Toronto's current real estate boom shares one thing in common with the red-hot housing market in the late 1980s, recalls real estate veteran Karen Millar.
"Prices were escalating and everybody was worrying how were they going to afford it, how were their kids going to afford it," said Millar, now a senior real estate specialist with Royal LePage Signature Realty.
She also recalls selling houses once the bubble burst. "There was no champagne," said Millar in an interview with CBC Toronto. "It was sad."
- Toronto area in housing bubble, says BMO economist
- How Toronto house prices went through the roof - in 1988
The rapid rise in the price of the average Toronto-area house — up 27 per cent from last year — is evoking memories of the way prices skyrocketed three decades ago. During the late 1980s, the average GTA house price more than doubled in just three years.
After 1989, prices dropped for seven straight years and didn't reach that level again until 2002.
While one senior bank economist is warning the Toronto housing market is again in a bubble, others are stopping short of using that term.
That's because these economists believe the "fundamentals" of the Toronto market — the economy, interest rates, population growth and the sources of demand for housing — are far more solid than they were in the late 1980s.
Dana Senagama, an analyst with Canada Mortgage and Housing Corporation specializing in the GTA market, cautions people against drawing parallels to the previous bubble.
"I would say don't compare," Senagama said in an interview Tuesday with CBC Toronto. "It's a very different time period, very different economies. The housing market has very different fundamentals at play."
"The only similarity that I see has been the rapid increase in price growth," said Senagama.
In the late 1980s, interest rates were high, some of the rules about qualifying for a mortgage were less strict, developers started building vast amounts of new homes without purchasers lined up and the province was about to get hit with a deep recession.
Sherry Cooper, chief economist for Dominion Lending Centres, describes another housing bubble bursting — in the U.S. in 2008 — as "absolute collapse, massive foreclosures, underwater mortgages. If that's the definition, then no, we are not in a bubble."
The fundamentals of Toronto's current boom "are very strong in comparison," Cooper said Tuesday in an interview with CBC Toronto. "We are not seeing a situation where households are so overextended that they're going to walk away from their homes."
But Cooper is concerned about the growing unaffordability of homes in the GTA and worries the sharp rise in prices is in danger of becoming "self-perpetuating."
"Everyone thinks you can't lose money in housing and that spurs all sorts of activity beyond owner-occupied house purchases," said Cooper.
'I was in shock'
Both Cooper and Millar recall how the bubble affected them personally.
After it burst, MIllar had to carry two homes for six months because she couldn't get a buyer. "We lost our shirt," she said.
Cooper arrived in Toronto in the mid-80s from Washington D.C., where $250,000 bought a good-sized house with a yard. In Toronto, north of Eglinton, she bought a "small house, no lot, $425,000. I was in shock."
Then came the collapse. Cooper says the drop in prices benefited people who wanted to move up in the market.
"Everyone thinks it's the end of the world if the bubble bursts," said Cooper. "A lot of people took advantage of it and were able to move into what were formerly very expensive properties for significantly less than what they otherwise would have had to pay."
The Toronto Real Estate Board is predicting the average selling price of GTA homes will grow between 10 and 16 per cent in 2017.
Ontario Finance Minister Charles Sousa is promising a slate of measures to cool housing prices in his upcoming budget. The date is yet to be released.