The gap between Mecca and Misery grows ever wider. The latest stats reveal a steamy, demand-driven, low-supply real estate market in Toronto, and a dying-on-the-vine situation that’s developed in most other cities. ‘The last gasp” is how a Bloomberg article described the Kingdom of the GTA a few days ago. And it wasn’t fake news.

Logically, things should be changing. Everybody now expects mortgage rates to creep higher. And speaking of creeps, most moisters now view the federal finance minister as one. Ottawa’s far-reaching autumnal reg changes, including introduction of the hated borrower stress test, have started to bite.

Recall the survey results shared here last week. Brutal.

About half of first-time buyers in Ontario will delay a property purchase because of Bill Morneau. The stress test requires anyone putting down less than 20% to prove they have income sufficient to carry the place with a mortgage pegged at 4.64% – roughly twice the rate our accommodative banks are charging. That, say realtors and lenders, knocks out 45% of the kids, who must wait and save. And, oh Lord, saving is hard.

In total, 80% of all newbie buyers are impacted. Those not putting off a home purchase are looking for cheaper digs (34%) or moving out of Dodge (22%).

Meanwhile 52% of all condo purchases in Toronto are being made by specuvestors and amateur landlords, while over 130 new buildings will be coming on stream in 2017. At the same time, GTA prices increased 17.3% year/year in 2016 and the pace pf price acceleration by December had touched 20%. Inflation is 1.2% and wages are growing annually by 0.4%, so most real incomes have dropped. Household debt just cracked $2 trillion, of which 65% is in mortgages.

Does this sound healthy to you? Why, with the kids whacked, debt rampant and loans getting dearer, would real estate in Toronto escape unscathed?

For that answer, look to the eternal laws of supply and demand. The latter may be under pressure, but the former is in serious trouble. All you need to know is contained in this little box tucked at the bottom of the Toronto Real Estate Board monthly stats.

Wow. Sales last month up. New listings down. Total listings all but collapsed. That 48% decline in available homes over last year (which was low by historic standards) is solely responsible for a 17% rise in prices. Last month 5,338 properties changed hands, despite crap weather, and now there are fewer than 5,000 listings in a metropolitan area of six million people. That’s a 23-day supply even if sales languish at pre-Christmas levels.

But they’re not. Along with the entire squirrel population of the GTA, the locals woke up this past week to a waning winter, their loins suddenly, insatiably stirring with lust. House lust. And that takes us to 244 Bain, an ungainly skinny brick house on an ugly street on the wrong side of Toronto. The downstairs is one room with a tired kitchen stuck on the back, four bedrooms on two upper floors, a tiny garden and a laneway parking space. The property’s merely 20 feet across. The reno is dated. Two feet of clearance from the squat semi next door, with two agents standing at the dining room table watching the hordes pour in to their open house.

Dozens came Sunday. Wall-to-wall cars outside. A sea of shoes clogging the tiny vestibule. Scuffles on the staircase. The vague odour of competitive testosterone in the air. The asking is $1.4 million, but the expected sale price will be $1.6 million. With closing costs and the double land transfer tax, that’ll edge to $1.7 million. Offers accepted Monday at 7 pm. Be sure to include your certified cheque for at least $100,000.

“It’s a drought,” the experienced realtor throws out. “So little on the market that January is turning into a feeding frenzy. People bidding whatever they have to. Nobody knows how to price things anymore.”

Where from here?

No correction this spring in the last bubble market in Canada, not until the listings flow again. Ironically, the higher prices go, the fewer there are. Homeowners are either greedy for more windfall gains or (more likely) unable to move – priced out of the market, no matter what they pocket. It’s likely 90% of the people owning in Toronto these days (as in Vancouver) would be unable to afford their own houses.

Again, does this sound like a healthy market?

Things will continue to rise until they don’t. The final tulip bulb will be epic.