How much does a 1996 house cost today?

Higher home prices and lower interest rates lead us to wonder—has housing affordability actually changed?

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Housing prices are much higher today, but interest rates are significantly lower. So, has housing affordability actually changed? To appreciate the impact of inflation let’s take a look at, as an example, the cost of homes today versus 10 or 20 years ago in Toronto.

According to the Toronto Real Estate Board’s historic home prices for Toronto, houses cost, on average:

Year Average Price Average 5-year mortgage rate 20% down payment required
2016 $739,382* 2.33% $147,876
2006 $351,941 5.25% $70,388
1996 $198,150 9%** $39,630
*Based on April 2016 data
**Based on BoC prime + 2%

But to really compare these costs, let’s factor out inflation. Using the Bank of Canada’s inflation calculator, here’s what homes and mortgage payments would look like in today’s dollars:

Year Average Price In today’s $ 20% down in today’s $s % change in those years
2016 $739,382* $739,382 $147,876 0%
2006 $351,941 $413,498 $82,670 17.49%
1996 $198,150 $286,614 $57,232 44.64%

If you consider that your mortgage payment based on today’s average priced home is $2,724, while the monthly mortgage payment in 1996 was $1,210, which is equivalent to $1,750 in today’s dollars, then homes are less affordable today.

 

Read more from Romana King at Home Owner on Facebook »

Correction: In an earlier version of this article, the biweekly payments for the the 2016 and 1996 mortgage payments were used, but reported as monthly payments. This information has now been updated using Dr. Karl’s mortgage calculator

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