The spoils of pandemic wealth have added billions to Canadian households and to their total wealth unexpectedly during this past year. In every province, net worth is on the rise. About two-thirds of the average wealth gain came from rising home values, with the rest owing to a surge of savings. It’s a situation that bears little resemblance to past recessions. Disposable income is up sharply, home prices have never been higher and stock markets erased their losses months ago.

Ontario saw its average household wealth rise by close to $50,000 or 7.2%. Roughly three-quarters of that was driven by real estate. In the Toronto and Ottawa areas, the average gain in home values was around $43,000 over nine months in 2020. The wealthy have certainly benefited. In high-income annual neighbourhoods, where average annual household income is between $190K and $300K, home values rose by an average of $106,000. In lower-income areas, it was less than $10,000. Keep in mind these are just averages. Some home values have way exceeded these numbers.

The key driver of wealth was savings. Over the first nine months in 2020, households in Canada saved in excess of $200 billion. The vast majority going to deposits, which include savings accounts, GIC’s and term deposits. The rest was used to pay down debt like credit cards.

The other side of the net-worth equation is debt. Statscan figures show Canadians lowered their non-mortgage debt last year, but also added $118 billion in mortgages, the largest annual increase on record. The value of real estate assets climbed by significantly more than mortgage debt, helping to bolster wealth. The Bank of Canada announced this week it wouldn’t be raising interest rates until inflation consistently stays around two per cent, something it doesn’t believe will happen until some time in 2023. Mortgage rates have already started to edge up as markets start to take note of several positive economic signals.