This is more or less how I see it unfolding too. However I also thought that the bounce in 2009 (caused by lower prices and lower interest rates and the CMHC) would not cause a rebound to new highs, which now seems to be the case.
It seems our RE market is more highly correlated with that of China and HK than with the US, who would have thought it.
The ironic thing though is, while the average price has hit new highs, we are at a higher MOI than we were when we were last at these lofty levels. The market also feels a lot less tight, with more listings coming every day, and less frenzy in the market (except at the end of December).
But as I said before, until we get the Olympics out of the way, we wont know what to make of the numbers.