Environics Analytics Releases WealthScapes 2011 Measuring the Financial Health of Canadians

 Environics Analytics, the marketing and analytical services company, today announced the release of WealthScapes 2011, the latest edition of its comprehensive financial database that measures the assets, liabilities and wealth of Canadians. Updated to December 2010, WealthScapes 2011 features a database of more than 80 key financial and investment statistics that serve as a balance sheet of every neighbourhood (or census dissemination area).

With WealthScapes 2011, financial institutions, retailers and charitable organizations can analyze the fiscal health of current and potential customers, identify promising markets, minimize risk and develop targeted strategies to increase market share. And because the latest edition examines historical data covering December 2007 through December 2010, organizations can perform trend analyses on consumer investing, debt, spending and net worth to better understand the impact of the economic downturn and recovery. In addition, the database allows clients to develop marketing solutions based on the growth potential or risk profile of customer segments, geographies and target markets.

 

"WealthScapes has rapidly become a valuable resource in the marketplace because of its in-depth data on the assets and liabilities of every neighbourhood in Canada," says Catherine Pearson, vice president and leader of the financial services practice at Environics Analytics. "And now with the latest edition, WealthScapes 2011 can help businesses and not-for-profits better understand the state of the recovery on their customers and markets. How are different cities faring financially? Have investors recovered from the stock market crash? Are households carrying too much debt today? With WealthScapes 2011, you get the answers."

Although the economic downturn may have ended in mid-2009, WealthScapes 2011 shows that Canadians are still struggling with an uneven recovery across many provinces and cities. In Ontario, where the recession may have had the greatest impact, battered investors have turned conservative, dumping stocks while increasing savings by 42.3% between 2007 and 2010—the highest rate of any province. Meanwhile, Winnipeg has undergone the most significant rebound among major cities, its net worth rising 11.4% to $296,706 over the same period, as households avoided taking on debt and experienced a 5.2% rise in real estate values. Among other noteworthy findings from WealthScapes 2011:

Major Cities

1. Vancouver Retains Its Net Worth Crown, But... Good news and bad news for Vancouver: In 2010, Vancouver kept its title as the city with the highest net worth in Canada ($600,500 per household) with Calgary ($571,848 per household) edging out Victoria ($571,256 per household) for second place and Toronto in fourth ($553,896 per household). Vancouver and Victoria are clearly on top due to the high value of their real estate holdings ($482,710 and $438,676 per household, respectively). However, Vancouver is also the second most indebted city, with the average household carrying $165,146 in debt; the city whose residents report the most debt is Calgary ($190,490 per household).

2. Toronto: We’re Number Two: Thanks to a cautious financial approach, Toronto was the second-best performer among top-ten cities in terms of net worth, experiencing a 9.6% rise to $553,896 between 2007 and 2010. Like many residents throughout Ontario, Toronto’s investors were hard hit by the recession and pursued a cautious approach to investing, increasing their bank deposits by 47.2% to $116,619 while avoiding riskier investments like stocks and mutual funds. In addition, real estate values rose 12.1% to $406,526, and debt loads stayed relatively low. In fact, Toronto’s debt level grew at one of the lowest rates among all major Canadian cities, increasing only 14.1%—well below the national average—to $149,161 over the past three years.

3. The Montreal Squeeze: The financial crisis has hit Montreal particularly hard. With liquid assets per household declining 2.9% to $175,609—while the national average increased by 4.9%—the financial portfolios of the city have not recovered to their 2007 levels. Even though Montreal residents increased their bank deposits per household by 21.4% to $69,360, that level still lags well behind the average Canadian increase of 32.0%, and to make matters worse, their investment portfolio declined by 14.1%—more than twice the Canadian average drop of 6.6%. However, much of Montreal’s balance sheet deterioration has been offset by stronger than average growth in real estate of 13.9%. On balance, households in Montreal managed a modest 1.3% growth in net worth over the three-year period.

Provinces

4. Increasing Real Estate in the East: From 2007 to 2010, the largest growth in net worth among the provinces occurred in Newfoundland and Labrador, up an extraordinary 33.1%—28.2% ahead of the Canadian average—largely driven by a booming real estate market as property values rose 48.7%. Even though the province was the least affluent in the nation in 2007, by 2010 it ranked ahead of New Brunswick and Prince Edward Island with a current net worth of $210,806. It’s now showing potential for significant growth due to a resource bonanza that’s attracting workers who, in turn, are pushing up real estate values.

5. Riskier Investors in Saskatchewan: A similar story is occurring in Saskatchewan, whose net worth rose 16.9% to $321,943 over the same period, fueled by a real estate increase of 32.4%. But contrary to Saskatchewan’s reputation as a conservative area, residents have become increasingly active investors in the stock market. Investments (stocks, bonds and mutual funds) in Saskatchewan per capita rose by 4.8%—the only province where 2010 investments surpassed 2007 levels. Households in Saskatchewan have continued to invest in the stock market and have shown a willingness to take more risks than, say, those in Ontario, where investments dropped by 8.7%; nationally, they declined by an average 6.6%.

6. Alberta’s Slow Recovery: While much of Canada is recovering from the economic downturn, Alberta continues to lag. Compared to Canada’s average net worth increase of 4.9% over the past three years, Alberta’s actually declined by 3.8% to $447,187—the worst record among all provinces. The reason: Alberta’s real estate market has not recovered to its 2007 values, still down by 1.5%—another low among the provinces—while households have increased their debt loads by 22.3%. Despite the tepid recovery, however, Alberta retains the highest liquid assets per household of any province in Canada at $299,036—47.2% ahead of the Canadian average.

Nation

7. Moving to the Sidelines: In the aftermath of the market collapse of late 2008 and early 2009, Canadians turned conservative in their investment strategies. Stock, bond and mutual fund investments declined by 6.6% to $126,991 between 2007 and 2010, as investors burned by the market kept their money on the sidelines. Meanwhile, households nationwide played it safe, increasing their short-term investments—savings, chequing accounts and GICs—by 32.0% to $76,227 per household. In total, Canadian households now are keeping 37.5% of their investments in these short-term vehicles compared to 29.8% in 2007. Many took on less debt as national mortgage and consumer debt loads rose only 19.0% to $110,282 over the three-year period, much less than the near 10% annual increases that occurred prior to 2008.

"Rather than sitting back and enjoying a white sand beach, Canadian investors today are worried about the waves and clouds on the horizon," explains Peter Miron, a senior research associate at Environics Analytics. "They’re preparing for financial storms in the future rather than relaxing in the sunshine."