No, I don’t know anyone who lost money then. Everyone I knew who owned a home did not sell, so they didn’t lose anything. That and I turned 18 in 1990…

I have also proven six ways from Sunday why price-to-anything ratios are moot. No one buys a house based on sticker price, they buy it based on monthly cost. Rental prices have nothing whatsoever to do with real estate prices. The average 2-bedroom condo rents for $2,360 right now, whereas the average property at $543,838 costs exactly the same (@ 2.99% with 10% down and 25-year amortization). So monthly price to income ratio is 1:1 — why is that scary? Price-to-income is just as moot, as you use a monthly income to generate an allowable housing cost per month, with translates to a price based on current mortgage rates. Compare average monthly incomes to average monthly mortgage costs and you have a measurement that actually means something.

Heck, I could come up with my own measurement of numbers of garage doors divided by water usage and compare it to the size of my pants… means just as much. But just to play along, I did the math for another piece and came up with a price to rent ratio of 16.8 for CityPlace and surroundings. Tell me why that is good or bad.

Also, tell me what the average income in Toronto is, for homebuyers. Not for everyone, but for those buying homes. Then we can compare it with the average price and you can tell me how the result is good or bad. Actually, I can do it for you. Average income of homeowners in Toronto, according to CMHC, is $78,800 for 2010 (the last year of data). Average price in 2010 was $431,276. That gives us a price-to-income ratio of 5.5. What does that mean? Is it good or bad? All I hear is that the ratio is too high, but no one ever says what the value is or why it is too high.

If you want to have a meaningful debate, bring the data you mention and let’s hash it out together.

No doubt you know (or know of) people who lost a lot of money in Toronto real estate in the early 1990s.

The late 1980s may have been a bubble, but price-to-rent and price-to-income ratios were lower then than they are now.

The real implication is what it means for people buying in the future. I think we would see the same as with the new mortgage rules. That knocked a good 17% of low end of the market out. And that was with about the same reduction in purchasing power, some 15%. My guess is then that a near-doubling of mortgage rates would knock 15% out of the market. Even so, the 17% drop put us the low 80,000s for annual sales, right in the 10-year norm — still quite high by historical trends. Knocking us down to the mid-70,000s probably be safe, keep the market a little saner.

Disaster? Nope. Crisis? Not really? Stricter, more sane real estate market? Yes.

So, where are those 30-year mortgages…?

Let me start back as far as my stats go. In 1966, the average price was $21,360 — and it was $57,581 in 1975, 10 years later. In 1976 it was $61,389 and in 1985 it was $109,094. In 1986 it was $138,925 and 1995 was $203,028. In 1996 it was $198,150 and in 2005 it was $335,907. In 2012 it was $497,298. None of those periods saw prices decline.

Funny, the stock market dropped, almost crashed in the spring of 2002 — yet prices rose 9.4% from 2001 to 2002 and then again another 6.5% from 2002 to 2003. That crash did not have an effect. Or the one in 2008, as prices rose 4.2% from 2008 to 2009. Heck, the big crash of 1987 came just a couple of years before the peak of the bubble in 1989. The recession started with the crash in 1987, peaked in 1989 and then fell in a double-dip scenario, recovering in 1992. But the two are only related, one did not cause the other.

None of which has anything to do with today, nor with 1975. When 41 out of the past 47 years have seen prices rise, I feel quite confident in saying “over any 5–10 year period, prices will only ever go up”, which is why I said it. Your citation of a bubble from 24 years ago does not refute my statement in any way.