The housing market in Toronto keeps on accelerating to defy all odds, with small one bedroom condosselling for in the $700,000safter bidding wars, the average home priceverging on $1 millionin the city and over that mark in the GTA, and the vast majority of propertiesgoing for way over askingas of late.

Prices and sales volumes have been hitting record highs andblasting past last year's numbers, leading some experts to believe we've been heading towardsa housing bubble that eventually has to burst— the only city in North America deemed to be in such a position.

Toronto home prices are spiking hard along with sales activity.Chart from CMHC'sHousing Market Assessment, released Thursday.

As such, theCanada Mortgage and Housing Corporation (CMHC)has just this week reclassified the country's largest city's real estate market as "high risk" and vulnerable to a fall.

Toronto is one of five metropolitan areas nationwide that the authority considers to be overheating, overvalued and/or imbalanced, among other concerns, along with Ottawa, Hamilton, Halifax and Moncton, as listed in its latestHousing Market Assessment— a report that indicates overheated across the country at large.

How Toronto's market compares to other Canadian cities in Dec. 2020 vs. now. Chart from CMHC's newHousing Market Assessment.

The assessment moved Toronto up on the risk scale due to "evidence of price acceleration and excess inventories," the latter being a first thanks to a continued influx of condo units onto the market asAirbnbs are converted into longer-term rentalsdue tonew regulationsand travel restrictions, andpeople leave the city as work-from-home continues.

Prices have indeed been steadily rising for single-family homes despite the pandemic, and将继续这样做. After a brief lull,the condo sector is also picking back up again, and fast.

As the CMHC states, "excess inventories are a risk even in unaffordable markets." Chart from its latestHousing Market Assessment.

With the city becomingincreasingly unaffordableandpeople moving farther outside of the city or the GTA than anticipateddue to the health crisis and the new normal, we'll have to wait and see if the slow return tourism and immigration helps keep Toronto housing in-demand, or if we are indeed in for a reality check and a major price correction.