Could Canada's housing market mimic oil's sudden, steep decline?

You think the steep drop in oil prices has been tough on the Canadian economy? Just wait until you see what rising interest rates do to the housing market, warns business journalist Don Pittis.

The price of oil continued its steep decline today, with West Texas crude briefly dropping below $54 per barrel, the lowest it's been in five years. Oil's dramatic drop -- it was trading at more than $100 in July -- will cost Ottawa about $5 billion in lost revenue and provincial economies even more, according to a new CIBC report.

But despite those stark numbers, the plunging value of oil is not the biggest threat to the Canadian economy. The Bank of Canada says that honour belongs to inflated housing prices and consumer debt. Bank Governor Stephen Poloz warned that housing may be overvalued by as much as 30 per cent. Mr. Poloz says he's not expecting a sudden, painful correction anytime soon, but others are not so sure.

Pittis, a senior producer with CBC News Network's Business Unit, says the Canadian housing market could eventually see a drop in value similar to what's happening to oil right now. The CBC business journalist says the problem is who we're listening to, because industry always paint a rosy picture ... until it's too late. 

"I think we have to listen to a few of these contrarian voices when we're looking at various markets, especially the ones that affect us very seriously."

He said that Poloz is walking a very fine line. On one hand, he's trying to warn people the housing market is over-valued, but he doesn't want to sabotage the market by delivering the message.  

"No one wants to be the one to call the end to the party. The fact is, though, that parties end, and it's better to look forward to the party's end before things get worse and worse. And right now, we're in a position where things are getting worse and worse."