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marcus gee

At a downtown dinner party the other night, the talk turned to that favourite Toronto topic: real-estate prices. All three couples at the table bought their houses about 20 years back. Since then, prices in our gentrifying west-end neighbourhood have soared. Semi-detached Victorians that went for $200,000 or so in the early 1990s now fetch four or five times that. "We're all millionaires!" one neighbour said. On paper, anyway.

The ongoing, seemingly endless run-up in Toronto real-estate prices continues to amaze. A tiny two-storey row house down the alley from us was gutted, renovated to within an inch of its life and put on the market for $800,000 plus. A silver Mercedes now sits on the backyard parking pad.

Down the street, a cramped semi-detached that the real estate blurb calls full of original character – a complete fixer-upper, in other words – is listed in the $800,000s, too. Whoever buys it will probably have to spend at least another couple of hundred thousand to bring it up to standard.

This sort of thing is happening all over town. A converted garage in the east end known to some locals as "the shack" recently went to an investor for $165,000. At 210 square feet, it looks like a children's playhouse. It has a sitting room and bedroom but no kitchen, bathroom or, for that matter, running water.

Or consider the case of the "murder house." A man was killed in the detached Ossington Avenue property in 2011. His body was found in the entryway. This spring, the place sold for $900,000 regardless.

It can all seem a little crazy. My grandmother's old house in the Beach, a lovely but smallish place at the top of Neville Park Boulevard, sold this spring for more than $860,000. When she moved out in 1995, she got just $260,000 for it, but then, family lore has it that when the family moved in after the Second World War, they paid $2,500.

My own parents bought their first house in Moore Park for $17,000 in about 1960. It was a semi-detached overlooking Mount Pleasant Cemetery. It must be worth more than a million now. They moved up to a bigger, detached house next to the park around 10 years later and still paid only $35,000.

The experts have been warning for years that a crash is coming, and perhaps it is, but the real-estate boom rolls on and on. People say there is no way young couples can afford a downtown house any more, but young couples keep buying them, even if means being mortgaged to the hilt.

"I think it's always been hard to buy a first house," says Dianne Chaput, a real-estate agent in the Beach. "Think about what people did to get a house back in the day."

To look on the bright side, it says good things about the city that house prices keeping going up and up. It means people want to live here and are willing to pay a premium. It takes faith to pay so much for bricks and mortar. Buyers are investing not just in the house, but in the future of the city, and the future of Toronto seems bright.

From Leslieville to the Junction, once down-at-heel neighbourhoods are profiting from the hunger to live in the city. Thousands of run-down houses are being returned to their former glory, and better. Tens of thousands of older residents are cashing out, funding their retirement with the proceeds of a house sale.

If it seems cruel to the young that house prices are so high, it is worse in some other places. Prices have sailed through the roof in cities around the world from Hong Kong to New York to London. A British friend bought his big house in North London for £32,000 ($52,000 at today's exchange rate) in 1977, about four times his salary at that time. It is worth £1.2-million today – by his reckoning, about 25 times the average annual British salary.