My Uncle Bert built a mansion…
Way back in the late 1970s, Uncle Bert bought 100 acres of farmland near Mount Forest, ON, northwest of Toronto.
He negotiated with a Mennonite farmer a few towns over to reclaim the lumber from a dilapidated old barn. Tore it down and loaded all the lumper on a flatbed truck for his house.
That house was going to be huge!
Some 10,000 square feet featuring an indoor swimming pool, a games room and a three-level deck over-looking the fields.
Early on he planted a variety of pine saplings, as far as the eye could see.
Uncle Bert’s dream was to become a Christmas Tree farmer.
Now before you get the wrong idea and think that Uncle Bert was rich you need to know that the entire process, from empty fields to mansion and row upon row of Christmas Trees took him over 15 years to achieve. All the while working full time as a science teacher at the local High-School.
He built it all, “by the sweat of his brow and his own two hands” as the saying goes. Whenever we would visit, for years, the house was under-construction. The finishing touches were only completed a few weeks before his daughter’s wedding, she was 13 when he started.
Uncle Bert built slow. Using cash whenever possible, reinvesting the profits from the Christmas Tree Farm, adding little by little and piece by piece until his dream became reality.
But that wasn’t the original plan.
Originally Uncle Bert had a traditional mortgage on the land and a pledge from the bank to advance him more money as the house was built. But then halfway through construction the mortgage rate went above 20% and some local politicians got nervous about this massive house being constructed with recycled lumber.
The bank refused to advance any more money and the local government threatened to pull his building permit.
With the stamp of approval from a structural engineer the government relented but the bank never did so Uncle Bert was forced to finish his dream house with cash.
The 1980s were a crazy time in the lending markets. The Arab Oil Embargo of the late 70s started a period of high inflation and to cool things down central banks all over the world began to increase interest rates, making it harder to borrow and curbing demand for housing and luxury items. By the fall of 1981 a 30-year mortgage in Canada was going for 21%.
High interest rates put the breaks on inflation but also ushered in one of the deepest and longest recessions of the past 50 years. Interest rates didn’t drop below 10% until the mid 90s. When I bought my first house in 2005 the interest rate was 5.75% and everyone told me to lock in for as long as possible because we would never see anything lower than that.
The only thing that is constant is change.
The subprime mortgage crisis of 2008 started what has now been the longest continual decline in mortgage rates ever.
But last month inflation hit 3.6%.
Is the cycle starting over? Or is it just a COVID bump?
Only time will tell.
Here is what I know for sure.
The only constant is change…
If you want to get into the housing market, my affiliate lender, Canada Life, offers some very attractive mortgage programs.
But more importantly, to be prepared for whatever happens, you need a strategy. It all starts by looking at where you are now and where you want to be in X number years.
That’s what I do for my clients.
I write and implement strategic plans, (I call them Financial Security Reports), all day every day.
It starts with a FREE 30-minute strategy session over zoom or in person.
As the summer starts to wind down, I currently have room in my calendar for up to three of these sessions per week, book your session here, now. Fall is coming and my calendar will book up fast come September. Now is the time to get started before interest rates rise and we all get too busy.
Peace – Lauren
PS: If you’re not ready to commit to a strategy session why not order a copy of my EBook; Three Steps to Financial Freedom here. You can always try to book a strategy session later. That is if I still have the time.
PPS: In case you were wondering, the politician who tried to block Uncle Bert’s construction project was arrested and charged with conflict of interest. Turns out he was silent partner in the local lumber supplier. Go figure…