1y ago

Millennials set to face most economic pain in months ahead, RBC says. Here’s why - National | Globalnews.ca

globalnews.ca Millennials set to face most economic pain in months ahead, RBC says. Here’s why - National | Globalnews.ca

Millennials who are saddled with debt such as costly mortgages might well bear the brunt of higher interest rates in the months to come, a new RBC report argues.

Older millennials, adults aged 35 to 44, had debt-to-disposable income ratios around 250 per cent in 2019, while Freestone noted that metric was roughly 150 per cent for the same age group in 1999.

Can confirm we're sitting around 250% but this is after exercising significant restraint to not take on as much mortgage as the banks would have given us. Everyone I know who bought over the last couple of years went all out and I can't imagine them being any lower than 300-350%.

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It isn't just mortgages. I read just a few days ago that the average price of a new car in Canada is $66k. I'm not sure I've spent that much on all of my vehicles combined since I bought my first car at 17. Add in other things bought on financing – lots of our friends have travel trailers, ATVs, and such.
- People where I live regularly sell trucks on FB for 60-80K, and they are used with 100,000 km on them
  
  Bidding up used cars during covid was peak bubble behavior
  Work trucks costing what a start home used to cost a decade ago
  I guess with at truck you work AND live in it
  
  I bought a 2017 tundra with 60,000k on it from a dealer for 40k this year. It’s not fancy and has few bells and whistles, but I can live with that at less than half the cost of newer ones.
- I read just a few days ago that the average price of a new car in Canada is $66k.
  And a good used bike is $150.
  People, we need to start looking for alternatives that won't make rich people richer. Buy a *used *car if you must have a car, but don't keep filling the pockets of these greedy bastards by buying new.
  
  I'm super into urbanism and love my bike, but unless there's good bike infrastructure in your area, you're risking your life. I know and keep riding anyways but most people aren't willing to take that risk. What we need to do is organize to push our governments to provide safe infrastructure for all road users.
  
  i'd settle for more sidewalks in my town
  on some streets they just paint a line down the road and call it a sidewalk - one of these is on a road touching an elementary school
  
  I understand the sentiment, but I'm willing to bet that it's more likely that the average person will die in a car than on a bike.
  Yes, there are risks, and yes cycling infrastructure can absolutely help to reduce those risks, but in the greater context I think cycling is still the better option in more ways than one.
  For instance, cycling can reduce the chance of the #1 cause of death (heart disease), while cars increase that risk. That alone would make cycling better for health and longevity, even with less than perfect cycling infrastructure. 😀
  
  The amount of stress and risk riding a bike next to 60+ km/hr traffic with 4+ foot hood heights is simply not worth it to most people. Cars are the only method of travel prioritized in most Canadian cities while pedestrians and cyclists aren't even a third or fourth thought. We need dedicated and seperated/protected bike/ped routes so everyone can feel safe.
  
  I agree that there are barriers to cycling that need to be addressed, and safety (or perceived risk of injury) is one of them.
  We need to consider that most trips by car are very short (<5km), and if a bike can be used, then it should. Longer trips can use public transportation.
  I'd say that anyone living in any Canadian city with a population over 100,000 will have "good enough" cycling infrastructure to replace a good chunk of their car trips. And that would be great.
  Even in these smaller municipalities, new development seems to get cycling infrastructure baked in, so things are always improving.
  If you live in a city like Toronto, Montreal, or Calgary (three largest population centers in Canada), then you already have a vast cycling infrastructure network available.
  More realistic barriers to cycling are often practical things: how to deal with sweat, how to deal with bad weather, where to park the bike, etc., and those come with experience and planning.
  If we keep waiting for cycling infrastructure to be perfect, it'll never happen. One cyclist on the road = one less car, and infrastructure won't be built unless we have more cyclists asking for it.
  Those are my 2 cents as someone who has replaced the majority of my own car trips with a bike, throughout the entire year, living in a Canadian city that doesn't have ideal cycling infrastructure, but "good enough" cycling infrastructure.
  
  I live in a city with more than 100,000 people and do not at all feel safe biking on the major roads, which are the main option for most travel as their is poor side road connectivity.
  A lot of the new developments I see have painted bicycle gutters, which is barely even infrastructure and this point an insult to cyclists. One recent development in my home town has a painted bicycle gutter along a 6 lane road and it passes directly under a bridge and in front of a highway entrance. I have literally never seen a bike on this section because it is borderline suicidal. You may be comfortable in a painted bicycle gutter, but many people are not and it is a massive barrier to cyclists and especially younger ones.
  Those "more realistic barriers" like weather and sweating exist everywhere else, including Sweden and Norway which have climate similar to ours. But people in those countries are able to bike year round on safe and maintained bicycle infrastrure that is so safely seperated from cars that kids commute to school on these routes.
  The quality and connectivity of good bicycle infrastructure is the biggest hurdle in the majority of Canadian cities for cyclists. Sure people could probably make their commute on their bike, but until it feels easier and more pleasant than driving we won't see mass shifts into cycling.
  
  I live in a city with more than 100,000 people and do not at all feel safe biking on the major roads, which are the main option for most travel as their is poor side road connectivity.
  Have a look at Strava, Garmin, RidewithGPS "heatmaps" and see where other cyclists are riding. You may be surprised at the creative routes people use to avoid major roads (which I also tend to avoid completely).
  A lot of the new developments I see have painted bicycle gutters
  That's a real damn shame. I live in Oshawa, and all our north development has full multi-use paths, as well as bike lanes. Whitby has been adding mutli-use paths and separated (but painted) bike lanes like crazy, which have been great to ride on. Ajax is also well ahead of the curve. All three municipalities have < 150,000 people
  I'd suggest having your municipal or regional active transportation committee follow up with your city to see what the hell is going on with their planning. Sounds like nobody who's in a position of influence is putting cycling on their priority list.
  but until it feels easier and more pleasant than driving we won’t see mass shifts into cycling.
  I have to reiterate that driving is still more likely to get someone killed, as is inactivity (from driving). So we have to put things into perspective. There's often a gap between perceived barriers and actual barriers, so some of the perceived barriers disappear once someone is riding regularly. Some new barriers may pop up, especially after a negative experience, but often times cycling strengthens our resilience and ability to adapt.
  I'm not suggesting that someone bike on objectively dangerous roads or piss-poor bike gutters (which probably have parked cars in them anyway), but cycling requires different route planning, and there is often good cycling infrastructure that's unknown to the average driver, which becomes "discovered" once someone takes up cycling.
  Heck, we have an intersection around here that I'd use for at least 75% of my rides because there are bike lanes in all directions, which has been completely closed off due to construction all summer. This has forced me to seek alternate routes. And while my first few detours were on less-than-ideal roads, I've since found alternate routes that are even more efficient (and arguably safer) than the bike routes I was taking.
  I would urge anyone who's interested in cycling to connect with a local club or group to ask what the actual experience of cycling is. I'd hate for someone to not take up cycling in their city, because they don't *feel * it's safe, even when it could be.
  
  Even my bikes are like 10k now...
- I'm super confused, why is everyone bringing up such ridiculous car prices? Both Canada and the US have cheaper cars too. For example a KIA Rio (5 door) is around $17-23k new in Canada. It's $16k in the US.
  Are Americans only considering massive SUVs when they talk about new car prices?
  
  You are talking about least expensive, they were talking about average.
  
  Where are you getting $17K from? According to Kia's website, they start at $19,933. And that's pretty much the cheapest new car in Canada. That's way out of reach for many people, and the used market is insane.
  Earlier this year, my 2005 Civic with 301,000km was totaled. I bought it in 2013 for $5,000 with 121,000km. From my research, if I had sold it before it was totalled, I probably could have gotten more than $5,000 for it, even with the extra decade and 180,000km.
  
  I went on a rampage in 2019 about SUV costs, the zero miles we put on it, and the pain in the ass that thing was to wedge into my microscopic parking spot downtown at my last job, so I bought a sports car. About 3.5 microseconds after buying the sports car my wife was like I'm pregnant (and she also sucks at driving stick, but moot point). So we got her a barely used Cruze, and we got a pretty good cash deal on it. Happy wife, car actually has a ton of room and she didn't have to wedge a kid and stroller into a sports car, and all is good. It's been a great problem free car these past few years too, but I don't think she's even put 30k on it total.
  So yeah, like 2.4 seconds before COVID, we bailed out of our teeny tiny DINK-dweller condo and now live in the burbs. We don't get great snow plowing, so we usually have a few days or even a week where the cars are buried in the garage and I can't get them out because they'll get stuck, which means the kids are staying home. We both work from home now, and I don't even drive my car in the winter anymore, and my wife is like I want an SUV again. Basically, I can't removed about having to park it downtown, and who cares about the fuel milage it gets, because we barely will drive it anywhere. We have kids plural now, and I mean, I get the appeal. Our latest compromise is a small truck, because I'm also sick of having to try and get 4x6s home from Home Depot in teeny tiny cars, and having to mount bikes, on a damn Cruze. We've acquired a great hatrid of roof racks for my (our) bikes, and all the noise that comes from them, so I've become excited about being able to have a hitch rack again, or even just filing my bikes into the back of a pickup.
  But now we are in this scenario, of what do we sell the Cruze for? The comps are bananas, like they are averaging about $8-12k more than we paid, with more milage. Now I'm not necessarily expecting we are going to get that, like that's asking, but that's the comparables. Every time she gets an oil change, my phone literally rings off the hook for a month afterwards. The place we bought it from offered $3k more than we paid for it last month, and I wouldn't sell it to them because they know what I paid, but that sets a theoretical floor. Basically I'm hoping for 6-8k more than we paid for it at a dealer, and if I go it alone, I'd probably ask closer to 8-10k more. It's such a friggin bizzare situation.
  
  Ah, from Google (and the MSRP), now it's $20k on their site directly. See: https://blog.clutch.ca/posts/6-cheapest-new-cars-in-canada
  There are cheaper options actually. My Kia Rio cost 14k€ (and that was with a deal) back in 2015. So it's not that far off I guess. But that was actually the new price, with navigation, camera for driving backwards and so on with 7 years warranty on top.
  Prices suck of course, but on the low end they are still affordable. Mid-tier is probably a lot of leasing (as you'd have to spend a big chunk of life savings on a direct buy) and high tier is only for rich assholes (or company cars).
  
  How many Rios do you see on the road for every F-150?
  
  I see a RAM for every 2 F-150s. 🥲
  
  It was like 12 years ago I was looking at $10k new Kia rio.
  
  My best bud dated this girl that drove one of those basic Kia 4 doors, I think it was the Rio. This was back probably 2003, 2004. If I remember correctly she paid like $12k for it. That thing would shake every filing you had loose. It didn't have suspension, it had decorative struts that held the wheels on. What a piece of crap. I've heard people swear by them, and I know they've come a long ways since, but I always think of that POS when I think of Kia.
  
  It's getting hard to find cars period. I forget where I read this stat, it was only in the last day or two too, but the number of cars being made, and sold for under $30k, it's like a small handful of models in total. And good luck actually finding many of said models on local lots, the factory production numbers of these cheaper models is super low.
  Also you drove by a Kia lot lately? I ride by one near us fairly regularly on my road bike, and that lot is sparse. The only vehicles on it are SUVs, and there isn't even very many of them. So yeah the internet says the Kia Rio is $17k, but can you actually get one in your hands for that?! I mean sure, maybe one or two. But remember, we are talking averages here, for the whole marketplace.
  $60k average price is definitely in line with the observations I've been able to make, and it definitely reflects the laneways on my block. You are right, monster trucks and SUVs, but that reflects the current market. I'm the only person on my block that only has cars in their garage.
  
  I'm from Austria, we don't have that issue in Europe. But people here (luckily) are a lot less into monster SUVs. If I see even one of those taking up the entire lane or blocking my sight at an intersection I'm getting annoyed.
  Going to the Kia website I can actually view cars in stock in the entire country. So I could immediately pick a Kia Picanto (that's the cheapest one) up for €15,840. Or a Kia Rio for €17,440. Though I just saw on the Kia page, they discontinued the Rio (No more new cars coming).
- Don't forget the cost of insurance, maintenance, fuel, etc. According to TechAltar it costs about half a million euros to own something like a VW Golf at the low end, 1.5M euros on the higher end. It's estimated that the average person spends 30-40% of their lifetime income on their car.
  People only see the initial purchase price (which is often ignored because of various deferred payment offers that further increases the price), and the price of gas. Gas alone is starting to reach the price of renting an apartment, yet somehow people still can't see themselves living without a car.
  Insane.
  
  Is it really that expensive to own a car outside of the U.S.? That seems absurd
  
  It's that expensive to own a car everywhere. In Canada, it's projected to be >$1K/mo (CAA has a calculator if you want to project your own costs).
  The US is no better.
  The craziest part, as TechAltar points out in that video, is that society as a whole subsidizes car ownership and if owners actual saw the whole cost through registration fees and gas taxes, that cost would probably be 50% higher.
  
  How does $1k CAD a month equate into 1.5 million euros though? $1k a month is $12k a year. $120k over 10 years. Hell if you stuck $120k CAD in a bank account making 6% for 10 years, you'd have like what, $220k? 1.5 million euros is $2.2million Canadian. Come on.
  
  How does $1k CAD a month equate into 1.5 million euros though?
  The first is the average owner's annual costs, the second is the upper bound on the total cost to the owner and society at large over a lifetime (with €500k being the lower bound).
  
  Nice! My 2010 B2300 pickup comes in at $4,031.98 a year AND 75% the emissions of " the most fuel efficient [new] vehicle in the same category."
  
  Expensive is relative. This means nothing in isolation. Being a capital expenditure, what is the projected return on the $1k per month spend?
  10% is generally considered a good investment. Given the scenario, does spending $1k per month on the vehicle return at least $1,100 back? In other words, if, in an alternate reality, this person had no vehicle, would we find he had at least $1,100 less income each month? If so, that is not expensive at all. A total bargain compared to putting $1,000 per month in a bank collecting 0.5% interest. Now that's expensive.
  
  Obviously in our car-centric North American cities, cars are essential to make a decent income. My point is more that it shouldn't be that way. If it's not a work vehicle, why is it essential to own something that costs >$12K/y when it sits unused 95% of the time?
  
  Enjoyment? Heck I even work from home. My car is a toy, and sits unused in my garage for 95% of the time. It probably costs me $12,382,818,826 a year, and gets 20 miles to the hogshead and all of that. Do I care? Honestly not really.
  My investment portfolios? Up 15% one year, down 20% the next year, up 5% the next year, then down 10%. You factor inflation in there, and it doesn't amount to shit. So that $50k my car cost? Might be $100k this year, $50k next year, and so on. Just like my house. Worth $425k last year, now it's suddenly worth $600k, then it'll be worth $400 when oil shits the bed, then it'll be worth $609k.
  My point is, can't I at least have some damn hapiness somewhere? 8 years of school, I'm a millenial (borderline), so I pretty much don't have fuck all to work with, and never have or will. I was in debt to my eyeballs for a decade, so I could have a job afterwards, and have the things I want in life. Which means I'm a decade behind. And you only live once, or so logic leads us to believe anyways. You can't take it with you. So live it up. And keep your hands off my car.
  
  When did I ever day I wanted to take away your car? I just said our society shouldn't be as car-centric and require that almost everyone has to have a car and drives everywhere. Cars are expensive and many people are struggling to make ends meet, yet they can't eliminate the cost of owning and driving a vehicle.
  
  Cars are expensive and many people are struggling to make ends meet, yet they can’t eliminate the cost of owning and driving a vehicle.
  Before cars, those who could not afford a horse and buggy, or the fare to ride the train, lived in compact, densely populated areas known as cities where they could rely on their own two feet to get around. That's literally why cities were invented. I understand that more people live in cities now than ever before, no doubt to avoid the problem you speak of. If your rural homestead isn't making ends meet because the cost of getting goods on and off the property is more than the value the property is creating in return, the solution is obvious. We figured that out tens of thousands of years ago.
  
  8 years of school
  Huh. I thought attending grade 9 was legally mandatory these days.
  No doubt you are way better off financially having entered the workforce full-time at 14. Compound interest is no joke. Enjoy the car it has afforded you!
  
  why is it essential to own something that costs >$12K/y
  In what way is it is essential for the vast majority of the population? Rural dwellers, perhaps (although Canada's Old Order Mennonite/Amish population seem to manage just fine), or those with particular disabilities, but most people?
  I live in a small town and could easily go without a car. Imagine those who live in cities, which is the majority of Canadians. The whole reason they are wanting to jam themselves together so tightly is exactly so that they don't need vehicular transportation to live life!
  I do own a car, though, as the ROI on my vehicle easily exceeds 10%. I don't like owning a car, but where else am I going to find those kind of returns?
  My point is more that it shouldn’t be that way
  It wouldn't be that way if it weren't a good investment, but it generally is (becoming much less so over the past couple of years, granted) for a lot of people. In part because of subsidies, of course, but I expect that it would still provide good ROI even if the subsidies were lifted. The early road infrastructure in Canada was built by private interests, after all.
  Being capital, it is a useful tool that gets useful things done. When useful things get done, life improves for all of us. What else are you going to invest in with similar affordability, risk, and returns? In other words, which tools would most people find more useful than a car to get useful things done?
  
  That's just it though, and your average investment profile hasn't likely been getting 10% overall these past few years. Even if you stuck that cash in a high interest savings account, it's been making maybe 4-5% this last little bit, which sounds good until you consider that inflation has been about the same amount, eroding the purchasing power of it. 10% return in your RRSP's isn't going to drive you to work in the morning either.
  
  It is absurd because those numbers are nonsense. There's a spreadsheet linked in the video description.
  
  What numbers in that spreadsheet seems like nonsense to you? Other estimates I've seen agree with his numbers.
  
  The majority of "costs" are indirect ones like noise and pollution. Tell the average Joe that ackshually his Civic is costing him $1.5M by showing him those figures, and he will say he's never seen noise or pollution charges coming out of his bank account. It's sophistry and not helpful to the environmentalist cause because it makes us look like we're manipulating data to suit a narrative.
  
  That's totally absurd. I drive a British made car that falls apart if you even so much as look at it the wrong way in the morning, and there's no way in hell my outlay would be that, even over 20 years, even factoring in FV and whatever else. Hell, my mortgage and total house outlay costs over a 30 year period probably wouldn't be that. Bananas numbers.
  
  I cant find anything to back them up either.
  My RAV4 was $30k, took a loan on it for about 25k, no interest, it's paid off. In terms of maintenance I've put ~$10k on it over time.
  It gets 22mpg, and I drive <10k miles a year. Currently at 53k miles, that gives us ~2410 gallons of gas. I'll be generous to account for the spikes in gas prices and say it was $4/gallon -> $9640. At 6 ish years, that's now ~$60k It's a Toyota so I expect it will last a while. Taxes started at $400/year and are now $150/year. That's about a cost of $10k/year. In the unlikely scenario I keep it for 20 years, I might hit $200k over its lifetime.
  If people are spending €1.5m over the lifetime of their cars, they are getting scammed
  
  Here is an alternative Piped link(s): https://piped.video/watch?v=ztHZj6QNlkM
  Piped is a privacy-respecting open-source alternative frontend to YouTube.
  I'm open-source, check me out at GitHub.
- Some people have good incomes, but cannot anymore changes houses every 5 years because it's out of control, for the price and interest rates, so they use their income to buy cars/RV.
  Also some are leasing even if it's like 800$/month just to show their car, I know people who lease big Volvo, Porsche, etc.
  Me I keep my 10yo Sonata, and if it dies/crashes, I don't think I'll be able to buy anything more than 15k :-/ What's available for 15k ? a 2006 Sunfire?
- True. I don't own a car so this completely escaped me.

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