Mortgage Throwback: Dan’s Story

Mortgage Throwback Dan

Is it really tougher to buy a home in today’s market? Any new homeowner will likely say so, as a house with a yard – considered the norm in yesteryear – is now reserved for the millionaire set in our nation’s steepest markets. However, it can be argued that borrowers have it better than ever: ultra-low mortgage rates have lasted for years, and are a far cry from the high teens and 20s seen in the 1980’s.

So, what was it really like to buy a home decades ago? MoneyWise connected with veteran buyers to share their experiences in our new Mortgage Throwback series.

Also read: Stuck in the Starter Home>

The Buyer: Dan Kennedy

Age: 61

First Home: Bought in 1973 for $17,000

What was your own parents’ real estate experience like?

My grandfather lost everything in the Great Depression and migrated to Canada from the Carolinas. The local bank manager lent him $50 to make the journey with his family. They found a farmer in the Straffordville, Ontario-area who let them share-grow tobacco. They made so much money the first year they were able to buy the farm the next year.

My parents did the same, share-growing with my grandfather for a year then buying the farm from him in 1956 for about $80,000.

When did you buy your first home?

I’ve always felt that once you were sure where you wanted to settle, renting was a waste of money. We got married at 18 and, at 19, decided to buy a duplex so that we could live in the lower unit and rent the upstairs to provide us with some income to help support the mortgage.

We paid off the house in five years, so from the age of 25 we have been debt-free as we never bought anything we couldn’t pay for.

What were the mortgage rates at the time?

In 1973 we bought a house in St. Thomas, Ont., for $17,000. We had $4,000 to put down so we needed a $13,000 mortgage. We were both working; I was making $2.35 an hour as an apprentice machinist. But the bank I’d dealt with since I was a kid said we were too young and wouldn’t give us a mortgage. My mom and dad gave us a private mortgage at 10 per cent – better than the 12.75 per cent another bank tried to gouge us at.

How did you save up for the down payment?

At the time, farmers were allowed to pay their children $950 a year for working on the farm. We all had to pull our weight. When I was 10, I was cooking for the workers because my Mom was working in the field. My parents forced us to put half of the money into Canada Savings Bonds. The rest was for our clothes and spending money.

At the time you and your wife, Brenda, were starting out, could you ever imagine interest rates being as low as they are today?

Definitely not. In the 1980s, I had a small machine shop. I needed a $20,000 lathe for a project. The bank charged me 21 per cent interest. The job took one month, then it took 90 days to get paid. As soon as I was paid I walked into the bank and paid off the loan.

What was it like being a landlord?

At one time we had three rental properties. We only ever rented to seniors, so we had stable tenants. Seniors just want to be left alone. One couple lived there for 18 or 20 years. We cut the lawn and did odd jobs around the house.

What did you do with your retirement nest egg?

We’re small town people, but we enjoy doing things in the city – theatre, concerts at the Molson Amphitheatre, hiking and biking along the waterfront trail… Three years ago we sold the last of our income properties and bought a condo in the Fort York area of Toronto. It’s our condo cottage. We come here once a week to relax.

Any advice for young people just starting out today?

Real estate prices always seem high. The best time to plant a tree is 20 years ago! As soon as you can afford it, stop renting and buy a house. Buying a duplex is a good way to start off. We always bought fixer uppers. My wife and I have been up on the roof re-shingling.



Related Topics

Buying A Home / First Time Home Buyers / Home Ownership / Mortgage News / Mortgages

4 thoughts on “Mortgage Throwback: Dan’s Story

  1. We were given a piece of land in rural Ontario to build a house in the late 80’s, upon which we built a lovely home. what happens when we sell the land/house with GST/HST? The house is now too large for us with health issues that we now have.

  2. I don’t understand what this story is trying to illustrate. If I made 10x what Dan did in 1973 ($23.50/hr) I could afford a house for 10x what he paid ($170,000). The problem is that that won’t even buy you a condo in most of the country let alone a duplex!

  3. I bought a duplex fixer in 1990 for 92500 its now worth 215000
    Paying off a mortgage in 5 years would have been impossible.
    Same with property increasing 5 or 600% in 17 years.
    Same with students paying there tuition with a summers work.
    Or buying a farm with a seasons work.

    The blessing of low interest rates would seem to be offset by lack of opportunity, high taxes, and diminished government support

  4. Boomers say they worked for every cent, but, somehow GenX seems to have got the bill….high government debt, high taxes, government cuts and fees, low government highering, low growth. Ya low interest rates, low wage and asset growth as well

    enjoy retiring at 65…..must be nice.

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