According to our analysis, there are clear signs in the housing market to indicate the

existence of a real estate bubble in the Toronto housing market. First of all, the ratio
of STL and SOLD suggests that the current housing market is experiencing an
overvaluation. The fact that there are around 80% of houses sold above their listing
prices, and that the house vacancy rate increasing rapidly since 2018 are clear signals
that overpricing exists in Toronto's housing market. 
 
In addition, by using the houses listed on the market as the housing market supply,
and the absorbed houses as demand to derive the absorption rate, we found that the
mean absorption rate in the Toronto housing market is 72.6%, which indicates that it
is a extremely seller-friendly market, and also the housing bubble will continue to
accumulate because the housing demand is much higher than the housing supply. The
rising housing price coupled with the increase in the number of unabsorbed houses
sends a clear signal of a housing market bubble. 
 
Furthermore, after comparing Toronto’s housing price with that of other major
Canadian cities, we discovered that exorbitant increase in the Toronto House Price
Index in the last 15 years has put tremendous pressure on house buyers in the last
fifteen years. In addition, the surge in housing prices in 2020-2021 coupled with the
historically high unemployment caused by the Covid-19 pandemic have exacerbated
the house bubble to form in the Toronto real estate market. 
 
In conclusion, surging housing prices, rising housing demand but with higher vacancy
rate, and higher unemployment because of the pandemic, have all contributed to form
the real estate bubble in the Toronto housing market. Even though the bubble will not
burst at the moment, it certainly needs to be noticed and regulated before it is too late.