How much does a 1996 house cost today?

Hand Offering Real Estate with FOR SALE Sign on White

Higher home prices and lower interest rates lead us to wonder—has housing affordability actually changed?

Housing prices are much higher today, but interest rates are significantly lower. So, has housing affordability actually changed? To appreciate the impact of inflation let’s take a look at, as an example, the cost of homes today versus 10 or 20 years ago in Toronto.

According to the Toronto Real Estate Board’s historic home prices for Toronto, houses cost, on average:

YearAverage PriceAverage 5-year mortgage rate20% down payment required
2016$739,382*2.33%$147,876
2006$351,9415.25%$70,388
1996$198,1509%**$39,630
*Based on April 2016 data
**Based on BoC prime + 2%

But to really compare these costs, let’s factor out inflation. Using the Bank of Canada’s inflation calculator, here’s what homes and mortgage payments would look like in today’s dollars:

YearAverage PriceIn today’s $20% down in today’s $s% change in those years
2016$739,382*$739,382$147,8760%
2006$351,941$413,498$82,67017.49%
1996$198,150$286,614$57,23244.64%

If you consider that your mortgage payment based on today’s average priced home is $2,724, while the monthly mortgage payment in 1996 was $1,210, which is equivalent to $1,750 in today’s dollars, then homes are less affordable today.