The latest immigration figures out of Citizenship and Immigration Canada reminded me that people rarely let the facts get in the way of a good story. Immigrants to Toronto dropped to 87,136 in 2007, the second year of decline, and 23% below 2005 levels. The data startled me because it was inconsistent with several conversations I’ve had since I migrated here. I’d been told that rising immigration was one of the structural forces sustaining what appeared to me to be an overheating housing market. Apparently, like myself, none of my antagonists had bothered to check the data.

Still, I’ve been offered additional “evidence” that the Toronto residential market is on firm ground. Housing is cheap, I’m told, compared to world-class cities like New York, Hong Kong and London. It’s true. This time I’ve checked the data myself. But I’m not sure I understand the comparison. Do Torontonians believe that New Yorkers are comparing a loft in the East Village with one in Cabbagetown? Or perhaps they believe that Hong Kong residents will buy a Toronto home and make the daily trip to work in Kowloon? A pricy commute, not to mention the jet lag.

Another area where there’s a leap in logic, is on the subject of renting. Property bulls love to remind us that it’s always better to buy, because renting is just “throwing your money away.” At current prices, the math does not corroborate this. Nor does my yoga instructor, “Aura,” who is as deft in condo-flipping as she is in Eagle Pose. She just sold her Liberty Village condo for $205,000, a tidy $60,000 profit. At 0% down, a buyer who managed to obtain a preferred 5.5% rate, would pay around $940 per month on the interest portion of the mortgage alone. Adding on taxes and maintenance fees would lift the monthly payment to $1,160, before any principal payment. Alternatively, the buyer could have rented an identical 387 square foot condo for the same amount. It appears that whether you buy or rent, you’re going to be throwing away that money. Aura, for the record, has chosen to rent a much larger townhouse with a friend. She loves the extra space as she can now do Chataranga without bumping her head on the coffee table. She also doesn’t have to worry about property prices weakening.

Most believers in the Toronto property miracle can’t even fathom the possibility that prices could go down. This is especially true of young condo buyers who eagerly snap up 425 square foot slices of heaven. Don’t they know that between 1989-1996, Toronto average home prices fell over 25%? Perhaps they should use the internet for research, instead of “poking” former classmates on Facebook. Unless, of course, old pal Timmy from Kindergarten is also a mortgage broker.

All in all, there does appear to be some flawed logic among Toronto homeowners. Not that it’s mattered. Toronto property prices have been rising now for over ten years. Who cares if the fundamentals deteriorated or the logic was incorrect, so long as people knew to buy?

But with the economic turmoil across the border – and China and India’s stock markets portending an end to the commodity cycle – a change may be on the horizon. Housing activity is slowing. Toronto home prices are still up from a year ago, but have slipped 0.7% in the last two months. With the majority of new homeowners having opted for sketchy 40-year mortgages, the gaps in our knowledge may now be worth paying attention to. Sure, pundits are happy to argue that Toronto is not as overheated as the U.S., but U.S. property is in the worst slump since the Great Depression. Do they mean we Torontonians should be grateful if we only suffer a recession? Because if that happens, it won’t matter what anybody chooses to believe; the truth will be staring us in the face.