Homes are priced at what the market is willing to pay given the current conditions, that is an unarguable fact. Market conditions, interest rates, confidence can change. People obviously do not mind taking on huge mortgages believing their home will continue to rise. We have gotten way beyond the historical average, the last correction (crash) saw prices decline for more than a decade. I hope it keeps going up or at least holds current valuations.
http://www.bnn.ca/News/2016/5/31/Bank-of-Nova-Scotias-CEO-calls-on-Ottawa-to-raise-down-payment-rules-again.aspx