I think a few things are happening:
(1) I note that condo apartment prices, especially in the 416, keep rising, some months many many points above SF homes and towns. That could be a function of supply as well as affordability, i.e. where younger generations can't afford the dream home and are settling for starter homes in the sky. Or it could also be a product of the Boomer downsizing wave. Or both. And/or something else. But whatever the reasons, demand continues.
(2) I think a lot of "kids" really don't want houses and all that comes with them, lawns, shoveling, raking, cleaning eavestroughs etc. Many of them grew up in the burbs and, once they have a taste of downtown living or commuting to university, want no part of spending the weekend looking for new sprinklers at Home Depot and weekdays on the DVP. As long as they have sufficient space for strollers and all the other baby equipment, and there are playgrounds, schools, daycares, transit, bike paths, car shares and/or Ubers nearby, they are happy in apartments. Many don't even cook. They buy ready made food or go out. I recently had a conversation with a lawyer in his 30s who grew up in Mississauga and he and his wife (also a professional) live near Liberty Village with a baby and a toddler. They have no intention of buying anything else, at least not in the near term They can both take the streetcar or walk to work, there's a condo playground with lots of other kids downstairs (no driving around for playdates) and daycare close by. Are they typical? I dunno but I do know that, in some friends' building (to which they downsized from Riverdale as well) near the St. Lawrence Market, I ride up the elevator with many children and strollers. So I suspect their numbers are growing -- and will continue to do so as long as more bigger-than-a-shoebox condos are built. But then, I have been saying this ever since I signed up for this forum.
(3) That whole picket fence, two-car garage thing no longer is. It's a creature of a later 20th century past that we, as a society, can no longer afford for many reasons -- although, perhaps among larger immigrant families, it's still a dream. For example, millennials are not as into car ownership as Boomers were. They want to be as close to "where the action is" as possible. They are envionmentally-conscious and want as small a carbon footprint as possible.
(4) There is no bubble because, as steveintoronto above notes, the fundamentals are there. Toronto is growing and it keeps growing. It's crazy. You can only live so far away from the city in a suburb and work in the city. The commutes are nightmarish and getting worse by the year. That's why centrally-located condo apartments are climbing, physically and financially.
(5) The esteemed Admiral Beez notes that "as the Boomers get older, there's less money to fund your kids' housing dreams." If I am correctly interpreting that, I disagree -- at least for the present. The huge Riverdale Victorian we bought in 1985 sold again a few years ago for much more above a million. The downsized Riverdale house we sold in 2012 is now worth a solid 20-30% more than we sold it for. The value of the condo apartment we are now in, based on sales over the past two years, has increased a stupefying 60% over six years. But it is large, solidly built as it is a vintage building and in very walkable, TTC-able, bike-able etc. location. I know that the sales (and there is a very low turnover BTW) over the past three years have all consisted of downsizing Boomers who, like us, wanted space and location, location, location. Units are snapped up without even getting on MLS, the demand is that high. If those people are all selling houses in the surrounding areas (Riverdale, the Beach, Rosedale etc.) then chances are, if they are mortgage-free when they sell, they are getting more than enough to buy into the building and subsidize their kids. All this said, I recognize that ours may be a unique building in a unique location. That plus I believe that Riverdale, Leslieville and prime Beaches are areas that really never corrected for very long. In other words, prices hiccuped in the early 90s but, over the long term, trended up and up and up.
So Baby, unless the bubonic plague hits us, or there is a total environmental or infrastructure collapse, there ain't no bubbles gonna burst at least not for certain sectors.
