Calgary is more affordable today than 25 years ago?
This Business Edge article would suggest it is.
Typical Calgary home price: $106,000Typical Calgary mortgage: $90,000Interest rate at the time: 18.125%Mortgage payment: $1,319Average Income: $19,932Proportion of Income: 79%
Typical Calgary home price: $357,000Typical Calgary mortgage: $332,000Interest rate at the time: 6.0%Mortgage payment: $2,125Average Income: $60,000Proportion of Income: 42.5%
This comparison is deceptive, because interest rates spiked way above historical norms between 1980 and 1982. Mortgage rates have averaged about 10.4% over the past 25 years (5 yr. closed). Use that number and the 1981 proportion of income drops to 49%… not far from today’s numbers.
House prices in Calgary increased 400% between 1971 and 1980, before losing 1/3 of their value in the next couple of years. Let’s hope nothing triggers a similar boom-bust cycle now.
Hi James, Thanks for the perspective. That’s very true. Using historical average mortgage rates would considerably affect the comparison. However, then it would no longer be an fun trip back in time. :) 1981 rates were indeed a statistical outlier, but nonetheless very real!
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