In a recent press conference regarding fiscal policy, the Finance Minister, Bill Morneau, boldly assured Canadians that the economy is doing well and growing as expected. He did mention.." but with challenges", however, failed to elaborate on what those were.
Regardless, events that have unfolded and continue to unfold have cast doubt about his statement specifically with respect to employment, insolvencies, personal debt ratios and inflation.

In October, insolvencies and bankruptcies were up 13.4% from the same month the prior year, and according to the Office of the Superintendent of Bankruptcy, 13,200 people either declared bankruptcy or sought help to rearrange their financial payments in a way that helped with affordability. 

What's different about October is despite people still being employed, wages were not enough to service the debt they had, which compelled thousands to consult Bankruptcy Trustees. Usually, insolvencies relate to a higher unemployment rate, not just the debt levels.

Therefore, current bankruptcy statistics may indicate two detriments impacting the economy:
1. Low wage growth; and
2. The rising household debt levels that are drastically outpacing low wage growth. 

Unfortunately, the Finance Minister's public address did not speak to debt, which is one of the most considerable financial risks facing every single Canadian at this time. Instead, the Government admitted its plan to increase the deficit to $27B, meaning it will also be borrowing to keep the economy afloat amid a sluggish economic climate. 

As Canadians, we should be concerned about the rise in insolvencies but also the rise of inflation. Just today, Bloomberg released the news that Canada's inflation has hit the highest level since 2009. The price index was up 2.2% compared to 1.9% in October.

Inflation means costs are rising. When we consider rising debt levels and the rate of insolvencies, is it likely consumers can afford an increase in living costs? Probably not. 

According to Stats Can, on an annual basis, energy rose 1.5%, fresh or frozen beef rose 6.2%, mortgage interest rates also rose, along with the costs of transportation. 

In the last Bank of Canada meeting, while many countries cut their overnight lending rate due to an uncertain global economy, BOC held its rate, which now seems justified. However, according to Michael Babad of the Globe and Mail, it must be careful about raising interest rates too fast since increasing rates with increasing costs will likely translate into a financial disaster for Canadians. 

According to a survey "the proportion of Canadians who are $200 or less away from financial insolvency at month-end has jumped a significant six points since September, from 40 percent to 46 percent."

With the rise of inflation, the increase in debt levels, the possible rise in mortgage interest rates and the apparent low wage growth, is the economy actually doing well? 

In November, Canada also shed 71,200 jobs in the private sector and according to the former Minister of Employment, Pierre Poilievre, Canada also faces imminent risk of companies leaving to go to the US where they won't get charged for carbon. 
Do we need to rethink whether or not the economy is in good shape or whether it's headed for something much more concerning? Apparently we do.
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Need help with debt? Getting out of debt is my specialty.

A Jim Carrey quote reads, "No holiday should manipulate you to the point where you're going into debt to show someone you love them." It’s true.


Debt, unfortunately, will be the likely outcome for many people this holiday season. Not only will they be buying overpriced and overvalued plastic, glass, cotton and hand soap, but they will also be charging those purchases to major credit cards that bear substantial interest.

To put credit card interest in perspective, one credit card balance of $3,000 charged at 23.99% interest can take up to forty-seven months to pay off if just $100 (slightly more than the monthly minimum payment) gets made each month. Over the next 3.9 years, these payments would equal just over $1,300 in interest payments. Therefore, a person who shops on credit this season could be spending significantly more than they’ve bargained for and unnecessarily putting themselves in financial constraints soon. 

As a mortgage professional, I can attest to the surge in mortgage refinance applications submitted after the holidays. Many borrowers who've accumulated large credit card balances from gift-giving usually prefer to consolidate and avoid expensive monthly payments afterward. It makes perfect sense. 

How can borrowers take preventative steps, so that they won't find themselves forced to pay down debt and interest later?

It’s essential first to be cognizant of the reality: that expensive holidays can indebt someone for years!

Here are three ways to make the holidays more affordable without losing its sentiment.

Consider memberships or lessons instead of toys.

As a parent, I can attest to my basement, becoming a plastic scrapyard over the years. After my kids play with their toys for a week or two, they end up in the basement and later, either sold at a garage sale or tossed in the trash. This year, I have respectfully asked family and friends to refrain from buying my children what I consider to be glorified plastic. 

Memberships and lessons, for example, hold higher sentimental value and can also be used throughout the year. A set of piano lessons, as one example, can be a gift that keeps on giving. Not only can a child and family member experience an increased bond between each other, but the present can facilitate the development of a new skill set and create a life-long memory. 

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Stop Buying For Adults

Most adults are (hopefully) aware that Santa is not real, so I question why we continue to exchange gift certificates that are devoid of thoughtfulness and originality? 

Whey do we shop retail for adults? Do we need to buy thousands of ounces of perfume? Sure they smell terrific, but according to a Los Angeles Fragrance Expert, "the ingredients in the average bottle of prestige perfume cost about $1.20 to $1.50. The actual liquid in a typical bottle of $150 perfume is less than 1% of the retail cost. The bottle, box and display carton typically cost four to six times more than the fragrance itself."

Similarly, the typical markup on clothing "ranges from 55 to 62 percent. If the wholesale price of a silk dress is $50, the retail price might range from around $110 to $130. Premium denim jeans often wholesale for around $150 and may sell at retail for up to $375 or more."

So, can we honestly ask ourselves if buying holiday gifts for adults is realistic, and more importantly, whether our adult friends and family could understand the benefit of refraining?

Revive Kris Kringle


"Kris Kringle," an ancient Secret Santa gift-giving tradition, has always been an excellent way to include everyone without a person's having an enormous obligation to buy something for everyone. It's fun, and the mystery of it all can make for an exciting gift exchange. 

Sarah A. Colucci
Sr. Mortgage Agent & Real Estate Expert

Canada just shed over 71,000 jobs in November. Not only is this tumble in employment the most significant loss since 2009, but it also comes as a  shock. The Bank of Canada has consistently emphasized healthy rises in employment rates and a sound economy.

However, despite the assurances, it seems Canada may be facing a new  set of issues with the private sector looking to cut costs. 

Bank of Montreal has just shed 2,300 positions in Canada and abroad because of slow growth. Scotiabank and the Royal Bank of Canada have also reported slow growth in earnings.  For the Bank of Montreal, layoffs have affected 5% of its workforce.

In Alberta, 18,000 people lost jobs. Husky Energy laid off hundreds of staff, which most employees believe is due to a “politically beleaguered industry.” 

The goods-producing industry shed more than 26,000 positions — natural resources down 6,500 jobs. In manufacturing,  27,000 jobs. There were 44,000 jobs shed in the service-producing industry.  

November hasn't been the only month that suffered declines. In August of this year, the Spanish energy giant, Repsol, laid off 30% of its Canadian workers in locations within Chauvin and Edson, Alberta.

The Bank of Canada has been adjusting monetary policy on the premise that the Canadian economy is resilient. And while many countries have responded to the  economy with reducing overnight lending rates, Bank of Canada has held firm.

However, it appears the BOC may not have been abreast of the Canadian economy when it made its statements. These new numbers may signal trouble.

And if we look back farther, October numbers were also weaker than expected. 

Simply put, something is amiss in Canada since the employment report has shown the exact opposite of what was expected which was the creation of 10,000 jobs in November. Instead it lost 71,000. By contrast, in the United States, hourly earnings rose, and it created 266,000 new jobs.

Overall,  the economic numbers for the US have been positive and unfortunately,  have inadvertently highlighted Canada’s current weaknesses.

We should now expect the Bank of Canada to cut rates and act according to the reality that presents itself. 
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​This morning I read an article published by The Globe and Mail that quotes Evan Siddall, the chief executive of Canada Mortgage and Housing Corp., discussing the need to stop "overpromoting" homeownership.
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To quote Siddal, “We have to call out the glorification of homeownership....renting is a perfect and valid housing option, and may, in fact, be the best long-term option for many households.”

His statement comes at a time when there is a massive housing shortage in cities like Toronto and Vancouver. Real estate is currently hugely overpriced in these cities and bought up by rich people, and the rental vacancy rate is less than 1%.  

In Toronto, the average rental apartment costs $2,515 per month, and the average home sells for just under a million dollars.

Therefore, nobody can deny Toronto is experiencing a housing crisis, however, should Canadians really stop looking at homeownership in a positive light? Is renting truly the best long term solution or is Siddal's comment just a talking point used to suppress the conversation of those who are outraged and hopeless?

The reason housing is currently unaffordable in Toronto and Vancouver is because of loose regulations on foreign real estate investment and the BIG issue of money laundering. For example, an article written by Vancouver Sun, entitled, "Anatomy of money laundering in B.C. real estate: 12 cases, $1.7 billion, 20 countries and 30 banks" reveals the hundreds of millions of dollars put into real estate through money laundering. For example, as far back as 1993, it was found that drug money was being laundered through Vancouver Real Estate. In 2015, "bundles of 20-dollar bills were seized as part of RCMP E-Pirate Investigation into money laundering at alleged Richmond Bank, Silver international." It is also alleged that $100M was was washed with real estate.

There have been numerous articles written exposing the laundering issue in Canadian real estate and how drug money has been used to artificially prop up its value. For example, an independent report was released in 2019 that showed $5B was laundered through British Columbia's real estate market in 2018. 

It's obvious that average Canadians simply cannot compete with those who have oodles of cash (illegal at that) at their disposal and are often outrun and outbid. And, although the Government did implement a foreign investment tax, there are many loopholes investors can get through such as setting up Corporations and using straw men who become difficult to track. There has been tremendous concern expressed about how perpetrators are abusing the system in Canada by setting up phony corporations to buy real estate. In fact, according to Kevin Comeau, author of the C.D. Howe report on money laundering, he says it's likely "more than $3 trillion in dirty money entered the international finance system last year."  In Canada, Corporate structuring offers anonymity by allowing the real, or “beneficial,” owner to go undisclosed.

Canada has also unintentionally allowed a private American company (Airbnb) to permeate its housing market and persuade homeowners to turn their rentals into hotels. Everyone knows "hotels" are never a viable long-term housing option for renters due to price and, therefore, the contributing factor to the decimal vacancy rates for rentals is that what once was considered a long term rental priced out at fair market value is now a "hotel" priced out at commercial rates.

Airbnb is squeezing Toronto's rental market, but because everyone is ultimately governed by Capitalism there is only so much policy democratic Governments of the world can put in place. For example, Toronto recently enforced a 180-day a year policy for Airbnb's, which will help stop some, not all of the rental issues since there are still 180 days that homes can be hotels. 

And, as more home builders are now building rental buildings instead of condominiums, which are considered a luxury, the inflated rental market is here to stay.

I have analyzed the differences between owning and renting numerous times and for numerous clients. I have compared the advantages and disadvantages, and my conclusion is the ONLY time renting is a better option than buying is when market rents are lower than mortgage payments, and where a person can consistently hoard away cash and earn interest.

When rent is inflated like it is now and equivalent to or more than mortgage financing, for the average person, there is little room to save money. Therefore, renters would be losing wealth over time because they wouldn't own assets such as real estate that would be appreciated in value, nor would they pay into investments that earn money.

In a time where existing property owners are experiencing a surge in their net worth, and rental rates are getting more expensive, how on earth can anyone say renting is a good option and that we should stop "glorifying" homeownership?
They can't and they shouldn't. Talking points have never fixed problems. The wealthy shouldn't get wealthier well the ones who never get a chance slip into poverty.

Just because we failed to stop a housing crisis and lacked efficient Government policy, doesn't mean we should lie about the reality of which is the better choice. Just because we can't see a way to change things doesn't mean we should discourage those who intuitively know owning is better than renting. 

In my opinion, homeownership will always be a superior choice for most people, and we shouldn't deny the obvious. Siddal shouldn't pretend he isn't a homeowner who's made money in real estate.
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The Government is failing us when they lie to us. The Government is failing us when they are hypocritical. The Government is failing us when they think they are smarter than us. 

Instead of CEO's who are real estate owners telling us we should forget the dream of homeownership by lying about which is the better option from a financial perspective, they should focus on the reasons why there is a crisis to begin with and spend their energy trying to repair the damage so everyone can prosper. 

It's become clear as day that unfortunately for Sidall, the problem is not people who glorify homeownership but the Governments who have failed them. 

Having worked in real estate’s legal field, I have firsthand experience of the consequences for buyers and sellers who back out of their Agreements of Purchase and Sale. In my current role as a senior mortgage agent, I have also had to help many purchasers put in place emergency mortgage financing to ensure they are not held liable for any damages related to their inability to close or to save them from forfeiture of their deposits by new home builders.

Despite the legal precedents set by the superior courts, many purchasers and sellers still don’t fully understand or appreciate how failure to uphold their end of the bargain can cost them a lot of money along with a never-ending legal headache. 

One of the ways purchasers and sellers can protect themselves from being financially exempt from damage claims is by ensuring there are specific conditional periods written in their offers. The most common conditions include conditional financing periods, inspection conditions and enough time for a lawyer to review the Status Certificate if the property happens to be a condominium. For sellers, there could be conditions written up related to finding a new home within a specific time frame, for example. This condition can offer protection against being out of a place to live or an upward swing of the market where prices become too high.

Ultimately, contingencies offer more time for purchasers and sellers to solidify their offer without losing their deposit or being sued for damages if they happen to change their minds or can't fulfill conditions.

From experience, most purchasers believe walking away from a contract after all conditions get met and when the offer is ‘firm,’ will only mean losing their deposit. After working with many lawyers and even going through a court battle myself, I can tell you that the deposit is only the beginning of a potential damage claim that may arise.

In 2017, I sold my house in Newmarket, Ontario, during what was considered an unprecedented market. Homes were flying off the shelves so to speak due to limited inventory and an influx of foreign investment. Like most property owners who were selling at the time, I believed it was the perfect opportunity to capitalize, so I listed my home for sale. 

Within one day of my house being on the market, I received offer of $200,000 over the asking price. Without hesitation, I accepted. The purchaser did not require an inspection or financing condition. And besides people willingly paying crazy amounts of money for real estate at the time, conditions were frowned on and usually denied so none were put forth.

Before closing, due to a sudden downturn in the market because of the influence of the Government's Mortgage Stress-Test and the foreign investment tax, my purchaser did not want to close for the agreed price. Instead, he requested a $250,000 price reduction, which I denied. 

Many sellers erroneously believe that if a purchaser walks away from their contract to buy, they will automatically be entitled to the release of the deposit. The legal system, unfortunately, does not allow this if the purchaser refutes the release of the deposit.

The purchaser must authorize the brokerage to release it, and if they won't, the seller will have no choice but to sue them in court. A realty brokerage is not obligated to release the deposit just because the contract came to an end. They don't have the authority to govern the matter. Since many purchasers, even those who obviously breached their contracts, will not voluntarily release the deposit because it may otherwise incriminate them, bureaucracy ensues. 

In my case, I had to sue the purchaser for the deposit as he refused to release it even though he overtly breached his contract by his failure to close. He later countersued me for the deposit back, which forced me to not only sue him for the difference in the market value of my property from the time he offered to purchase it to the date of my court hearing which was determined by an appraisal but sue him for the release of the deposit. I won both claims.

For sellers, it can be helpful to realize that purchasers can still sue if they have a change of heart. For example, if a seller decides to walk away from a firm offer, a purchaser can sue for damages related to price fluctuation, especially if prices go up after the offer acceptance date. 

An example in the case-law of Azzarello v. Shawqi shows the purchasers entered into an agreement of purchase and sale for a home in Mississauga for $1.555 million and gave a deposit of $75,000. 

After the sellers agreed to a few extension requests, the buyers offered to close for about $1.4 million, but the sellers declined. They later resold the property for $1.28 million.
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In conclusion, purchasers and sellers should understand the importance of conditional periods and that damage claims can go beyond just the loss of deposit, especially if the property depreciates or appreciates after signing and firming up an offer.