We wanted to share an interesting discussion we had the other day with a long-time client. The gist of the discussion revolved around the affordability of living in the area in 2023 versus when they moved here in the 1950s. The conversation centred on the inflated price of homes in 2023 and housing affordability now versus what previous generations may have faced.

 

It is common knowledge that the price of everything goes up over time, and inflation is a near constant outside of short stints of time. The amount of inflation, however, varies significantly over time. And over the last couple of years, we’ve seen unprecedented highs compared to the last few decades.

 

Specific statistics for the average home prices from the 1950s aren’t easily attainable, so we’ll use the average Canadian home as a proxy for this exercise. According to Statistics Canada, the average cost of a home in Canada was $12,179 in 1951[i]; this compares to $30,000 in Toronto[ii] around the same time for comparison. The average family income at that time was $22.401[iii]

 

If we do some simple math, the average Canadian family paid 54% of their annual income to purchase the home they lived in.

 

Fast forward to today’s market, and things have changed dramatically regarding price and affordability. In the first quarter of 2023, the average sale price of a detached home in Canada was $656.000[iv]. More specifically, this number in the GTA was $1,433,400. The average household income in Canada is $75,452, and in Ontario, it is $80,322, according to a report published by Insurdinary[v].

 

The same simple math application gives us a very different outcome. The average Canadian family pays 869% of their annual income to purchase the home they live in. That percentage soars to 1,785% for the lucky folks in the GTA.

 

The affordability of housing doesn’t stop at the purchase price. The cost of everything associated with a home has gone up. Items like property tax and insurance are directly tied to the home's value, so they increase in lockstep with the value of the home.

 

So when we hear one of our older clients express sorrow for the plight of the new homebuyer, they inherently remember the difference of making that same purchase when they were younger. And comparatively, they could afford a lot more back then than now.

 

[i] Evolution of housing in Canada, 1957 to 2014 (statcan.gc.ca)

 

[ii] The History of Home Prices in Toronto - (tembofinancial.com)

[iii] Average Incomes of Families and Unattached Individuals, Canada, 1951-1995 (ccsd.ca)

 

[iv] Canada: Average price of single-family homes 2023 | Statista

[v] Average Household Income in Canada for 2023 Ranked - Insurdinary