The Generation Gap: Buying a Home Today vs. 20 Years Ago

Is buying a home easier or harder than it was 20 years ago? That debate – and the answer – varies depending on the historical factors considered and your own financial position and lifestyle preference. We explore how times have changed by looking at prices, demographics, mortgage rates, and house type and location.


Then: A long slump

Going into the 1990s, Canada’s housing market seemed robust, but then the economy slid and prices stagnated for most of the decade. In Toronto, prices peaked at $254,197 in 1989 and didn’t reach that level again for more than 12 years.

Statistics from the Canadian Real Estate Association show that the national average price was $142,091 in 1990 and $154,768 by 1997 – an 8 per cent increase that, according to Financial Post columnist Garry Marr, is “paltry by today’s standards.” Even two years later, in 1999, the national average price was still just $158,000.

Now: Rapid growth

The current housing landscape is characterized by rapid growth – a stark contrast from the 1990s. The national average price for a home sold in June 2014 was $413,215, up 6.9 per cent from June 2013. The figure is skewed by hot demand in cities like Toronto and Vancouver. Excluding those markets, the average price was $336,164, or a 5.2 per cent increase from last year.

Nonetheless, there has been steady growth from coast to coast. The national market has had only one down year since 1998 – after falling 0.7 per cent in the 2008 recession, prices bounced back by about 5 per cent the next year.

Although it is true people are making more money than in the past, incomes have not kept pace with prices. In Ottawa, for example, families earn twice as much as they did 25 years ago, but the cost of a new home is three times what it was back then.


Then: Fewer first-time home buyers

A key factor in Canada’s last major housing market crisis – which set the 1990s up for stagnation – was the unusually low number of people in the 25-34 age group. The lack of young people meant fewer first-time home buyers to drive the market forward.

Now: Echo boomers abound

By comparison, there are many more people currently in the 25-34 age group primed to purchase a home. This is the ‘echo boom’ generation, the children of the baby boomers.


Then: High mortgage rates

At the beginning of the 1990s, the interest on a 5-year fixed mortgage rate – the most popular rate in Canada – was about 14 per cent. Rates gradually declined, but jumped over the 10 per cent mark in 1995 until permanently dropping, thanks in part to new Bank of Canada policies.

Now: Low mortgage rates

Over the past few years, interest rates on mortgages have been at historical lows. At the 2-5 per cent range, they’re less than half what they were 20 years ago. This substantial difference has made buying a home a more attractive and feasible option, and helps to explain why the market has been so much more active.


Then: Suburban expansion

Data from the 2001 Census suggest the majority of dwellings built in the 1990s were constructed in “peripheral neighbourhoods” – metropolitan suburbs with low population density. Housing starts lagged in the first few years of the decade, but then construction of single-detached homes increased until the early 2000s, making up the bulk of construction projects.  

Now: Condo boom

The influx of echo boomers and their preference for an urban lifestyle is accelerating condo development. Toronto’s downtown population tripled between 2006 and 2011, whereas suburban population growth dropped from 18.6 per cent to 13.7 per cent in the same period. Of the hundreds of high-rise buildings under construction, the vast majority are condos – and the square footage is getting smaller.

Those seeking affordable detached family homes must look further afield. That’s why the Greater Toronto and Greater Vancouver areas continue to sprawl, and commutes are getting longer.


There’s no question the housing environment and trends of today have changed drastically since the 1990s – for better and for worse. Only time will tell what the future market brings, but it’s always good to know a bit of history for context and understand the different contributing factors.

If you’re thinking of buying a home, download Zoocasa’s free step-by-step buyer’s guide.

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