I'm just going to put my two cent in on this one.  I live in Toronto and my husband and I are looking to upgrade to a house from our townhouse condo.  We aren't in a hurry so we have just been casually going to open houses in the neighbourhoods we are thinking of moving to. 

There are serious bidding wars going on and all the houses we have looked at have been sold in 24 hours from when offers are being taken, going for way more than the asking price.  My cousin put her house on the market and she sold it in 8 hours.  There is definitely a frantic feeling in the air.  The open houses we've been too have been "tense" with most people bringing their agents in tow.

I personally think it is because of the low rates and because of all the taxes and rules that are going to be coming into effect. 

We are just going to sit tight for now.  I could never stomach bidding $100,000 more for a place.  If space really becomes an issue (when we have our 2nd kid down the road), we'll rent out our place and then rent a separate place for ourselves.  I refuse to be part of a bidding war.

I've been following the real estate market in Ottawa for the last couple years now. It's true that there's still high demand here and it is very much a seller's market. However, I wonder how much of it is being driven by low interest rates. The fact is supply is growing at an accelerated pace, and I can't imagine demand will keep up once the rates increase. For now the market seems fine, but I have enough reasons for concern to keep renting until things are more stable. The average price for a condo in Ottawa has gone up 30% in the last year.

I don't know about a bubble, but house prices in Canada are ridiculous.  Was out in Penticton BC visiting my father-in-law, and even there, in the middle of nowhere, crappy little ranch houses on third acre or half acre lots are over $400,000 -- more than they are on the East Coast of the U.S.