Sask. debt-free families percentage a snapshot of the past: statistician

Saskatchewan was home to the highest percentage of debt-free families in the country last year, according to a recent Statistics Canada report.

But that statistic speaks more about the past than it does about the present, says Doug Elliott, statistician and publisher of Sask Trends Monitor.

In this province, 32.8 per cent of families were debt-free in 2016. That’s above the national average by more than three per cent.

Family debt is affected by a number of factors, but Elliott identified three that he feels helped place Saskatchewan on top.

First, historical trends in the province’s housing prices may have led to strong asset-to-debt ratios for the current generation of homeowners.

“Because housing prices were low in Saskatchewan, a lot of families were able to pay off their mortgage, in effect, a lot earlier than folks in Toronto or Vancouver,” he said, noting that a home is known to be the main asset for families.

Second, Saskatchewan is home to a great number of farmers, who are often asset-rich, even if they’re cash poor, Elliott said.

“Farmers do have a lot of equity in land.”

Just like housing prices, land prices have also increased in the province. And just like families who own a home, Elliott said families who own land have a “big asset that’s worth a lot of money and it overpowers the small amount of debt that you’ve got against it.”

Finally, older generations of Saskatchewan residents were fiscally cautious, through good times and bad, Elliott said.

In fact, the province had a reputation built on that caution.

“We lost that reputation about 10 years ago,” Elliott said.

“We started to spend like drunken sailors,” he went on, noting that Saskatchewan’s savings rate, meaning how much a person would set aside in a given year, used to be the highest in the country.

That has changed, and now Saskatchewan’s saving’s rate is actually negative, he said.

“We spend more than we earn, so we’re actually going further into debt.” 

“The fact that our parents were so careful made our generation a little more incautious,” he opined, chuckling about his statement being “philosophical rather than mathematical.”

Changes in spending mentality and asset values, Elliott said, could mean the percentage of debt-free families in Saskatchewan may not be as high in the years to come.

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Published: 08 Dec, 2017 By Brandon Harder