Quote:
Originally Posted by GP_Matt
The $100000 mortgage taken out in 1980 at 19% interest works out to a monthly payment of $1540. Plugging that into the bank of Canada's inflation calculator it yields an inflation adjusted monthly mortgage payment of $4400. Using today's 4% interest rate you and a payment of $4400 you could buy a house worth $840000.
High interest and inflation can be a real bitch when they are working against you.
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But if you look at the average incomes, if you were making 50k per year after taxes (which is what this article states many recent graduates were making), with lower rents and food prices, you could easily find a way to put aside 50k in 3 years even on one income. That was probably enough to buy a starter home (AKA a condo) outright and then save up for the real deal. Good luck doing that now.
Interest rates killed you back then, but you had much more opportunity to build capital through saving. The ratio of income to home price was many times higher.
The article points out that after tax income is 60k now. However, the price of food, rent, etc... has all gone up several times. It would take you 10-20 years of saving to buy a condo outright now. That's once you manage to land that 60k after tax (around 80-90k prior to tax) job. So basically, in 1984 you could probably own a condo outright fairly easily by the time you were in your early 30s and be looking to upgrade to your first full fledged home.
Currently, good look doing that before 45 or 50. And how are you supposed to fit having kids into that plan too.