We must face the fact that houses could be the next oil: Don Pittis – Business – CBC News.
Recent reassuring comments about the Canadian housing market remind me of similar blandishments when oil prices began to fall.
I wouldn’t want to overemphasize the parallels between houses and petroleum. Indeed, there are many differences in the two markets, which I will expand upon in a moment.
But first the similarity. It is that, just as with oil, so many of the people we expect to know what is happening refuse to admit that house prices can go through big declines as well as big increases.
Expert failure
This is the most disturbing lesson from the recent fall in oil prices, that the professionals — the people who have all the historical data on production and demand — seemed as surprised as the rest of us when oil plummeted by half. The second most disturbing lesson is that after the decline had happened, economists at the big international banksacted as though it was an inevitability, sagely predicting further declines.
Where were they this summer when oil was trading at $100 US?
