As of March, a 28.6% rise from a year earlier pushed the average cost of a Toronto home to just under 1 million Canadian dollars ($750,000), up from C$558,000 just three years ago and making it one of the fastest rising markets in North America.
"This is a bubble of historic proportions," said David Rosenberg, chief economist at asset manager Gluskin Sheff & Associates in Toronto.
Toronto's year-over-year price surge is so stark, and the city is so important to the Canadian economy, that a correction in home prices now poses a risk to the country's financial system, some economists warn. The Toronto area accounts for roughly 19% of Canada's country's gross domestic product.
It also may escalate existing worries about the strength of Canada's financial system. Data compiled by the Bank for International Settlements suggest the amount of credit extended to households and nonfinancial firms and the level of house prices above long-term trends have both hit alarming levels.