Toronto has a large wealthy immigrant population that is parking foreign money in real estate that drives up the prices. Salaries in Toronto area do not justify $950k homes. I have also noticed people in those $950K live poorly : by that I mean they don't eat out in decent restaurants, or got to movies as often. Best Buy and Target stores are doing poorly in GTA.
Very well said, that is the argument against high valued real estate in relatively modest income large cities such as Toronto. With low or no disposable income other sectors of economy are getting affected. I would also argue another reason for high prices are the greenbelt laws, by which government has effectively restricted land available for development.
Most of the people I know who have bought real estate recently are scraping by and using their basement apartments as mortgage helpers. Another issue I have noticed is the lax standards in issuing mortgages, there are companies writing employment letters for $1-2k in order for couples to qualify for mortgages. Banks and government is wising up but the damage has already been done.
