How big it can get is set by how far bidding runs past recent closed sales, not by any rule. An appraiser working to Appraisal Institute of Canada standards values from transactions that have already completed, so in a fast rising market the gap widens simply because the evidence base is behind the street. In a flat market, gaps are usually small and usually mean the price was wrong.
The cash requirement is worse than the gap alone suggests. Mortgage default insurance is calculated on the lower value, so a buyer at the insured minimum of 5 percent to $500,000 and 10 percent above finds both the shortfall and a slightly larger down payment obligation landing at once. Money held in a Home Buyers' Plan withdrawal of up to $60,000 or an FHSA at $8,000 a year to $40,000 lifetime is where that cash usually comes from.
In Saskatoon the practical defence is knowing before you offer whether the price can be supported. With 1.63 months of supply reported by the Saskatchewan REALTORS Association, competition is real but not blind, and Joel Dyck values a property from comparable sales and documented condition first, so a buyer knows exactly how far past the evidence they are being asked to go.