The B.C. Housing Market Over the Decades

 
 

Has buying a home ever been this difficult?

It may feel like today’s combination of high home prices and rising mortgage rates is putting home ownership out of reach. But look back and you’ll see that the housing market has experienced many periods that were challenging for home buyers. Inflation, interest rates and the economy rose and fell through the decades – but those who persevered and found a way to buy a home generally found they had made a very sound long-term investment.

Travel back to the 1950s

On February 8, 1950, a new house with five rooms and “very nice grounds” was listed in The Chilliwack Progress for $6,800. Another with six rooms on an acre of land with “lots of fruit” was going for a bargain $5,000.[1]

That all sounds very reasonable. However, inflation was on the rise in Canada in 1950 – down from a 1948 post-World War II peak of 14.6%, but curving up again in response to the Korean War.[2] Maclean’s magazine ran a story in January 1950 that advised readers, “You’ve got to get a new model budget to cope with the leaping cost of eating.”[3]

At the same time, interest rates were on the way up. In 1950, the bank rate was 1.62% and prime was 4.50%, but by 1960 the bank rate was 3.54% and prime was 5.75%.[4]

Meanwhile, the hourly minimum wage in BC didn’t reach $1.00 until 1955.[5] And while average hourly wages across Canada rose through the 1950s, they were still at just $1.77 in 1960.[6]

Now, let’s visit the 1980s

On May 21, 1980, The Chilliwack Progress advertised a three-bedroom house with inlayed oak floors and an “exceptional fireplace,” close to a daycare, elementary school and high school, for a price in the low $40,000s – with a mortgage assumable at 10.25%.[7]

That was a good mortgage rate at the time. Interest rates were soaring, with the bank rate reaching a peak of 17.93% the following year, by which point prime was 19.29%. Interest rates stayed high throughout the decade, with the bank rate at 13.04% and prime at 14.06 by 1990.[8]

Canada also experienced a particularly difficult period of “stagflation” – rising inflation during a period of slow economic growth – between 1973 and 1982. Inflation topped out at 12.5% in 1981 as world oil prices rose sharply.[9]

The hourly minimum wage in BC was set at $3.40 on July 1, 1980, and bumped up again to $3.65 that December.[10] Meanwhile, average Canadian pay rates grew slowly through the 1980s,[11] making it hard for people to keep up with rising prices.

And, we’ve reached the 2000s

On January 21, 2000, The Chilliwack Progress ran a “big house, small price” ad showcasing a four-bedroom house on a large lot with “great rezoning possibilities,” listed at $104,900.[1]

This decade started with the dot-com crash in March 2000. Then, in 2008, our economy was engulfed by a global financial crisis and subsequent recession.

That said, inflation was calmer in the early 2000s. In January 2000, it was just 2.2% and it remained largely under control until 2021 when it started its current rise. Inflation recently hit 7.7% in May 2022.[2]

Interest rates were considerably higher than they are now, however. In 2000, the bank rate was 5.77% and prime was 7.27%. It was only following the global financial crisis that interest rates dropped precipitously, with the bank rate at 0.65% and prime at 2.40% in 2009.[3]

BC’s hourly minimum wage rose to $7.60 in November 2000 and was most recently set at $15.65 in June 2022.[4] The average hourly rate in Canada climbed from $16.66 in 2000 to $22.43 in 2010 and $30.03 in 2021.[5]

 

What does all of this mean to you?

Through the ups and downs of inflation and interest rates, recession and economic growth, house prices have continued to rise – with BC market values leading the rest of Canada. In 2022, the average BC house was estimated to be worth $991,400.[6]  

But what really matters to you isn’t an average but the cost of the house or condo you want to buy and whether you have room in your budget for the mortgage you need to move in.

Your local Prospera team can help you get pre-approved for the best mortgage for your situation. They can also work with you to calculate the home price you can afford so you can go house-hunting with confidence.

Once you’re a homeowner, you won’t be watching house prices rise from the sidelines anymore. Instead, you’ll be participating in housing market growth that’s likely to continue in the decades to come.

 

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