An unprecedented imbalance between the supply and the demand for Toronto-area homes is exerting a disproportionate impact on the national picture, according to the Canadian Real Estate Association (CREA).

Its chief economist Gregory Klump said Wednesday that he doesn’t see that changing any time soon, although one bank economist suggested that the Toronto and area market may be “dangerously” overheated.

Across the country, home sales declined 1.3 per cent between December and January, but the actual (non seasonally adjusted) sales activity rose 1.9 per cent compared to a year ago, said CREA.

Its report showed dollar volume of Greater Toronto residential property sales rose 35.6 per cent year over year in January, compared to a 2.1 per cent national average rise, which was dragged down by a 51.1 per cent decline in Greater Vancouver.

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New listings in Toronto fell a seasonally adjusted 17 per cent in January from a month earlier, the biggest one-month decline since 2002. Sales as a share of new listings — a gauge of how demand compares with supply — rose to a record 94 per cent.

But there are different takes on how concerning that is.

Bank of Montreal chief economist Doug Porter described the Toronto region, including cities surrounding it, as being in a “housing bubble,” in a note to investors.

“Toronto and any city that is remotely within commuting distance are overheating, and perhaps dangerously so,” Porter wrote.

But CREA’s Klump said prices won’t go sideways until affordability starts to erode sales and buyers can no longer afford to purchase a home.

“As long as we see the (Toronto area) shortage of supply there’s no end in sight,” he said.

What is clear, however, is that the high price of Toronto real estate — coupled with the city’s unique municipal land transfer tax — is driving activity to unaccustomed high levels in communities farther and farther outside the city.

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New mortgage regulations introduced last year that make it harder to qualify for a home purchase are a boon to urban sprawl, said Klump.

The average price for what is considered a “benchmark” home in Toronto is up 22.6 per cent from a year earlier, according to CREA. That has lifted prices for areas like Oakville-Milton to 26 per cent over the past year.

Kitchener-Waterloo, Barrie and Brantford are all feeling the city spillover, said CREA.

“Guelph is really emblematic of the bigger picture, which is basically drive until you qualify (for a mortgage),” said Klump.

“If you want to qualify for a mortgage, that’s pushing people out to places where land values aren’t as high as they are in central Toronto,” he said.

The full impact of the new mortgage stress testing hasn’t yet been seen, he added. Realtors are urging governments to go slow on any more market cooling measures.

The reach of the Toronto market’s influence is coming as something of a shock to realtors in communities farther from the city, said Dianne Usher, senior vice-president of Johnston and Daniel, a division of Royal Lepage.

“They’ve experienced fluctuations before, usually driven by very specific economic factors of a plant closing, a plant opening,” said the former Toronto Real Estate Board president. “But they’re not used to being influenced by the Toronto market — you can’t afford Mississauga so you go to Guelph. You work in Mississauga-Brampton, Kitchener-Waterloo and Guelph are very commutable still.”

On the world stage, Toronto remains a bargain, said Usher.

“We are a destination city now from a global perspective. If you look at our growth compared to the Chicagos, the San Franciscos and the Londons, we’ve become a world-class city but our prices are not world class yet. We’re a bargain compared to New York. We are dirt cheap compared to London,” she said.

Canada would have to shift its immigration policy, reverse its political stability and erode its education and health care to reverse its growing attraction in the eyes of the world, said Usher.