Single data point as an example: Last month a friend, who between he and his partner make approx. $200k (before tax) combined household income, bought a semi-detached property on the east end (west of the DVP, south of Dundas). "$200k you say, that is a lot!", right, it isn't insignificant, but it's also just two skilled people who make $100k in a major city. There are a significant volume of $100k jobs out there (so if they lose them, I suspect they will find another fairly soon). It's just not as impossible to do as people say, but most of us are not willing to pack a lunch every day, stop drinking lattes make it possible.
When hunting for a house in Toronto there were 3 things that really bugged me that would be great to have addressed before we freak out over the possibility of foreign money:
1) "Second round of offers". It's a trick relators play. Basically they get all the offers together and then come back and say "uh, they're all super close, we're looking to get an outlier". Of course some people come back with bigger offers...and the highest is accepted, or the highest offer from the previous round is accepted.
2) Poorly done home-owner renovations. People doing shitty renovations and then later selling the place (often these are flips). Uneducated buyers see these 'improvements' as positive things when most of the work will be to be re-done due to the job not being done properly. It just keeps Home Depot humming and inflates the cost of the house by the cost of materials + repairs down the road. It's compounded by the fact all offers [in practice] need to be unconditional or they won't get considered. So no inspection, the buyer doesn't get the chance to really find out until later. Sellers often include inspections, but these are always terrible sources of info.
3) Illegal housing; So many listings say "Potential basement suite", and people do the math expecting to get $800-1500 / month extra income from it. They say "potential" in the listing because it's nearly impossible to create an actual legal basement apartment in your house in Toronto [and they know it], but people are willing to risk it or simply unaware of the exposure this places on them. Legal basement apartments need fire rated rooms, to include a parking spot (which is super hard to do in Toronto!), have a separate HVAC system and much much more. 99% of basement apartments do not comply, but due to either people not knowing, or not caring, they rent them out to increase their housing budget. Banks are partly to blame here, they enable this by increasing the lending amount accordingly based on an assumption that the second unit will be rented 10/12 months per year.
I think the thing we're truly seeing here is what access to cheap capital produces in established major (aka historically low risk) cities. Interest rates are sub 3% with no signs of increasing, people make decent money and are willing to sign up for 30 year commitments. There is risk, but when you look at the key factors, it's pretty low give the likely outcome over that time horizon. This isn't a small suburb hours away from a major city [i.e. Hamilton Ontario - where prices are going up despite the fact lots of the residents commute hours to Toronto every day] where one company going broke will send everyone into the poor house, it's a major city with a very good history of having available skilled work.
I'm personally more worried about robots taking skilled jobs than I am the possible housing market crashing. Those things will probably be related events, and housing will be one of the many industries not ready for that shift.
Finally, having said all this, a well timed quote from a conversation i had on Friday "If i lose half the value in my house, i won't be upset or surprised...I went into it assuming things might not go my way". Not everyone has that luxury or time horizon to not mind waiting around like I do, but I'd encourage more people to not see a house as an investment but more as a cost (as you would rent) and use that emotional response you get to help you justify your next decision in the house buying process.