Is the media shaping public perception of the bubble?
From the NY Times:
Someone’s Spoiling the Party, the Housing Market Says
Someone’s Spoiling the Party, the Housing Market Says
TO hear some people in the real estate industry tell it, one of the biggest problems with the housing market is what is being said about it in the news media.
Agents and industry executives say reporters, editors and news anchors are making a cooling market sound worse than it is. While the number of sales may have dropped from 2005 (which was a record-setting year, the end of a five-year run) and more homes stay on the market longer, real estate professionals note that sale prices in much of the country are still higher than they were a year ago.
Richard A. Smith, vice chairman and president of the Realogy Corporation, the nation’s largest residential real estate broker, said there was a “constant flood of media that is so negative” that it was discouraging many potential buyers and sellers.
“Nobody wants to be foolish in this kind of market,” he said. “No one wants to sell too low or buy too high.”
...
Robert J. Shiller, the Yale economist and author of “Irrational Exuberance,” said the news media played an important role in molding public opinion as markets both rise and fall. But he said he generally approved of the skeptical tone of many news reports about both the real estate boom and subsequent downturn. “The media has been pretty on top of this story, that this might be a psychological event,” he said.
24 Comments:
On top of the story?
The ONLY ones on top of this bubble bursting is this and other independent blogs.
Saved many people over paying on a house
anon @ 8:09
I completely agree. However, some of the posts here are overly negative while some are extremely positive.
I'm not going to buy now, nor am i going to wait for 6 years. We will research the market again next October. If things stand as is, we will postpone buying for another year. Right now my target is 2008.
I wish the sellers start renting out all of their 35K+ homes :)
Ah, the CYA begins -- as the "media" attempts to congratulate itself by getting someone to say they've been on top of the story -- and look, realtors don't like what they're saying now!
When your concubine gets up from your lap to take a look around (after such a long, long pleasurable interlude) it can be a bit distressing, so I understand the RE industry is upset.
As much as the media try to spin themselves into the watchdog role, history won't be kind to them when this bubble shakes out.
The silver lining of this tragedy is that many people were lucky enough to trade their data and stories on the internet, avoided financial devastation, and came to a consensus about the media's role in failing to warn its readers about the risks of the housing collapse in time for them to save themselves.
09:29:08 -
This specimen's ARM will soon reset. There will soon be population explosion of these specimens. They will soon have no prey (bag holders) to feed on.
Peter Schiff on Bloomberg:
Schiff Video
grim
Well the media hype theory is somewhat true. Just from the stand point that the media takes any story and talks about it all live long day. And, if the story is relative to you, yes you will take the story and the news to heart. Just think of any big news item and how they replay the same clip over and over in essence programing the boob tubers. House market bad - CDs good (said in a Frankenstein voice)
NOW!
Anon - 9/17/2006 08:59:31 AM
Said "If things stand as is (during 2007?), we will postpone buying for another year. Right now my target is 2008."
I have the same exact outlook on the situation. While i hope 2007 will let my family get into bigger breathing room from our 3 bd room apartment, I know there is a distinct possiblity that the more attractive downturn of price will take place during the 2007-2008 transition. Perhaps saving another 20% or more.
Well the media hype theory is somewhat true. Just from the stand point that the media takes any story and talks about it all live long day. And, if the story is relative to you, yes you will take the story and the news to heart. Just think of any big news item and how they replay the same clip over and over in essence programing the boob tubers. House market bad - CDs good (said in a Frankenstein voice)
NOW!
Anon - 9/17/2006 08:59:31 AM
Said "If things stand as is (during 2007?), we will postpone buying for another year. Right now my target is 2008."
I have the same exact outlook on the situation. While i hope 2007 will let my family get into bigger breathing room from our 3 bd room apartment, I know there is a distinct possiblity that the more attractive downturn of price will take place during the 2007-2008 transition. Perhaps saving another 20% or more.
The truth sucks, doesn't it?
Emphaticus, you might be able to find an article here, a quote there flicking at the dangers, but the bulk of press coverage in 2004-2005 (when readers really needed to know of the risks of toxic loans) has been gushy and positive and filled with quotes from vested RE interests, instead of disinterested market analysts. What the press should have been doing is what the some of blogs did, which is an historic analysis of the market and a look at data underlying all the cheerleading - this was extremely lazy of the press at best, and complicit at worst.
Either way, the media abandoned its role as a "news" provider. If anyone ever had fantasies that the press wanted a truthful discussion of the huge risks of this bubble, those hopes were abandoned in the past 2 years. The only place to get that type of dicussion is the blogs.
One thing is always 'convieniently' left out --- Rents.
Rents are soaring in an around the NYC / NJ metro area. Rents are significantly higher in the 'Other 4 Boros' outside Manhattan & in North & Central Jersey than three years ago.
A one bedroom apartment that may have rented for $1,100 in Queens back in 2003, is now going for well over $1,600 a month (Plus the 15% brokers fee).
Even in the JC Heights & Greenville, you cannot find a one bedroom apartment for less than $1,600 + Heat & Hot Water (which is NEVER included in the price)
The average rent in this area is up close to 20% since last year (but this is "convieniently" ignored by the media).
Whereas rents may have been stable or have fallen in some cases outside the NYC metro area, they rent up by the same percentage as housing prices in the last 5 years..
Plus it is much harder to qualify to rent an apartment in NYC than it is to get a mortgage for a house anywhere in the country west of the Delware river. You need to earn 45 times the monthly rent + have a FICO score in the 700's.
The average rent in this area is up close to 20% since last year (but this is "convieniently" ignored by the media).
Prove this and I'll get it in print in a week. That is a promise.
jb
The average rent in this area is up close to 20% since last year (but this is "convieniently" ignored by the media).
Prove this and I'll get it in print in a week. That is a promise.
Well, this is certainly a start:
http://www.nysun.com/article/38069
You use a news article to prove that something is *not* covered by the media???
{{You use a news article to prove that something is *not* covered by the media???}}
Its not covered by the general media except for a few articles in the NY Times & those stories you read in the Sunday Real Estate section about people trying to find an apartment to rent in NYC (money is NEVER an object BTW in these 'stories) and shocked at how little they get for $3,000 a month.
The NY Times actually mentions things that other newspapers don't like the 15% brokers fee which is common now in Queens, Brooklyn & Nassau County, the 'Income of 45 times the monthly rent rule' and the '700 FICO score or above rule'.
The 'fluff' media sites like Cnnfn.com & Marketwatch.com want you to believe that housing prices have stagnated and how renting is a 'great deal' right now. I guess it is if you want to pay $36,000 - $40,000 a year to rent a walkup apartment on the far UES of Manhattan or $25,000 a year to rent in the Greenville section of Jersey City or in Newark.
Point is that rents in the NYC metro area track the local economy and incomes especially in the 'other 4 boros' outside Manhattan and Long Island where rents are surging by a higher percentage than in Manhattan.
I think Grim was simply looking for concrete evidence, media-based or not, to indicate that local rents were up 20%.
That's all I attempted to provide.
{{{I think Grim was simply looking for concrete evidence, media-based or not, to indicate that local rents were up 20%.}}
That's all I attempted to provide.
The NY Times talks about this all the time in many of the articles in the Sunday Real Estate section.
Even in the general CPI, rents have been pulling up the housing component which has been rising by the highest rate in 16 years.
The explanation is 'but it is so much cheaper than buying'. Sure, if you think that a 600 square foot apartment for over $2,000 a month is a deal with a 15% brokers fee where you don't gain an iota of equity or ownership.
It's about time you register and sign your comments.
grim
grim said...
Peter Schiff on Bloomberg:
Schiff Video
grim
9/17/2006 10:40:31 AM
You aren't taking this guy at face value, are you?
He's bet the friggin' house and leveraged it to the hilt. He only needs a few ticks in his panic stoked direction to book some gains. He's probably sweating out that he was USD short coming off the 2005 rally.
He strikes me as a tad disingenuous and has an agenda.
grim said...
It's about time you register and sign your comments.
grim
9/17/2006 08:44:12 PM
It's about time you
1. Get this bolg off of the cesspool known as Blogger.
2. Put your photo on the front page. Gap-toothed and all.
At a minimum give us a picture of your bike.
NY City real estate is its own world.
It's absolutely false to say "The average rent in this area is up close to 20%."
"This area" is not synonymous with "NY City."
My NJ rent goes up a few bucks (about $15 a month) every year -- it's a financial non-factor.
How was the bbq?
The NYC metro area includes all of Eastern NJ north of Ocean county or anywhere on the NJ Turnpike north of Exit 7A.
Most people in North & Central NJ think of themselves as NY'ers anyway. They are the ones who ran to NJ & Long Island when the 5 boros became 'too brown' & 'too ghetto' for them.
Now there kids are moving back to NYC droves causing the biggest Reverse White Flight & Reverse Immigration that NYC has seen in the past 200 years.
"They are the ones who ran to NJ & Long Island when the 5 boros became 'too brown' & 'too ghetto' for them."
Not fair. Color has nothing to do with it, personal danger does. If the brown shoe fits, wear it. Otherwise, don't call me a racist because I rescued my grandmother from the UES (yes! the UES!) in the 70's. Every other apartment on the floor had been burglarized, and it was the TENTH FLOOR.
If it's "too brown" when some affirmative-action drug dealer who whined his way into a janitorial job starts rolling over old European-American females, then god damn it, NYC got too brown and I can say it in plain English.
Otherwise, check your racial issues at the door.
It's about pigs, not pigments.
Hi Emphaticus, the press's job would have been to suss out disintrerested sources (economists included) quote them, but also examine the underlyng data they use to support their opinions.
It woudln't have taken an economist to realize that incomes were way out of whack with house prices in 2004-2005.
What the press did, instead (for the most part - (I agree there were a handful of voices crying int he wilderness - Dimatino in Dallas was one) -was to quote sources with an interest in keeping the market going and selling properties at the highest price possible - Lereah, Watts, local realtors etc.
And for all of you who posted, the NY Times was to me guiltier than most because it bills itself as a paper of record. Remember back in July they did that RE section front page article making fun of people who wouldn't buy? The Times RE section is supported by RE advertisers, and anyone who thinks they didn't play their pied-piper tune is naive.
It's a laugh they want to rewrite their shill history now, because now that the market has sagged they'd look stupid not to report on the bubble. They have to say something now -- to bad it's waaay too late to have helped the millions who bought into the frenzy and the bad loans.
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