"OP" here ...

Wow. I had no idea that my question would generate so many well-formed
answers and so much debate. Thanks to all.

Perhaps I should not have put any numbers, and instead just
percentages. I don't know if there's much of a difference between
going from $200K to $800K as there is from $40K to $160K. I wish it
were 40 to 160, but Toronto is not a cheap place to live.

While I do not feel I should have to justify to anyone my ability to
buy anything, at any price, the usenet is what it is, and people will
(rightly) have their say. FWIW, we are financially responsible,
"well-off" (but not rich, so let's say upper-middle class) people
that, over the long term, elect to spend our money on our home. I am
not into fast cars, frequent expensive restaurant meals, drugs,
sailboats, cottages or other bottomless money pits.

Obviously, an $800K house is not affordable right now (otherwise I
wouldn't have asked the question because I'd be in that house). But I
can dream! And maybe in 10 or 15 years, hard work will pay off.

There is obviously no clear-cut answer, but the information above is
excellent food for thought.