The 70’s: Peace Love and Flares
The 1970’s buyer’s usually looked at laying down roots in what would be their ‘family home’, which usually consisted of a bungalow with three bedrooms, one bathroom, and lots of shag carpet. Wood panelling was all the rage, and the homes maxed out at about 1500 square feet. If you’re lucky, you might even have had the luxury of a garbage disposal, and a single car garage just big enough for the family station wagon. How much for all this luxury I hear you ask? Well all this could be yours for just $30,000! I know, a steal right? Absolutely if inflation didn’t exist I couldn’t agree more, however by todays’ standards and with the usual rate of inflation applied, that same property would cost you about $572,675. Seems like a bit much for wood panelling, doesn’t it? Interestingly the average mortgage rate was 6.9% and the average household income amounted to $39,756 combined. In essence by the time they had paid off their mortgage the property cost them about two times their actual salaries. So much for Flower Power.
The 80’s: Decade of Credit
By the 1980’s Reaganomics, the Rubik’s Cube, and Real Estate were talked about everywhere. Star Wars was huge, as was hair and home mortgages, and in 1983 Time magazine named The Computer Machine of the Year.
Seems like houses also started to get bigger in the 80’s with the average family home now having three plus bedrooms, one full and one half bathroom, basement which usually housed the family rec room and Atari, as well as a sitting room (used for the fancy guest visits) and separate dining room. Garages expanded to include space for two cars now, and two storey homes were not uncommon. The average price for a ‘newer’ home in Canada at this time was about $76,000 and household incomes was approximately $53,000. Not bad right? There’s just this little matter of interest rates ALSO expanding at this time to between 13 and 21.5% !
This meant that those great homes with all the new gadgetry and space ended up costing around 8 times that of their income. By today’s standard that same property would cost you $1,092, 420 with a monthly mortgage of about $18,863! Thankfully this rate did not stay stuck in this crazy high. Even so interest rates still had some way to go with the national average never falling below 10% until 1991.