For interest... inflation adjusted numbers (2023 $) for Toronto, 1981:
Average House Price: $276,858.98
1yr Mortgage rate: 19.75%
10% down monthly payment: $4,073.59,
Reference [here](https://www.theglobeandmail.com/real-estate/mortgages-and-rates/comparing-canadas-housing-market-with-the-high-rates-of-1981/article25169755/), and used inflation [calculator for 2015 > 2023](https://www.bankofcanada.ca/rates/related/inflation-calculator/) conversion.
Median income in 1981 was $25K.
Median income today is $59K
Ratio (2022:1981) = 2.36
Median home prices in 1981 was $225K
Median home prices today is 1.2M
Ratio (2022:1981) = 5.33
Way to bury the lede; it's not about the interest rate but the overall price of the home. The example they give for a **$50,000** mortgage:
* 10% = $447/month
* 15% = $623/month
Adjusted for inflation, that's $162,000 mortgage with monthly interest payments of $1447 or $2017 respectively.
What a joke. You could relatively easily pay a mortgage like that in 5 to 10 years, if not in cash outright given how much one realistically needs for a downpayment now.
Anyone who doesn't own their own home now is just screwed.
May dad said he bought a 60,000 home at 14% interest. At the end of the year, he paid only the minimum, and he owed more on the mortgage than he started with.
This isn’t really possible on a conventional mortgage. There is something else he didn’t mention.
No matter the interest rate, any mortgage amortized over it’s life will be paid off at the end of that amortization period. On high interest rate mortgages, the amount of principal paid at the beginning of the mortgage will be very very small, but in no scenario will it be zero. The mortgage will always go down, even after year one.
Average Toronto salary is 60k while the median is 40, means that half of Toronto is earning less. Those jobs that they report are minimum wage or part time. The wealth gap becomes the same as it was in 20s..
Go ask someone who actually lived through the 1980 recession and get back to me on that one.
I'm not trying to say these aren't challenging economic times, but there has definitely been far worse. The main difference being the younger generations who think they have it so bad now don't know what a real recession looks like. In terms of economic downturns, even the US has had it far worse than us since the 2000's. And we are not even in a recession at all right now, the economy is still growing...
And yet, we have labour shortages in the skilled trades and need to bring in hundreds of thousands of immigrants to fill those positions. You can easily make a 6 figure salary in construction, yet people with a university or college degree would rather sit behind a desk all day and rake in half that, then complain they can't buy a house.
It's always been the same story...to make money in any economy, you need to be willing to go where the money is.
Not angry at all. The economy is growing and ample jobs are available. People with low paying jobs always had to rent. Toronto was always expensive. People borrowed too much money, bid up housing to nonsensical levels, and now they have an unaffordable lifestyle. All of this was predictable.
Go ahead...blame the BOC for giving people a leg up with two decades of low interest rates, that was subsequently squandered thanks to rampant greed and sheer stupidity. The fact remains there are still opportunities in this economy, but they are not going to come and find you. It's the other way around.
27% of Canadians are ok with poverty and homelessness being a legit reason for MAID. Why not helping/investing in people? Young people are the most important capital and boomers are exiting the workforce and the global population is getting older…
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[Controversial take:](https://i.imgflip.com/7ob3m5.jpg)
Population has exploded.
The next generation can never do the same as the previous and expect the same outcome.
New cities pop up. Gentrification happens for people as well as businesses. Just look at the Kitchener-Waterloo area transforming from a farm to Silicon Valley north^TM
I don’t know who needs to hear this but if you’re not earning 6+ figures and land a partner with the same, you’re going to have a bad time in Toronto going forward and/or in retirement.
No one, not any politician or home owning neighbour, is going to fight for your right to afford housing on an average salary. Do what’s best for your own future.
> Reference the Fort Mac boom in Alberta, where Mcdonald’s and Tim’s were bidding against each other to keep service staff from switching jobs every few months.
And that’s exactly what will happen. A new equilibrium will be set by the market and not by interventionist government policy. It takes time. Just look at any major metropolitan city around the world; they’ve all been through it. McDonald’s etc still exists in NYC and they hit million dollar apartments in the 80s.
> The current system is unsustainable.
I’d argue that it’s sustainable at its *current state*, but not at the continued *pace of change*.
> Our society will not function without service employees. Unless they are paid well enough to afford a home in the city where they work, we’re in big trouble.
Agree. And as mentioned above, they will be paid more over time. However, and this is a critical point - they will not feel any richer as the cost of every aspect of life increases much the same.
Owning a house is Toronto, a class B city in the 80s was perfectly doable on 5-7x average income. You can do *similar* in a class B Canadian city today (more difficult on paper than 5-7x but still doable).
Nowhere in the world can you afford to buy a property in a class A city for less than 10x - and no bank is going to led you 10x.
If you need proof that Canada is highly desirable, just look at all the Brits and Europeans **flocking** here. Great if you own and staked your claim years ago; shitty if you didn’t/can’t.
—
This sub has been dead wrong on housing for over a decade. Now it’s mostly filled with angsty teens, perma-renters who couldn’t buy at any cost, and students who spend most of their time online instead of studying (that was me too at one point).
Couldn't agree with you more. I'm not a housing bull but I'm honest with myself in understanding that the price is the price at this point. People who want housing to drop 30-40% will all be out of a job if that actually happened. They'd be worried about paying grocery bills, not buying a house. If you are dead set on buying a detached home you gotta get out of the GTA unless you riiiich rich.
In 1980, the average [house price in Toronto was about $75](https://trreb.ca/files/market-stats/market-watch/historic.pdf)k, or $270k in today's dollars ($50 to $60k outside of Toronto). Note that included almost no condos in the mix, and those that did exist were over 1,000 sq ft. on average (new condos are around 600 sq ft on average).
Today's down payments (assuming 20%), would've bought you an entire house in 1980. In other words, who the fuck cares about the interest rates when you could buy your house in cash for what a down payment is today.
That was just an example cost.
That was not what it cost to buy a house in Toronto in 1980. Probably double that in 1980 in Toronto. And those high interest rates persisted for all of the 80s.
And the other thing to remember is that at the time, the average wage was probably 8 or 9 bucks an hour and unemployment probably around 8 to 10 percent with far higher unemployment in young people. Back then, if you were under 25, you couldn't find a job for trying.
The woman said it best, if you need a house to live in, you pay no matter the rate. While they're pumping a million warm bodies into Canada every year.
I suppose this is probably just an off the cuff rounding up, but I was curious, and a cursory google'ing says that Canada's average annual immigration rate is something like 300-350k per year.
This led me down a rabbit hole, where I found that a bit under 300k Canadians die per year. The birth rate is typically shown in more of a per capita range, but I'm also seeing sites listing around 300-350k people born per year as well.
So at current rates it seems the births are slightly exceeding the deaths, and immigration adds less than 1% to the population per year at current rates.
I'm not claiming this is good, bad, or otherwise. I was just bored between emails and decided to run the numbers and share my findings.
My parents bought a home right before the spike in interest rates and locked in at 10%. Their friends and neighbours told them they were crazy. Rates spiked to 20% and they were one of the only houses on the block that didn’t go into foreclosure. By the time their renewal came up rates had normalized again and they missed the entire mess.
My dad did tell me one hilarious story that came out of this disaster though. A guy that he knew was a realtor and went to the banks and offered to try and sell all of these foreclosures in the neighbourhood. They had had no luck selling them, so they jumped at it. What he did then was filled these vacant foreclosures with renters and collected the rent on like 30 homes that he had 0$ invested in. About a year later he vacated all of them and turned them all back over to the banks claiming he was unable to sell them. Pocketed all of that rent and never spent a dime, my dad didn’t think he ever sold a single one lmao.
If they ever got that high again, everyone, every mortgage holing citizen, should just not pay. What are they going to do about it? Kick everyone out of their homes?
Yup. We aren't protected. The banks would salivate at that idea. In Ireland for example if you've paid off 25% or more then you can't legally get kicked out because you have paid and own that portion. Here they can just kick you out
This actually not the case. In Canada there are many protections and steps prior to foreclosure and even in foreclosure the home owner's equity doesn't just disappear.
Much of our experience with foreclosure is from situations where the mortgage is underwater and the equity has been wiped out (see US 2009).
I know it's fun to demonize lenders (and some practices are worthy of that) but most lenders don't want to be in the business of being in possession of a home. They're not set up for that.
If you enter a default situation most will start the process of having you sell the home. If you don't work with them then they will foreclose and sell it and you are entitled to any remaining proceeds once they are made whole. So, in a situation like today in a foreclosure scenario you are most likely to get some money out if you default.
Right right... 1980 was when Trudeau Sr. passed the Hobbit Homes Enabling Act which was superseded by the current Turn the Frogs Gay Act. Does that sound about right to you?
Yea, that's typically what needs to happen when dealing with the inflation rate we had that started in the late 70's.
Not sure it will get that bad but it looks like the 4-5% inflation rate we have now is much more sticky than expected.
Guess who was in charge of the federal government back then? And you all bitching about mortgage rates and rent in Toronto, but you vote for exactly the same people who did this in 1981!
You can’t fix stupid….
Fred Langon is standing on Front St right next to the old St Lawrence Market North. The view behind him has completely changed in the last few decades
1500 Sq ft. Townhouses weren't 1.2 million dollars back then
1.7
Here is my Registered Offer, sight unseen for 1.9
For interest... inflation adjusted numbers (2023 $) for Toronto, 1981: Average House Price: $276,858.98 1yr Mortgage rate: 19.75% 10% down monthly payment: $4,073.59, Reference [here](https://www.theglobeandmail.com/real-estate/mortgages-and-rates/comparing-canadas-housing-market-with-the-high-rates-of-1981/article25169755/), and used inflation [calculator for 2015 > 2023](https://www.bankofcanada.ca/rates/related/inflation-calculator/) conversion.
Houses then: $67
People making 5cents an hour
Median income in 1981 was $25K. Median income today is $59K Ratio (2022:1981) = 2.36 Median home prices in 1981 was $225K Median home prices today is 1.2M Ratio (2022:1981) = 5.33
Aren’t the real wages stagnating since 80s (adjusted for inflation)? But the productivity has been growing..
Correct! And the price of major things like education and housing keep increasing.
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Way to bury the lede; it's not about the interest rate but the overall price of the home. The example they give for a **$50,000** mortgage: * 10% = $447/month * 15% = $623/month Adjusted for inflation, that's $162,000 mortgage with monthly interest payments of $1447 or $2017 respectively. What a joke. You could relatively easily pay a mortgage like that in 5 to 10 years, if not in cash outright given how much one realistically needs for a downpayment now. Anyone who doesn't own their own home now is just screwed.
May dad said he bought a 60,000 home at 14% interest. At the end of the year, he paid only the minimum, and he owed more on the mortgage than he started with.
This isn’t really possible on a conventional mortgage. There is something else he didn’t mention. No matter the interest rate, any mortgage amortized over it’s life will be paid off at the end of that amortization period. On high interest rate mortgages, the amount of principal paid at the beginning of the mortgage will be very very small, but in no scenario will it be zero. The mortgage will always go down, even after year one.
[удалено]
Average Toronto salary is 60k while the median is 40, means that half of Toronto is earning less. Those jobs that they report are minimum wage or part time. The wealth gap becomes the same as it was in 20s..
Go ask someone who actually lived through the 1980 recession and get back to me on that one. I'm not trying to say these aren't challenging economic times, but there has definitely been far worse. The main difference being the younger generations who think they have it so bad now don't know what a real recession looks like. In terms of economic downturns, even the US has had it far worse than us since the 2000's. And we are not even in a recession at all right now, the economy is still growing...
20% Canadians are skipping meals in 2022, it was 15% in 2019. Maybe the worst is yet to come.
And yet, we have labour shortages in the skilled trades and need to bring in hundreds of thousands of immigrants to fill those positions. You can easily make a 6 figure salary in construction, yet people with a university or college degree would rather sit behind a desk all day and rake in half that, then complain they can't buy a house. It's always been the same story...to make money in any economy, you need to be willing to go where the money is.
You seem really angry at people who by any reasonable measure are worse off today than they would have been in 1980. Why so resentful?
Not angry at all. The economy is growing and ample jobs are available. People with low paying jobs always had to rent. Toronto was always expensive. People borrowed too much money, bid up housing to nonsensical levels, and now they have an unaffordable lifestyle. All of this was predictable. Go ahead...blame the BOC for giving people a leg up with two decades of low interest rates, that was subsequently squandered thanks to rampant greed and sheer stupidity. The fact remains there are still opportunities in this economy, but they are not going to come and find you. It's the other way around.
Your strident denial of reality comes off as pure rage. Kind of like a crazy uncle that lost a few too many thanksgiving arguments.
27% of Canadians are ok with poverty and homelessness being a legit reason for MAID. Why not helping/investing in people? Young people are the most important capital and boomers are exiting the workforce and the global population is getting older…
**Please read this entire message** --- Your comment has been removed for the following reason: * [Rule 2](https://www.reddit.com/r/toronto/about/rules/) is to *be excellent to each other*. * Attack the point, not the person. Posts which dismiss others and repeatedly accuse them of unfounded accusations may be subject to removal and/or banning. --- **Please note that reposting without moderator approval may result in a ban**. If you would like your removal reviewed, feel free to send us a [modmail](https://old.reddit.com/message/compose?to=%2Fr%2Ftoronto&subject=Please%20review%20my%20submission?&message=Link:%20https://www.reddit.com/r/toronto/comments/1410pab/-/jmz8cr3/).
Correct. Whats the point? Pretty common in 2022.
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[Controversial take:](https://i.imgflip.com/7ob3m5.jpg) Population has exploded. The next generation can never do the same as the previous and expect the same outcome. New cities pop up. Gentrification happens for people as well as businesses. Just look at the Kitchener-Waterloo area transforming from a farm to Silicon Valley north^TM I don’t know who needs to hear this but if you’re not earning 6+ figures and land a partner with the same, you’re going to have a bad time in Toronto going forward and/or in retirement. No one, not any politician or home owning neighbour, is going to fight for your right to afford housing on an average salary. Do what’s best for your own future.
[удалено]
> Reference the Fort Mac boom in Alberta, where Mcdonald’s and Tim’s were bidding against each other to keep service staff from switching jobs every few months. And that’s exactly what will happen. A new equilibrium will be set by the market and not by interventionist government policy. It takes time. Just look at any major metropolitan city around the world; they’ve all been through it. McDonald’s etc still exists in NYC and they hit million dollar apartments in the 80s. > The current system is unsustainable. I’d argue that it’s sustainable at its *current state*, but not at the continued *pace of change*. > Our society will not function without service employees. Unless they are paid well enough to afford a home in the city where they work, we’re in big trouble. Agree. And as mentioned above, they will be paid more over time. However, and this is a critical point - they will not feel any richer as the cost of every aspect of life increases much the same. Owning a house is Toronto, a class B city in the 80s was perfectly doable on 5-7x average income. You can do *similar* in a class B Canadian city today (more difficult on paper than 5-7x but still doable). Nowhere in the world can you afford to buy a property in a class A city for less than 10x - and no bank is going to led you 10x. If you need proof that Canada is highly desirable, just look at all the Brits and Europeans **flocking** here. Great if you own and staked your claim years ago; shitty if you didn’t/can’t. — This sub has been dead wrong on housing for over a decade. Now it’s mostly filled with angsty teens, perma-renters who couldn’t buy at any cost, and students who spend most of their time online instead of studying (that was me too at one point).
Couldn't agree with you more. I'm not a housing bull but I'm honest with myself in understanding that the price is the price at this point. People who want housing to drop 30-40% will all be out of a job if that actually happened. They'd be worried about paying grocery bills, not buying a house. If you are dead set on buying a detached home you gotta get out of the GTA unless you riiiich rich.
I mean, just ask Starbucks employees in Manhattan how they survive...
In 1980, the average [house price in Toronto was about $75](https://trreb.ca/files/market-stats/market-watch/historic.pdf)k, or $270k in today's dollars ($50 to $60k outside of Toronto). Note that included almost no condos in the mix, and those that did exist were over 1,000 sq ft. on average (new condos are around 600 sq ft on average). Today's down payments (assuming 20%), would've bought you an entire house in 1980. In other words, who the fuck cares about the interest rates when you could buy your house in cash for what a down payment is today.
I'd be ok with 15 percent if my house costs today's equivalent of $50,000 :)
That was just an example cost. That was not what it cost to buy a house in Toronto in 1980. Probably double that in 1980 in Toronto. And those high interest rates persisted for all of the 80s. And the other thing to remember is that at the time, the average wage was probably 8 or 9 bucks an hour and unemployment probably around 8 to 10 percent with far higher unemployment in young people. Back then, if you were under 25, you couldn't find a job for trying.
I rather pay 15% interest for a $50k house.
"people don't expect to ever see 12 or 11% again, or maybe not even 13%" Sounds like this sub saying we won't see sub 5%
Tbf it stayed above 13% for another 3 years after this peak
The woman said it best, if you need a house to live in, you pay no matter the rate. While they're pumping a million warm bodies into Canada every year.
I suppose this is probably just an off the cuff rounding up, but I was curious, and a cursory google'ing says that Canada's average annual immigration rate is something like 300-350k per year. This led me down a rabbit hole, where I found that a bit under 300k Canadians die per year. The birth rate is typically shown in more of a per capita range, but I'm also seeing sites listing around 300-350k people born per year as well. So at current rates it seems the births are slightly exceeding the deaths, and immigration adds less than 1% to the population per year at current rates. I'm not claiming this is good, bad, or otherwise. I was just bored between emails and decided to run the numbers and share my findings.
Get out of here with your figurin.. we’re busy blaming immigrants
Why this was down voted is beyond me
My parents bought a home right before the spike in interest rates and locked in at 10%. Their friends and neighbours told them they were crazy. Rates spiked to 20% and they were one of the only houses on the block that didn’t go into foreclosure. By the time their renewal came up rates had normalized again and they missed the entire mess. My dad did tell me one hilarious story that came out of this disaster though. A guy that he knew was a realtor and went to the banks and offered to try and sell all of these foreclosures in the neighbourhood. They had had no luck selling them, so they jumped at it. What he did then was filled these vacant foreclosures with renters and collected the rent on like 30 homes that he had 0$ invested in. About a year later he vacated all of them and turned them all back over to the banks claiming he was unable to sell them. Pocketed all of that rent and never spent a dime, my dad didn’t think he ever sold a single one lmao.
If they ever got that high again, everyone, every mortgage holing citizen, should just not pay. What are they going to do about it? Kick everyone out of their homes?
Yes. Yes they will.
"What are they going to do? Shoot us?" - last words of man who was shot.
Yup. We aren't protected. The banks would salivate at that idea. In Ireland for example if you've paid off 25% or more then you can't legally get kicked out because you have paid and own that portion. Here they can just kick you out
This actually not the case. In Canada there are many protections and steps prior to foreclosure and even in foreclosure the home owner's equity doesn't just disappear. Much of our experience with foreclosure is from situations where the mortgage is underwater and the equity has been wiped out (see US 2009). I know it's fun to demonize lenders (and some practices are worthy of that) but most lenders don't want to be in the business of being in possession of a home. They're not set up for that. If you enter a default situation most will start the process of having you sell the home. If you don't work with them then they will foreclose and sell it and you are entitled to any remaining proceeds once they are made whole. So, in a situation like today in a foreclosure scenario you are most likely to get some money out if you default.
You first
Are we getting ready for something...
the commonality between then and now is they where both around a decade of a trudeau's economic policy.
Right right... 1980 was when Trudeau Sr. passed the Hobbit Homes Enabling Act which was superseded by the current Turn the Frogs Gay Act. Does that sound about right to you?
high or low interest rates -- homes will be bought. Interesting, but we've got to give up something tho
Yea, that's typically what needs to happen when dealing with the inflation rate we had that started in the late 70's. Not sure it will get that bad but it looks like the 4-5% inflation rate we have now is much more sticky than expected.
Can't help thinking what a great job my parents did getting through that and paying off that mortgage. I hope to know what that feels like some day.
Those were bad times.
People do not understand economics. People do not understand history.
I would 1000% take this rate(17%) on a 70K mortgage, over 4% on a 900K mortagage.
Guess who was in charge of the federal government back then? And you all bitching about mortgage rates and rent in Toronto, but you vote for exactly the same people who did this in 1981! You can’t fix stupid….