Also, since there are a lot of Toronto folks on this thread ... what are you folks doing if you don't own anything already? Prices are at an all time high but there is a general fear that if you don't buy now, you will be locked out forever. A data point there are condos in Gibson Square in North York for north of 650K. Seems insane but that is what the market is I suppose.

Regarding my living situation it makes more sense for me to rent, everyone I know who buys a house has spent tons of time and money fixing up their place. I'd rather invest those resources into a startup or consulting.

Buying a condo might make sense at some point but I'm not really into condo living. If I go that route I'd want one with a pool and gym - which means a lot of extra condo fees, so I don't know if that ultimately makes financial sense. I'd be curious to see the numbers on that though.

Anyways, as far as what to do - Patience. Most people in Toronto who have good/great credit have mortgages w/~2.4% interest rate and 5 or less year term. What that means is that a ~1% increase in rates would increase their annual interest expense by ~50%. Considering that the average house price is $1MM in the GTA, let's say the average downpayment is 20% (it's actually lower from what I've read...), and you're looking at a situation where if rates go up just 1%, the average new home owner is going to need to come up with an additional $8K / year after tax, so ~$11-16K before tax, in order to not default on their mortgage. With wages being as stagnant as they are in Canada, and the average Canadian being more in debt than they have ever been in the history of the country(1), you can imagine that there will at least be a couple of people who will no longer be able to afford the houses they are in and need to sell it off.

1)http://www.theglobeandmail.com/report-on-business/economy/ca...

South Florida gets ignored in articles like that, because the cities are so physically small[1]. As of December 2014, South Florida as a whole had built 20 new towers, started construction on 80 more, and had yet another 200 in some sort of planning or presale stage[2]. That is what you want to look at for an example of skyrocketing population density in land-constrained areas.

[1] The largest city in South Florida is Miami, which is only 36sqmi. In contrast, Toronto is 244sqmi).

[2] http://www.miamiherald.com/news/business/biz-monday/article4...

What's really interesting is that the 244sqmi is full. There is room for maybe one or two more subdivision of houses, and then the only option is up (or another amalgamation with the neighbours, because that went so well last time).

We hit the point of "no way but up" about 20 years ago. There are a few holdout family ranches, but other than that there is nowhere left to build that doesn't involve tearing down something else first. In some parts of my home county the school board has had to start cannibalizing parts of public parks in order to build new schools to support the population.

The board keeps their school in the area that needs it (minus a few tough years without it) and they make a profit selling or renting the condos!