The normalization process will happen in fits and starts.  This exactly what I would have expected.  The weakest links will break first.  The first people to get shaken out of the real estate market are those who bought(really just put down a deposit) pre-build houses out in the far burbs (Milton, Georgetown, etc...).  Those areas are now dead quiet.  The value of these future houses have already dropped by more than the deposits that were put down. They are holding out now, trying to find people to take over their contracts, but eventually they'll have to walk away. The second phase will be condo speculators.  They were never end users to begin with.  I think many were locals taking equity out of their homes to speculate. I think third will be homes in the immediate suburbs of Toronto (Mississauga,  Oakville,..).  And slowly that wave will recede to Toronto.