There’s no denying it — Toronto’s resale housing market is hot right now.

Existing home sales jumped 28 per cent in September, compared to the same month last year, according to a report this week from the Toronto Real Estate Board.

In addition, the average resale price in the GTA was $406,877, a jump of 10 per cent compared to September 2008.

But, as the old saying goes, what goes up must come down.

At least that’s what real estate commentator and former MP Garth Turner has been trying to tell people.

PostCity.com spoke to Turner about the recent TREB report. Here’s what he had to say:

PostCity.com: Are these sales figures sustainable?

Garth: Of course not. Toronto, Vancouver (especially) and a few other major markets are in the midst of an unsustainable real estate bubble bred by a number of factors, chief among them cheap money and investor stupidity. Our household and mortgage debt levels are racing higher, with no real gains in income. Interest rates will be heading higher, and unemployment is still growing. There is no logical reason for average house prices to grow by double-digit increases during a recession. Except buyer delusion and herd instinct.

PostCity.com: If you think the market will turn, how far do you think average prices will go?

Garth: I’m on record as saying average prices nationally will correct by 15 per cent, and by at least 20 per cent in Toronto. This will lower the average price by about $80,000, and make recent ‘winners’ of bidding wars into significant losers.

Let’s all remember we are in a country with $56 billion in debt (federal only) this year, which will goose the bond market and raise mortgage costs — perhaps dramatically. Also assured are higher taxes (on incomes) as well as the HST next year. Add it all up and you have less disposable income, more expensive debt, less credit and inevitably lower real estate values. After cresting about now, you should expect a slow melt lasting several years.

PostCity.com: In TREB’s rental market report, leased transactions were up 32 per cent between May and August, compared to the same time last year. Do you make any conclusions/connections between that and the resale market figures?

Garth: As prices rise, even despite record low rates, affordability erodes. It now takes 5.4 times the average income to buy the average home, which is judged by international standards as "seriously unaffordable." No wonder there are more rental transactions, when you see doe-eyed newbie buyers in multiple-bid excess over crappy houses in fringe neighbourhoods. This will not end well.