Juggling Dynamite

The latest Canadian Joe Debtor study finds that the average insolvent debtor owed $60,678 in unsecured debt in 2024, an increase of 12.2% from 2023—the largest annual rise since the study began in 2011.

Driving the surge was a sharp rise in average credit card balances, which increased by 25.9% to $20,398 and accounted for 34% of total unsecured debt.

While balances rose across all age groups, millennials experienced the steepest increase, with credit card debt climbing by 35.0%. Senior debtors (aged 60+) carried the highest average balances at $27,543.

Insolvent homeowners faced a significant erosion of home equity in 2024, with average equity falling from 21% to 10% and 14% of homeowners experiencing negative equity. Vehicle loan shortfalls also re-emerged, with 31% of financed vehicles now underwater—a level not seen since 2016.

“Looking ahead, we expect consumer insolvencies in Canada to rise by 20–30% in 2025, driven by rising unemployment, record-high credit card debt, financial stress from elevated mortgage renewal rates, and challenges in the pre-construction condo market.”

Canada’s national unemployment rate was 6.6% in January and 8.7% in Toronto, the nation’s largest city. The latest Statistics Canada data shows that nearly 1 in 11 Toronto region workers are now unemployed and seeking work—a rate rarely seen outside the worst recessions. See, Toronto’s unemployed population hits 357k.

The threat of U.S. tariffs adds uncertainty to an already delicate economy and over-valued real estate market. RBC Economics notes, “The significant risk that tariffs pose to Canada’s economy casts a potentially dark shadow over the housing market.”

Bankruptcy Trustees Doug Hoyes and Ted Michalos discuss the latest data in the segment below and why they think financial strains will worsen in 2025.

Canadians are being crushed by debt—and we have the data to prove it. In this exclusive episode, we break down the findings from the 2024 Joe Debtor study, Canada’s leading consumer insolvency report. Our research reveals how rising debt levels are impacting Canadians like never before. From millennials facing record-high debt to homeowners running out of options, we analyze the trends, why they matter, and what the average insolvent Canadian looks like in 2024. You won’t hear this anywhere else—tune in for expert insights from Canada’s leading Licensed Insolvency Trustees. Here is a direct video link.

Anyone who plays Monopoly can experience how quickly real estate holdings drag once cash in hand proves insufficient.

Bubbles may seem fun on the way up, but they’re universally brutal in the inevitable deflation stage. China’s stimulus boom helped inflate global demand and real estate prices after the 2008 recession, but mean reversion has been in motion since 2020 and counting.

Policy interventions to avoid price discovery and arrest market clearing only prolong the pain. This is a heads-up for Canada and other countries where real estate mania was also a national obsession from 2009 to 2022.

As we saw in the ‘lost decades’ following Japan’s property bubble bust in 1989, real estate deflation cycles exert a prolonged, heavy toll in a series of economic dominoes. See China’s Property Crisis Enters a Dangerous New Phase.

Signs of trouble are now popping up everywhere. A brief revival in home sales has fizzled despite multiple rounds of stimulus from President Xi Jinping’s government. Chinese bankers have mostly stopped lending to real-estate projects outside major cities such as Shanghai, according to people familiar with the matter. And international creditors are losing patience: More debt restructuring deals are unraveling and at least a dozen developers face petitions to liquidate, including once-storied names like Country Garden Holdings Co.

The pain is also spreading to Hong Kong as Chinese homebuyers and tourists pull back. New World Development Co., a real-estate giant controlled by one of the financial hub’s richest families, is racing to sell assets and mortgage some of its marquee properties as losses mount.

Similar problems in many highly indebted developed economies now simultaneously challenge domestic growth at a time when tariff wars are poised to hurt exports.

Blackstone is selling off their subsidiary Home Partners of America, and doing big price reductions on certain homes. This is an indication of the ongoing investor selloff occurring in the US Housing Market. Big Wall Street investors like Blackstone and Amerst Holdings have lowered their purchases of homes, and haves started to sell off properties. Here is a direct video link.