Quote:
Originally Posted by blankall
It wasn't easy for boomers during that 2-3 years and then things began to adjust. My point is we are in that tough period, but there seems to be no adjustment coming.
Also household incomes, adjusted for inflation, are lower now, but the average family works for more hours. This doesn't take into account the rising costs of daycare and food.
It wasn't easy for the boomers during that massive recession. But the recession level tough times, would actually be a slight relief but today's standards.
Calgary may also be a bad example, as they probably have the least housing pressure in the country. They have an above average jobless rate, had a recent construction boom, unlimited surrounding land, and the population growth has slowed dramatically to about 1.4%.
So basically by your example, if you can find a job in Calgary, you can afford to buy a house at a comparable economics pressure to the hardest possible time the babyboomer generation experienced.
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2 to 3 years? Mortgage rates were over 10% from 1973 to 1992. Twenty years. So 3 renewals, assuming a 5 year mtge.
Quote:
Originally Posted by opendoor
There are no savings from lower interest rates. The purchase price of housing has simply been driven higher to compensate for lower rates.
So it's true a person with an $80K mortgage in 1980 has a similar mortgage payment to person with a $600K mortgage now after accounting for inflation. But paying off your mortgage was vastly easier back then. My parents managed to pay off their house in 15 years just by devoting a fairly modest 5% of their more or less median income to extra payments. To pay off a similar house now in 15 years with a similar income would require putting aside over 20% of your pre-tax earnings.
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It's probably been discussed, but you are far better off having your money go towards the principal (an asset) than interest (an expense)