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Rising Real Estate Wealth and Waters

Vancouver condominium sales have stopped for the time being, with a surplus on the market, my real estate deep throat tells me. Houses are in shorter supply than condos. Even so, "reduced" signs have appeared in neighbourhoods from Douglas Park to Point Grey. "Things should pick up for condos in the fall," deep throat says. I say: who knows?

Local real estate powerhouse Patricia Houlihan writes on her blog: "Well for anyone working in this industry, it has been clear for a while that the real estate frenzy has subsided in most neighbourhoods...and this includes all types of properties-even waterfront!

Although we are still getting multiple offers on the lower end properties in the hot neighbourhoods (this means under $600k in east van in good areas and under $1.2 in the west side). Even on properties which just a few months ago would have sold in an instant, buyers are taking their time deciding whether to buy or not."

Against this backdrop of uncertainty in the housing market, a report on Monday from statistics Canada came out on the growing numbers of millionaires with wealth created by the rising prices of their homes.

Surging real estate values and a strong economy helped drive up the number of millionaire families in Canada to 1.1 million in 2005, according to a Statistics Canada report released Monday, and as reported by the CBC.

The proportion of families with a net worth of $1 million or more rose to nine per cent in 2005 from five per cent in 1999. The number of millionaire baby boomers in their 50s jumped to16 per cent from six per cent, and among Canadians in their 40s rose to nine per cent from two per cent.

The federal agency also noted its taking less time for the major income recipient in a family to reach millionaire status, with the median age falling from 58.2 to 56.9 in 2005.

"On average, millionaire families held 10 times more wealth than non-millionaires [$1.9 million versus $190,000 in 1999 and $2.1 million versus $222,000 in 2005
," the report said.

"While non-millionaires derived most of their wealth from home equity and an employer pension plan, millionaires' wealth came mostly from net financial assets, followed by business and home equity."

A growing number of millionaire families also reported carrying debt, rising from 51 per cent in 1999 to 58 per cent in 2005. By comparison, 71 per cent of non-millionaire families carried debt in 2005, up from 68 per cent in 1999.
Average debt $82,500 per family

Canadians assumed $215 billion of additional debt during the same time period, the bulk of which was funnelled into real estate purchases, the federal agency said. Average debt climbed from $62,700 per family in 1999 to $82,500 in 2006, while family income rates increased moderately from $61,600 to $68,100.

But, the study also noted Canadians improved their wealth by $1,386 billion, with the family home ranking as the top major asset for Canadian families.

"In fact, by 2005, home equity and employer pension plans constituted over one-half of total wealth for families in their 50s, 60s, 70s or 80s. Rising real estate values pushed up home equity, and the appreciation in home value, as a proportion of home equity increased in importance for older owners," said the report.]

How stable is this wealth?
How stable is anything today? The BBC just reported that Arctic sea ice is melting even faster than last year, despite a cold winter.

Data from the US National Snow and Ice Data Center (NSIDC) shows that the year began with ice covering a larger area than at the beginning of 2007.

But now it is down to levels seen last June, at the beginning of a summer that broke records for sea ice loss.

Scientists on the project say much of the ice is so thin as to melt easily, and the Arctic seas may be ice-free in summer within five to 10 years.

Canada, Russia and the United States are apparently exploring sovereignty claims over tracts of the Arctic sea floor and celebrating the possible opening of a new trade route. Still, in answer to my previous question, it appears that nothing's very solid today and rising water levels may render all forms of wealth as unstable as an Arctic ice cap.

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