Home Prices in Canada – Then vs Now
Hi, WealthTrack founder David Pipe here. Canada’s housing market has seen a dramatic transformation over the past several decades. What was once a relatively stable and attainable part of the Canadian dream has evolved into a highly competitive and, for many, inaccessible sector.
Comparing home prices “then” to “now” reveals far more than just numbers—it unveils how factors like interest rates, wage growth, government policy, population changes, and market psychology have all contributed to a housing environment that feels fundamentally different.
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A Look Back: Canadian Housing Prices in the Past
In the 1980s, the average Canadian home cost less than $100,000. In fact, according to data from the Canadian Real Estate Association (CREA), the average home price in 1984 hovered around $76,000. Back then, a household earning a median income—roughly $25,000 to $30,000 per year—could realistically save for a down payment and afford monthly mortgage payments on a modest home, particularly in suburban or rural regions.
Of course, this doesn’t mean home ownership was effortless, but far fewer folks were depending on their parents for financial assistance to buy a home, as is often the case these days.
Still, down payment was no easy feat. In fact, high interest rates were a defining characteristic of the early 1980s. In 1981, the Bank of Canada’s overnight rate peaked at a staggering 21%, making borrowing extremely expensive. However, this also meant home prices remained grounded. While monthly payments were high due to interest costs, overall property values were much lower than today.
Interest Rates: Then vs Now
One of the most commonly cited drivers of home price appreciation is the shift in interest rates. As interest rates dropped steadily from the 1990s into the 2010s, the cost of borrowing plummeted. A mortgage that once had to be financed at double-digit interest rates could now be obtained for as low as 1.5% to 2% by the mid-2010s.
This change had a profound impact on how much people could borrow. For example, if your income stayed the same but interest rates dropped from 8% to 2%, your borrowing power could increase by 30% to 40% or more. As a result, housing demand rose, and so did prices.
This helped trigger a long-term surge in home prices across major cities. Vancouver and Toronto, in particular, became hotbeds of speculative investment and rapid appreciation. Between 2000 and 2020, average home prices in these cities more than tripled.
Wages vs Home Prices
While housing prices surged over the decades, income growth has not kept the same pace. Between 1980 and 2020, Canadian wages rose modestly, especially when adjusted for inflation. According to Statistics Canada, real average hourly wages have increased only marginally—meaning the average Canadian worker in 2020 had similar purchasing power to a worker in the 1980s.
This widening gap between wages and home prices has made affordability a key concern. In many markets, the price-to-income ratio—a common measure of housing affordability—has ballooned. In the 1980s, a typical home might have cost three to four times the average household income. Today, that ratio can easily exceed eight or even ten in urban centers.
Then vs Now: What Does a Down Payment Look Like?
In 1984, saving a 20% down payment on a $75,000 home meant setting aside $15,000. That could be achieved within a few years of diligent saving for many middle-income households.
Fast forward to 2024, and the average Canadian home now costs over $700,000. A 20% down payment is now $140,000—an amount out of reach for many younger Canadians, even with two incomes.
Additionally, the time it takes to save for a down payment has increased drastically. According to a recent report by the National Bank of Canada, it now takes over 25 years for a median-income household in Toronto to save for a 20% down payment on an average home—assuming they can save 10% of their income each year.
The Role of Urbanization and Population Growth
Canada’s population has grown significantly since the 1980s, particularly in large urban centers. Cities like Toronto, Vancouver, Calgary, and Montreal have seen considerable increases in population due to both natural growth and immigration. This urban concentration has put tremendous pressure on housing supply.
As demand has increased in these major hubs, supply has not always kept up. Zoning restrictions, lengthy permitting processes, and land use regulations have made it difficult to increase housing stock at the necessary pace. This supply constraint, combined with high demand, has further fueled home price appreciation.
Investment and Speculation
Over the past two decades, real estate has increasingly been seen not just as a place to live, but as an investment vehicle. Many Canadians have turned to property as a reliable way to build wealth. This investor activity has added another layer of demand to an already strained market.
In some regions, properties are purchased, held, and resold without ever being lived in—a trend referred to as "speculative investing." This has arguably played a role in pushing prices even higher, particularly in highly sought-after neighborhoods.
Modern Challenges: Then vs Now
Today, the average Canadian faces a set of housing-related challenges that didn’t exist in the same form decades ago:
Mortgage Stress Tests: Buyers now must qualify at higher rates than their contract terms to ensure they can withstand future rate increases.
Bidding Wars: In competitive cities, homes often sell for well above asking price, and bidding wars have become the norm rather than the exception.
Delayed Homeownership: Younger generations are buying homes later in life, if at all, due to affordability constraints.
Renting as a Lifelong Reality: Increasingly, Canadians are accepting long-term renting as a norm, a significant cultural shift from past generations.
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Conclusion: A Different Housing Reality
Comparing home prices in Canada then versus now paints a stark picture of how the housing landscape has evolved. While many variables—such as interest rates, income levels, and population growth—have shifted over time, the core truth remains: it is far more difficult today for the average Canadian to afford a home than it was 40 years ago.
The situation is not entirely without hope. New housing policies, incentives for first-time buyers, and proposed zoning reforms may eventually help ease the pressure. But for now, the Canadian dream of homeownership feels more like a long-term ambition than a readily attainable milestone for many.
