Throwback Thursday: Buying a Home in 1974 vs. 2014

Back in 1974, a typical home in Calgary was an 1,100 square-foot bungalow that cost $40,000 – or about 2.8 times the average household income. By 2014, the typical Calgary home had ballooned to 1,700 square-feet and sold for $470,000 – a whopping 6.3 times the average household income.

So who had it easier – the early Boomer generation who bought their first home in 1974, or the Gen Y’s who first bought a home in 2014?

It’s easier to qualify for a mortgage today when you consider the minimum requirement for a down payment is just 5 percent. As for affordability, even with interest rates at 10.7 percent, principle and interest on a 1974 home took up just 29.5 percent of a household’s monthly income compared to nearly 35 percent in 2014.

Buying a home 1974 vs. 2014

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14 Comments

  1. Tracey H on March 5, 2015 at 6:24 am

    I would have preferred a direct comparison (that is, the exact smale house in both years). We bought in the early 1980s and our mortgage rate was 13.5%. It wasn’t all that easy to manage, but we did. My friend had a 20% mortgage!

    • Boomer on March 5, 2015 at 10:37 am

      @Tracey H: That exact small house is on the market for $350,000 today. I did not use that as a comparison because it’s now an “older” home. The comparison here is for a new build home for a typical first time buyer.

      We bought our first home in 1976 with a 5 year mortgage rate of 12.5%. The renewal rate was 17.5% and I had to go back to work to help make the payments.

  2. Wendy on March 5, 2015 at 7:03 am

    What about a wage comparison also? I agree Tracey H. it didn’t feel easy paying for our $49,000. home in 78 at 12.25%…but we also were luckier than some for sure. What would that $39.900 house be sold for now? And would anyone buy it without a bathroom for everyone and a walk-in closet! lol

    • Echo on March 5, 2015 at 8:38 am

      Hi Wendy, the average household income is listed there – $14,100 in 1974 vs. $74,540 in 2014. Adjusted for inflation, the $39,900 home would cost $191,598 in today’s dollars – far lower than what an average home costs today.

  3. Kurt on March 5, 2015 at 7:09 am

    And what’s the difference in fixtures and finish? No one is happy with linoleum and arborite anymore. People will spend more than they have on stuff they don’t need and then complain about the price. Is that chart Calgary home prices? YYC’s median family income is pushing $100k a year… Not $74k

    • Echo on March 5, 2015 at 8:46 am

      Kurt, it’s apparent that today’s low interest rates are helping to pay for more space and luxury.

      Sorry, the chart indicates the median household income in Canada. You’re right, Calgary is closer to $100k.

      http://www.huffingtonpost.ca/2014/07/24/calgary-family-income_n_5617743.html

      • Boomer on March 5, 2015 at 10:43 am

        @Kurt: I took the Stats Canada median figures for home prices and wages for the whole of Canada.

        However, I used Calgary homes because that’s the market I know best – I lived there for 50 years – and they seemed to be in a similar range.

  4. kcowan on March 5, 2015 at 10:51 am

    We bought a home in London for $31250 in 1970 and sold it in 1973 for $46500 after 2.5 years. Then we bought in Edmonton for $64000 and sold in 1981 for $230000. I say it is impossible to compare those times to any other times!

  5. john q on March 5, 2015 at 11:07 am

    Irrelevant analysis. The rank-and-file home buyer in 1974 was quite aware of the fundamental financial responsibility of ultimately having to pay off their mortgage balance. Today, the (artificially low) monthly payment is the extent of people’s concern…if that.

  6. kcowan on March 5, 2015 at 12:37 pm

    Thank you for reinforcing my point! My desire to pay off the mortgage was very low because of capital appreciation! Yet, when I finally sold the GTA home (purchased for $325000 in 1981), in 1997, I got a mere $53500! Times had changed.

    Now granted that younger people have never experienced that so their hurt remains to be felt…

    • Boomer on March 5, 2015 at 12:52 pm

      @kcowan: “My desire to pay off the mortgage was very low because of capital appreciation!” You are speaking in hindsight.

      In the seventies and eighties the prepayment options that are commonplace now, e.g. more frequent, rapid, and increasing your payments, were simply not available. In the sixties you had one interest rate for the life of your mortgage. It was not until interest rates started their rapid increase that mortgage terms became the norm.

  7. Jacob on July 9, 2015 at 10:17 am

    In the photo what does “LR, DR” refer to in 1974 vs “LR, FR” in 2014? Pretty interesting how # of washrooms and square footage have increased in 40 years and yet I’m guessing the household number has declined (more people are having less kids (or just replacing kids with a dog if you live in Vancouver)).

    • Echo on July 9, 2015 at 10:49 am

      I’m guessing living room, dining room in the 1974 house and living room, family room (bonus room) in the 2014 house.

      Good observation on the size differences.

      • Jacob on July 9, 2015 at 10:57 am

        Thank you.. dining rooms are definitely being extinct these days. Only people I know who want and build space for dining rooms in brand new homes are the baby boomers while the other groups tend to opt for family rooms or larger kitchens and/or larger closet space.

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