If there was any doubt about the Vancouver housing bubble bursting, and there really should not have been after our latest update, when we showed 2 weeks ago that the average price of detached Vancouver properties crashed, dropping 17% on the month, and 0.6% on the year, to C$1.47 million ($1.13 million) in August, the lowest price since September 2015...

... it can be fully laid to rest, with the latest data from Sotheby's International Realty according to which transactions in Vancouver of at least C$1 million ($759,000) plunged 65% from a year earlier to a paltry 95 units in August, the month that a 15% real estate tax on deals by non-Canadian homebuyers took effect.

In Vancouver, the tax “injected uncertainty into the market, and is anticipated to moderate sales activity and velocity in the fall,” the brokerage said. The long-term impact of the surcharge remains to be seen and the city remains in an affordability crisis, according to Bloomberg.

The tax hit Vancouver’s condominium market hardest. Sales of at least C$1 million dropped 49% in August from a year earlier, after rising 29% in 12 months through July. There were no deals for condos priced at C$4 million or more last month, compared with four in August 2015. Sales of Vancouver’s most expensive homes, those priced at C$4 million or higher, fell 46% in August to 14 units, Sotheby’s said.

However, while the Vancouver housing bubble has now popped, the ravenous Chinese buyers, far from hightailing it out of Canada, have merely decided to shift to Toronto, because at the same time as Vancouver's real estate sales ground to a halt, luxury-home sales in Toronto and its suburbs doubled to 1,459 units, Sotheby's said.

According to the Star, sales of $1-million-plus Toronto-area single-family homes rose 83% year over year in July and August. That’s 3,026 homes, with 55 per cent of them inside Toronto’s borders.

That’s not entirely surprising given that the average cost of a detached home in Toronto was about $1.2 million, said Sotheby’s CEO Brad Henderson.

“While $1 million is still a considerable amount of money, it’s difficult to find a single-family home in the city of Toronto for less than $1 million and it is not uncommon to find homes in the $2-million, $3-million or even $4-million-plus range,” he said.

Sotheby’s says sales of homes in the $4-million-and-up category rose 74 per cent in the region and 58 per cent in the city in July and August. Sotheby’s said it expects Toronto’s luxury market to take the lead among Canada’s cities, outpacing Montreal, which probably will become a target for investors from Europe, China and the Middle East.

“What the (Vancouver) tax introduced is . . . some uncertainty as to what other policy issues the city or the province may introduce, which would adversely affect investors,” Henderson said, adding that investors are looking elsewhere, including cities outside Canada.

“But, if they are looking in Canada, we believe Toronto will be the most logical place for people to consider. Montreal and Calgary will probably also get a look-see,” Henderson said.

The good news for Vancouver is that there is finally hope the housing market will soon regain some rationality: Sotheby’s report forecasts a “more normalized fall market” in Vancouver, based on summer sales there. Others had more harsh words: on Tuesday, the chief economist and strategist at National Bank of Canada predicted Vancouver’s housing market may enter a correction with price declines of at least 10%.

The bad news is that the Vancouver housing nightmare of the past two years has metastasized to Toronto (to start) and anyone seeking to buy a house there will soon be priced out by Chinese money-launderers. 10% of homes sold in the Toronto region in the first six months of 2016 were $1 million or more, according to Sotheby’s. Sales over $4 million comprised less than .05 per cent of the total transactions, according to Sotheby’s. That number will soon go up fast.

We give Toronto between 9 and 12 months before the locals wake up in horror and realize that they are now the new favorite parking spot for illegally obtained Chinese cash, and demand a similar 15% tax on foreign purchases, which will simply shift the roving Chinese horde of homebuyers to yet another city, because with $30 trillion in Chinese deposits, the supply of cash is virtually endless, especially when the Chinese population knows that the next devaluation is just around the corner, no matter how hard the PBOC wants to fight it.