Don’t call it a bubble, it’s a balloon. Unlike the US housing market crash, Canada’s housing market is expected to deflate slowly rather than pop, according to BMO chief economist Sherry Cooper.
However, as economic analyst Ben Rabidoux tweeted, “Interestingly, the same analogy used by David Lereah describing US real estate market in ’05”
In an interview aired on November 29, 2005, NAR’s then chief economist David Lereah had some eerily similar thoughts on the US housing market. Below are some highlights:
DAVID LEREAH: Well, first, most of the news has been softening in the housing sector. It’s beginning to slow down. The boom is — has peaked and we’re starting to see some slowing.
INTERVIEWER: Was there ever such a thing as a housing bubble?
DAVID LEREAH: I don’t like to use the word “bubble” because bubbles burst.
DAVID LEREAH: Balloons don’t burst. You can put air in a balloon and it can expand or you can deflate a balloon, where air comes out. So if you’re looking at different metro markets around this country that got real hot over the last four years, I like to use the imagery of balloons because they’re getting hot. You’re putting more air into those balloons. The prices are going up. But now air can come out of the balloon rather than the balloon popping.
INTERVIEWER: So we’re hearing a hissing sound rather than a pop.
DAVID LEREAH: I think that’s probably the best analogy to use right now.
You can read or watch the entire interview here
Do you think there are enough similarities to warrant a degree of cautiousness?