What is wrong with buying 'a low-end detached home verging on tear-down status?' When my wife and I were starting our careers we bought and renovated a series of homes in Toronto to work our way up to a home that could comfortably fit our family. It was a lot of work, but it paid off. However, we also listened to the market and cashed out of the Toronto market near its peak in the late 1980's.

I would suggest that this couple stay on the sidelines in a rental, save their money and wait for the inevitable market correction. If enough people do so this will become a self-fulfilling prophecy.