Why is net worth so much higher in Canada than the US

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Peterstepon

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I covered this in another topic but I am curious why the net worth of Canadians is so much higher than families in the US. There was a recent article on CNN saying that the median wealth of Americans over 65 was $170,000 while moneysense in Canada says that the Median wealth of Canadian households is $170,000 (the great Canadian wealth test 2009). According to the Pew institute which had the stats for the US families, the Median for ALL US families was only $70,000.00.
My only guess is that, since a house is a persons biggest asset, the decline in US wealth was due to the crash in housing costs due to the Great Recession (these figures include Real Estate), while Canadian families still have jacked up real estate prices, especially in markets such as Vancouver, Toronto, and Calgary.
Any insights on this will be helpful. It seems that Canadians should be richer, but such a disparity seems rather large.
 
The disparity between the rich and poor is much greater in the US than in Canada, so it’s not a surprise that the median wealth in Canada is much higher. Canada also has a much higher tax rate which benefits the poor.
I think US, similar to many Asian countries, have 20% of the population that owns 80% of the wealth.
Additionally, you comment for Vancouver is only a small portion of Canada, you go outside that area or other provinces, the home prices are very affordable and in the 200s (and probably much lower) for a large home with front yard and back yard.
 
Inequality is not the answer. The median US person has higher income than the median Canada person. Yet, OP describes that among these two median people, the Canadian has a higher net worth. So, the US person has lower net worth despite having higher income.
I don’t believe that declining real estate prices alone are the answer. Surely, US net worth suffered more than Canadian net worth due to the real estate market. However, it’s hard to believe that this accounts for more than $100,000 to the median person, as OP’s data implies. Let’s say that real estate prices declined by a uniform 20% in the US. The median US person would have to own a $500,000 house for the decline to amount to $100,000. Real estate prices might be a factor, but it is clearly not the only factor.
The first thing I thought of was savings rates. However, it looks like Canada savings rates are lower, not higher than US savings rates. So that’s not the answer either.
http://seekingalpha.com/article/222914-savings-rates-and-household-debt-...
Taxes are not the reason either - the median US taxpayer does not pay higher taxes than the median Canadian taxpayer.
So, what’s left? The thing that comes to mind is personal debt. Maybe US people accumulate more debt earlier in their lives. Or maybe US consumption changes less then Canadian consumption as income fluctuates; maybe US people borrow during periods of underemployment to maintain their lifestyles. Maybe US people have other sources of debt, like college debt, that Canadians don’t have. I’m just speculating here, but I suspect that this is part of the explanation.
 
As a Canadian now living in the US, I’m going to try to shed some light on this.
The above posters hit a lot of it: housing prices are still rather inflated and rising quickly in most Canadian metros (I’m interested to see how that winds up playing out); Canadians pay higher taxes (sales and income) compared to Americans, which takes its toll on disposable income, not to mention a higher overall cost of living, at least compared to where I live now (Texas). Also, most Canadians are debt averse by choice with regard to consumer debt and many are frugal/cheap by nature. Due to the low taxpayer subsidized cost of college, the debt load there is much lower than in the US.
With regard to the comment about income disparity, I think a lot of that has to do with corporate executive pay. Canada has so few large public companies that pay tens of millions of bucks per year when compared to the US. On the other side of the income spectrum, Canada also has a high minimum wage. This tends to compress the income distribution. Canada also has much more generous social safety net programs which probably help to put a higher floor on net worth.
 
Interesting….
I was wondering about demographics but….
http://www.unitednorthamerica.org/simdiff.htm
(never heard of that website but their citations seemed legit)
They seem very similar on age, education, etc.
I wonder if this is the infamous “medians” are worthless numbers example. For example, median home price in an area. If the mix of homes sold changes, the median does very little to tell you about which direction house prices are moving and might just be telling you more about the mix of homes.
The other aspect I would be curious of is the impact the commodities boom of the 2000s may have had on Canadian Net Worths. Seems like in the US that Texas likely saw net worth increase in the 2000s from oil, and currently I imagine the North Dakota’s Net Worth are dramitically rising with their recent oil boom.
 
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