The real issue is that the big cities like Toronto are the economic centers of the region. When they pop, everything else will be in trouble too.
If you want to figure out what the correct price level is, find statistics that compares price of housing to median income in your area over time. That's the single most important metric determining the correct property valuations.
Prices can go up as long as incomes go up. Major cities have higher productivity and prices can go up until they start to eat too much from the income. In declining areas prices can go down and houses are still overvalued.
What is the price/income ratio now compared to long term average? How much of the 60% can be explained with prices rebounding to long term normal.
ps. I'm almost sure that house prices in Toronto are exceptionally high compared to income. I'm not arguing against that. I'm arguing against people using wrong numbers to measure things. Find relevant numbers and use them.