everything. Also, a spare T-shirt and/or sweater (two if you’re too far off your wife’s size for her to get by with one of yours) for when you get thrown up on while you’re out.

    1. GinaTo says:

      Excellent advice!!

  10. T says:

    There is no such thing as good debt unless you are the lender.

    1. Kramer says:

      Idealistic. Consistent with all your posts, T.

      1. T says:

        Logical truth is one of the most fundamental concepts in logic…

        1. Kramer says:

          Idealism increases in direct proportion to one’s distance from the problem.

  11. Appraiser says:

    Further to my previous post. It is clear that many Canadians have been paying down the principal on their debt, at an ever-increasing velocity, due to low interest rates.


    1. Chris says:

      “Overall, the debt service ratio (total payments) has increased over the last decade, and remains at an elevated level (Chart 4). Increases in household disposable income have been offset by continued accumulation of debt by Canadian households, requiring increased total payments.”

      Did you even read what you linked to?

      1. Appraiser says:

        I know it may be a little over your head Chris, but you do need to examine the charts provided and then read the entire analysis if you have any hope of comprehension :

        “However, it is important to note the aggregate nature of the data, and how high level aggregations tend to at times mask important details and trends at a more microeconomic level. As well, the macroeconomic nature of the debt service ratio does not provide the distribution of household debt servicing within the Canadian population. Therefore, a combination of indicators, including the assets of the household sector, is essential to the complete understanding of Canadian household sector debt.”

        1. Chris says:

          Turning to personal attacks, Appraiser? Always a sure sign that you’re running low on substantive points on which to debate.

          Your copied quote fails to provide any support for your assertion that Canadians have been taking advantage of low interest rates by paying down debt. Yes, from the charts we can clearly see more money has been going towards paying down principal. But debt has accumulated at a faster rate than it has been paid down.

          A quick glance at any recent statistics or articles discussing the record levels of household indebtedness would make this clear to you.

          Any other attempts at rebuttal? Or are you just going to lash out with some more rude comments now?

          1. LessThanSerious says:

            “Or are you just going to lash out with some more rude comments now?”

            Voila, a rude comment.

          2. Chris says:

            Asking if I will be subjected to rude comments now constitutes a rude comment? You seem to set the bar quite low for rudeness.

    2. Ralph Cramdown says:

      Yes, many households have been paying down debt. Many have been saving a significant fraction of their income, accumulating assets, eschewing consumer debt, and living below their means. I’m one of them, and I’m sure many others read this blog, because most financial blogs tend to attract the financially better-than-average.

      That’s what make the averages so scary. As Kramer says below, for every one of us, there’s a few idiots who are far on the wrong side of the averages to balance it out. The bank customers who have the portfolio’s average credit rating and average amount of home equity won’t be the ones who default.

    3. JustChill says:

      Am I the only one who finds it odd, not to say counter-intuitive, that people seem more likely to pay off debt when interest rates are low than when they’re high? I get that, with low rates, they have more money available to pay against the principal, but even so, I’d think that onerous interest payments (which pretty much by definition translates into less capital paydown) would trigger this particular lightbulb.

      1. Appraiser says:

        @ JUSTCHILL It does seem somewhat counter-intuitive, I agree. Paying down higher interest debt (i.e. credit cards) should be a priority for one and all. However, many mortgagors with variable rate loans over the last decade have been able to tackle principal paydown faster by doing nothing. As variable rates declined, keeping one’s payments the same as before reduced the principal more rapidly simply by default.

        Many others, like me who vividly recall interest rates in the double-digits back in the day, jumped at the chance to accelerate payments (weeky, bi-weekly) or increased payments to take advantage of the opportunity to build equity as quickly as possible.

  12. Kramer says:

    Agree with Kyle. There is bad debt and good debt. Every Fortune 500 Company has debt. You have to finance growth… so unless you are issuing shares in your own personal balance sheet, debt is mandatory.

    I have been meaning to start a thread on HELOCs for some time now. There is a massive negative connotation to them. I am not an expert on the stats behind all the record levels of debt, but I am confident that looking at the entire pool of HELOCs and calling it all alarming/bad debt is irresponsible.

    HELOCs aren’t bad… it’s what you do with them… gamblers, speculators, bad business people, and people who borrow to buy luxury toys… this is bad. Kind of like the “guns don’t kill people, I kill people” t-shirt in Happy Gilmore. HELOCs don’t lever up the economy, idiots lever up the economy.

    I have a HELOC, and I am unlocking value with it. I’m canceling out two idiots who used a HELOC to buy 5-year old Hummers.

    Do your part.

    1. Kramer says:

      sorry, was a reply to bottom post

    2. Chris says:

      More BetterDwelling (I know, I know), but they have an article discussing HELOC uses:

      What Are Canadians Using HELOCs For?

      Canadians use their HELOCs in different ways, not always because they’re strapped for cash. 28% borrowed for debt consolidation, which makes sense when borrowing rates are this low. Another 22% used the borrowed money for investments, which sounds good unless they’re “investing” in another house. 31% needed the money for a renovation or repair, and 9% for general purchasing. 9% of borrowers mysteriously use it for “other.”


      1. Kyle says:

        If you know you know, then why do you keep proliferating this fake news?

        1. Chris says:

          Fake news? Just because one disagrees with their conclusions, doesn’t mean the statistics they present are false.

          The data is from Mortgage Professionals Canada’s Annual State of Residential Mortgage Market in Canada. BetterDwelling just presents the data in a cleaner, non .PDF format.

          If you’d like the full report, it’s available here:


          The relevant statistics regarding Equity Takeout usage are on page 27.

        2. Kyle says:

          Umm, no, it has nothing to do with whether i agree or not. Better Dwelling has a history of mining data and then MISREPRESENTING IT, to turn it into click bait for bears who only exercise one-way critical thinking. As i have demonstrated over and over.

          If you’ll recall they published multiple articles on unoccupied homes, which many of the astute commenters on this blog could tell was complete nonsense, but you vehemently defended the article to the point of attacking anyone who challenged the report’s conclusions and then you continued spam the links to it on here for months. After i eviscerated the logic behind the report, showing that the article’s conclusions made absolutely no sense when compared over time or across cities, and that the only questions from the census that they could have drawn their conclusion from do not actually represent unoccupied homes.

          So obviously frustrated was Stats Can from the misrepresentation of their data into fake news articles, that they made a statement unequivocally rebuking it. If that isn’t fake news, i’m not sure what is.

          I think the obvious issue here is your beliefs, not mine. I think what should be said to you, is just because you believe it, does not mean it isn’t fake news.

          1. Chris says:

            In that article on unoccupied dwellings, as in all of their articles, BetterDwelling provides the data and references cited. As I said, you are entitled to disagree with their conclusions, but the statistics are there for you to inspect and form your own opinion on.

            Further, do you mind sharing the statement from Statistics Canada? I can’t seem to find it (not doubting it exists, as I vaguely recall seeing a clarifying statement awhile ago, just can’t track it down). On the topic that all unoccupied dwellings may not be empty houses, however, Toronto’s mayor has expressed concern even if the true number was substantially less:

            “Even if the number of vacant homes turned out to be half that, it would indicate “a worrying gap especially in the context of a hot housing market,” Tory’s office later told the Star.”

            With regards to HELOC data, I posted the Mortgage Professionals Canada’s report for your reading pleasure. Please feel free to examine it and form your own independent conclusions.

          2. Kyle says:

            “The agency said that’s just wrong.

            Sometimes, people believe that they can use the census counts to get a picture of unoccupied dwellings by subtracting total private dwellings from private dwellings occupied by usual residents,” StatsCan said in an email response to a query.

            “This is not the case since unoccupied dwellings only represents a portion of the remainder. In other words, the data should not be used to analyze unoccupied dwellings.”


          3. Kyle says:

            Like i said, they being fake news has nothing to do with me agreeing or disagreeing with their conclusions. They are fake news because (as i’ve proven) their conclusions are lies.

          4. Chris says:

            Ah, thanks for sharing! Yes, it highlights the difficulty in assessing dwellings that are truly left empty. While the ~90,000 figure in the GTA is likely too high because of Statistics Canada’s unoccupied dwelling definition, water and hydro usage examination can shed some more light:

            “According to new estimates from city officials based on aggregated water and hydro data, there may be 15,000 to 28,000 residential units in Toronto left vacant for 12 months or more”

            Note that this seems to be the City of Toronto exclusively, not the Toronto CMA (as assessed in the 2016 Census).

            Anyways, we have strayed off topic. You may roll your eyes at the conclusions that the BetterDwelling authors draw; that is your right. However, you should not be so quick to dismiss the statistics and references that they include in their articles.

            Examine the data for yourself, and debate with logic and reason against their conclusions. That is a far more robust rebuttal than simply invoking The Donald and claiming “fake news”.

          5. Kyle says:

            Then link to the stats rather than proliferating their misleading slanted articles.

          6. Chris says:

            As I said previously, I linked to BetterDwelling because they presented the data from Mortgage Professionals Canada in a clean, concise, and non .PDF format.

            I find this often to be the case; they take a report, or multiple sources of data, and condense it into an interactive, online graph or table. Makes for easier reading and increased focus on the topic at hand.

            You can always skim over their slanted commentary and focus exclusively on the data? Unless you’re opposed to even giving them the webpage views…in which case, I’ll try to remember to share the primary source of information when feasible.

          7. Kramer says:

            I’d bail out Kyle… he’s starting to drop USA 2008 references/stats above… when he gets into that mode nothing useful happens.

          8. Chris says:

            That’s a pretty weak position to take, Kramer. Any mention of the USA housing bubble renders my position on a myriad of topics moot?

            Would discussion of Toronto 1989, Japan, Ireland, Spain, or Denmark elicit the same dismissive response from you?

            Ad hominems, straw man arguments, and other logical fallacies do not make for great discussion.

          9. Kramer says:

            This is you in ideologically possessed mode… when you’re in this zone there is no point debating.

            A: “The latest data for Ontario from the Canadian Bankers Association (September, 2017) indicate that arrears are now a miniscule .10%”
            C: “If low delinquencies are a good prognosticator for real estate market health, why did the USA’s hit a low in 2004-2005, shortly before the housing crash of 2006?”

          10. Chris says:

            Kramer, please try contributing to the discussion without resorting to ad hominem attacks.

  13. JCM says:

    I’m pretty sure that there are new regulations governing payday lenders in Ontario.

    1. @ JCM

      You are one step ahead! Shhh!

      Wait until Wednesday.

      But yes, there are new regulations, and when you see what they are, you’ll feel like I do.

  14. Libertarian says:

    David, I’m glad that you’re tackling the issue of financial literacy. Ever since I started reading your blog all those years ago, I’ve mentioned how financial literacy is more important that the rent vs. own debate.

    Sadly, I believe that financial literacy will get even worse because Trudeau and Wynne have made it their mission to take care of every one. “Don’t worry about earning income, we’ll increase minimum wage. Don’t save for retirement, we’re expanding CPP. The gov’t will take care you at every step along the way. Just sit back and relax.” Yikes!!

    Having said that, I do think that the real estate industry should take some responsibility in getting people to spend more. All those shows about decorating and renovating. David even links to them in his Twitter feed. Yes, some of it is necessary to maintain the value of your home (this is why I don’t consider a house an “investment”, you have to spend money to maintain its value), but most of it is just straight up conspicuous consumption.

  15. Professional Shanker says:

    The larger issue at hand here, is that consumer debt (i.e. bad debt) has the potential to be re-financed into mortgage debt (i.e. good debt). So if a house appreciates in value while keeping the mortgage at elevated levels, do you consider this good debt?

    David’s larger point here is bang on, consumer credit cards are the worse kind of debt and the government should focus more effort into protecting consumers who have high interest forms of debt. I don’t know enough about the industry to recommend much right now, unfortunately I have been forced into using credit cards to pay for anything and everything just to gain back the 1.5% savings all the while knowing that I am paying 3%+ in increased prices so Visa & MasterCard can print money. Society is costing me money while I would be perfectly fine to use debit or another cheaper form of payment.

    1. Izzy Bedibida says:

      In the end, bad debt and mortgage debt are still debt. Mortgage debt can be good debt, because you have a tangible asset asset containing equity when the mortgage is paid off. Mortgage debt can be bad debt when most after tax income is spent servicing it leaving very little left for everything else. This is one point is rarely discussed.

  16. Rob says:

    David’s memory is remarkably detailed.

    1. Libertarian says:

      Ha! I thought the exact same thing.

  17. Negotiator says:

    Excessive consumer debt is bad, but the reason that the government is seemingly more concerned about regulating mortgage debt is obvious. What will have a greater impact on the economy and the stability of our financial system – consumers defaulting on their credit cards with a $10,000 limit, or their $1,000,000 mortgages?

  18. KM says:

    FCAC is the govt agency responsible for promoting financial literacy in Canada. This is indeed important, but in no way diminishes the importance of what OSFI is doing, which is to ensure the resilience of financial system to adverse events.

  19. JL says:

    I generally agree with the problem of people “chasing” loyalty points” without looking at their overall actual cash value. Optimum, however, tends to be one of the better programs, and some of their promotions (spend over x, get y points) can result in ~$20 worth of points on a single transaction… so there is a chance, depending on the details of what was offered, that the women in your story actually got $20 of free stuff she didn’t need by paying $6, which isn’t nearly as bad.

    Your underlying premise still holds, of course: blindly chasing points is a fools game.

  20. Jeremy says:

    If you spend $110 @ shoppers on 20x points day – you get 22,000 points which you can redeem for $30 off your next purchase. Hardly 1-2% David.

    1. Kim says:

      No way. I have an Optimum card and it takes me a year to get $30!

      1. Craijiji says:

        Yes way. It’s simple math.

    2. Sarah says:

      I was thinking the same thing!!
      I have been known to split purchases on those 20x points days or 18,500 bonus point days to make my purchases make sense. Just last week, I got over $100 off my purchase, and then with the remaining goods I went there to purchase in the first place, I redeemed enough points to put me back up to the point level I was at BEFORE i redeemed $100 off. A win if you ask me. That being said – I save my shoppers trips for the days there are the promotions. I rarely shop there without bonus points.

      1. Blowing sunshine says:

        Agreed. I only go to shoppers on bonus days, 5 trips spending around 500 total gets me 200 back (on a spend your points day). I Stock up on essentials and would never just buy things at the counter. If you are smart about it the points can work out to 40% return. One of the best out there.

  21. Chris says:

    There seems to be a misunderstanding as to what/who OSFI is and does. Their role isn’t to make sure “people who have scrimped and saved a 20% down payment” are able to buy the house they want.

    OSFI is “is an independent federal government agency that regulates and supervises more than 400 federally regulated financial institutions and 1,200 pension plans”.


    Their responsibility is to help ensure the stability of the financial system. Obviously, they considered the levels of debt that federally regulated lenders were issuing to be a risk to this stability. Hence, the new stress test rules. Buyers can still turn to unregulated lenders for mortgages that are not subject to this stress test; but they usually have higher interest rates.

    Additionally, part of the concern was that it wasn’t just “people who have scrimped and saved a 20% down payment”; many people turned to friends, family, secondary lenders, etc., in order to get to a 20% downpayment, and thus avoid the original stress test implemented in 2016. This was likely an unintended consequence of the first stress test. Hence the new stress test addressing this shortcoming.

    Finally, I don’t see why government efforts have to be an “either x or y” proposition? Why can’t OSFI implement rules like B20 to ensure stability of federally regulated lenders, and concurrently, other agencies and regulators work to increase financial literacy, address predatory lending, white-collar crime and fraud, etc.

  22. Appraiser says:

    Regarding today’s excellent post.

    Many people who are poor money managers or are chronic credit seekers need help and education, others require a dose of reality, some require both.

    In any case, although the state has a role in providing good social economic policy, that role should be very limited. Personal responsibility cannot be discarded.

    Those who have not taken advantage of interest rates over the last decade to retire debt, have only themselves to blame. Having said that, it is never too late to join the millions of Canadians who have, rates are still very low ( (https://www.ratehub.ca/prime-mortgage-rate-history)

  23. Agnese says:

    Great read!

  24. RPG says:

    I absolutely love this topic!!! Can’t wait for part two.

  25. Ralph Cramdown says:

    “[…] sign up for a [Canadian Tire issued MasterCard] that two minutes ago, they had no idea existed, which will lower their FICO score, and put a massive red mark on their credit report, when they could walk into any of the Big-5 banks and get recognized credit card. ”

    Dunno who told you this (somebody at a bank , maybe?) but you should fact-check it, and write a correction.

    1. Jason says:

      If you’ve ever obtained a free copy of your credit report, it clearly states that number of inquiries on your credit does have a negative effect on your score! Maybe you should fact check and issue a correction!

      1. Ralph Cramdown says:

        The number of inquiries is the same in both cases.

        1. Jason says:

          I think Dave was suggesting that getting an additional credit card that you don’t really need will lower your credit score! Most people have a credit card issued by their bank of choice. Acquiring an additional credit card to get cash back or loyalty points will have a negative impact on your credit score. There’s an assumption that most people will have at least one credit card issued by their bank or other financial institution.

          1. Ralph Cramdown says:

            I go by what David wrote, not by what you think he was suggesting, contrary to what he wrote.

          2. Jason says:

            Gotcha. Great point Ralph! You have such meaningful insights!

          3. T says:

            This is incorrect.

  26. Real estate millennial says:

    I think those were great stories and reflect a large portion of society and not just one or two people. You can take this a step further when banks lend money whose money is it? Rhetorical question we have a fractional reserve system and the money belongs to all depositors, the point is to protect the system not the individual consumer mortgage debt is larger and a greater risk to the system regardless of the collateral. I’m leaving my house in an hour to appraiser 3 properties for private lenders if you think the kid selling the 2500 limit credit card is bad! no one is worse than some of these private lenders. I’ve appraised the same house 3 times last year I know they bought it 10 years ago for 1/5 of what it’s worth now but it lost 1/4 of its value in the same year. Given the clients income no schedule “A” bank is going to give them the type of loan they’re asking for. This was completely anecdotal but I understand the why these rules were put in place. I want to get into the market and as a young person theses rules directly affect me but working in this industry I can see why these new rules were inacted.

  27. Ralph Cramdown says:

    Yeah, it’s a crummy feeling when you and your go-to mortgage broker guy are all ready to saddle up a customer with half a million in “good debt” but he doesn’t qualify because the kid with the clipboard and the greaseball at the car dealership beat you to it and loaded up the customer with $20,000 in “bad debt.”

    1. Mike says:

      Oh pah-lease!

      Don’t make this into something it’s not. I’ll be the first one to call David out when I smell something funny, but you’re really reaching if you’re gonna suggest that David’s motivation for this post is that his ability to sell real estate is affected by people seeking costly debt elsewhere.

      I think this is a great topic, and one that virtually never gets explored in the mainstream media. Some of David’s readers will benefit from this discussion and the following post.

      1. Ralph Cramdown says:

        Mortgage brokers are constantly complaining that they could’ve gotten their clients a much bigger mortgage (and themselves a commensurately bigger commission) if consumer credit providers hadn’t loaded their clients up first. Check out their industry blogs to confirm. Of course, the way they put it is “Why is the government over-regulating mortgage lending when it should be going after dem rapacious banks and their credit card lending?!”

        Here’s David, who plays a swashbuckling free marketeer whose government is too big and too intrusive 364 days a year. And today he says the government’s role is to serve and protect the people from those dastardly forces of supply and demand of consumer credit? Remember, the subgenius in front of him at the Shoppers transmogrifies into the Voice of the Market when she overbids for housing.

        1. Joel says:

          As a broker the problem I have is when someone already owns a house and has piled on consumer debt. They are not able to make the payments for the debt they have taken on and need to refinance their house. 90% of people will not entertain selling their house and so take on higher rate mortgages to get the extra money that they need to pay off. This causes a perpetual cycle hurting those who make poor financial decisions.

          Customers buying a house simply won’t qualify and therefore can’t put themselves into that debt. It is not a problem of qualifying on a purchase, but rather for those who already own. Educating a 50 year old about finances is much harder and is something that the government can look to control by decreasing the amount of debt one can take on.

        2. LawrencePark says:

          Exactly what I was thinking as I read this post. Free market supply and demand is wonderful except for certain industries I don’t like, such as credit card companies.

      2. LessThanSerious says:

        “a great topic, and one that virtually never gets explored in the mainstream media.”

        The “great” topics that do get discussed in the MSM are what exactly?

    2. jeff316 says:

      “I go by what David wrote, not by what you think he was suggesting, contrary to what he wrote.”

    3. Daniel says:

      You don’t believe there’s good debt and bad debt? Or “worse” debt at the very least? If David is going to talk about credit card debt and Payday Loans in the next installment of this post, I’d like to see you argue that a 2.99% mortgage is somehow on par with a 30% credit card or a 500% cash loan.

      1. Ralph Cramdown says:

        I think the “good debt”/”bad debt” concept is oversold by various industries to convince people that it’s OK to borrow more. Higher Ed says student debt is good (usually true for a DDS, not as often for an MA({Phil) ). Real Estate says purchase mortgage debt is good (usually true, especially if you have stable jobs, a stable marriage, and buy what you can afford, not at the top). Mortgage brokers and bankers often say debt consolidation loans are good debt, finessing the fact that “bad debt,” and the unreformed spending patterns that often led to it are the problem that the “good debt” supposedly solves. The Investors Group guy says borrowing against your home or insurance policy to buy high fee mutual funds is “good debt.”

        Reading David’s blog, he says he always advises buyers to lead with their best offer… but sometimes they up their bids in subsequent rounds of bidding. He also talks of clients who are looking to invest in lofts that don’t cash flow with their equity. And he talks about houses “won” with bids that were much higher (sometimes $100k+) than the next highest. Do those deals all create “good” debt? I would say no, even though many of them may work out OK.

        Just as most drivers will rate themselves “above average,” I think there is a lot of illusory superiority when it comes to Canadian household balance sheets. Many have too much debt, period. Of course, if a bunch of them actually start to pay down debt like they tell pollsters they’re going to, we’ll get a recession. Whaddyagonnado?

        1. Kyle says:

          It’s actually really simple and not nearly as loaded as you make it out to be. If your borrowing results in an improvement in your balance sheet (e.g. buying an appreciating or income producing asset, or reducing an expense) it’s good debt. If your borrowing results in an erosion of your balance sheet (e.g. borrowing to fund expenditures) it’s bad debt.

          1. Craijiji says:

            Ding ding ding! Thanks for not trying to over complicate things. Basically if the appreciation rate of the asset stays ahead of the the interest rate on the debt used to obtain the asset, it’s good.

          2. Chris says:

            ” if the appreciation rate of the asset stays ahead of the the interest rate”

            Ah, it all sounds so simple when you word it like that.

            Unfortunately, accurately and consistently predicting rates of appreciation (a.k.a. picking winners) is a pretty rare talent.

          3. Kramer says:

            A) that’s not the point chris, and everything said above is correct and is generally aligned with NPV/IRR analysis in corporate finance.
            B) it is absolutely possible to invest successfully, and the world is not all “picking winners” which implies you’re talking about cowboy speculation. And if you have a long enough time horizon and a decent strategy/advisor, it’s not only possible, it’s probable. Don’t nitpic my wording in that sentence, I’m in my car an I don’t have time to Chris-proof it.
            C) you already knew everything I just said, so why don’t you drop the bias and approach each comment even keel so the discussions don’t resemble those in my 3rd grader’s classroom.

          4. Chris says:

            When did I say you couldn’t invest successfully? I do agree with much of what Kyle has said, however I also feel there is bit more nuance to the question of debt than was originally implied.

            Employing leverage efficiently, successfully, and consistently, is easier said than done. When debt is taken on to buy an asset that one thinks will appreciate or provide an income stream, sometimes it works out, other times it does not. Unfortunately, people being emotional creatures, seeing an asset purchased with debt depreciate can be quite stressful, resulting in losses due to an early exit. The reality is, leverage amplifies. On the way up, it amplifies gains. On the way down, it amplifies losses. This isn’t to say one shouldn’t use leverage, but it requires consideration.

            I should mention that I’m primarily referring to assets other than a primary residence; I suspect very few people would sell their home and move just because it has depreciated from their purchase price.