The Housing Bubble

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A weekend topic on the media and housing bubbles. A curious thing has been happening in Ireland. From RTE News. “An academic who specialises in media analysis has told the Banking Inquiry that, overwhelmingly, the Irish media maintained that there was no bubble and that the boom would eventually end in a ’soft landing’. Dr Julien Mercille of UCD said there was a clear discrepancy between coverage of the housing bubble before and after it burst. He said that before 2008, the media tended to largely ignore it and it was only months after it had started deflating that reality had to be faced.”

“Dr Mercille said that after the crash, the media also presented the Government’s crisis resolution policies in a largely favourable manner. Dr Mercille also spoke about the large amount of money received from property advertising and he said the Irish media went even further by becoming owners of property websites themselves, acquiring a direct stake in the growing housing bubble. He said Prime Time also sustained the housing bubble. Between 2000 and 2007, 717 shows were aired. Of those, only ten, or about 1% of the total, had a segment concerned with the housing boom.”

“Dr Mercille said it did influence coverage and he said former business editor of the Sunday Independent Shane Ross had said there were explicit threats to move advertising and he said journalists were under pressure from bosses to give good coverage. It did not have to be explicit pressure, journalists knew very well the rules to play by within institutions.”

“The editor of the Irish Examiner has told the inquiry that he accepts that the newspaper contained an insufficient critique of frequent claims that there would be no crash and that the economic miracle would continue to be an example. Tim Vaughan said it was a matter of personal regret but he said that he doubted such coverage would have gone a long way to preventing the crash. He said if it was guilty of anything, it was that it believed and accepted that institutions like the financial regulator were doing their jobs competently and with due diligence.”

“He said they still have been faced with an alignment of authority in the form of the IMF, the ECB, the European Commission and the International Credit Agencies along with the Taoiseach and the Minister for Finance, the Central Bank and the ESRI, who were all of the view that the country’s economic fundamentals were sound - with the IMF giving Ireland a clean bill of health as late as 2006/2007. He said it would have been difficult to envisage how any media organisation could effectively challenge such a formidable consensus.”

The Irish Times. “Property porn in the media during the boom years helped push a social appetite for moving up the ladder, the Oireachtas banking inquiry has heard. Dublin Institute of Technology media lecturer Harry Browne said such material existed in TV and print journalism in the form of property programmes and lifestyle features. ‘[THIS] encouraged readers to constantly think about going higher and higher up the ladder,’ he said. ‘To think about how to getting that bigger house; to think about how to decorate their apartment in Bulgaria, that sort of thing.’”

“However he said there was not necessarily a ‘conflict of interest’ arising between invested parties during the formation of the property bubble. ‘It is tempting to conclude that there is no real conflict of interest at all but rather a congruence of interests between media organisations and the developers and financiers who were advertising with them and cashing in constantly on the speculative bubble.’”

“UCD academic Dr Julien Mercille said the media’s close relationship with the political and corporate establishment prevented it from being a critical watchdog of the growing property bubble in the build up to the crash. ‘A number of journalists simply acted as cheerleaders for the property sector,’ he said.”

My Suncoast in Florida. “The days when foreclosure signs littered neighborhoods are long gone, especially on the Suncoast. The increase in the number of homes being sold is just part of the good news. Toni Zarghami a realtor with Keller Williams, says the prices of those properties have also jumped. The news has many like Mollie Nelson, a longtime Sarasota resident who’s invested in multiple properties celebrating. ‘I am excited; so much of what I see in Sarasota reminds me of what I saw in Naples in 1998,’ added Nelson. ‘Naples began a really huge turn about where their property values doubled and tippled because they were found by the new young money. I say if you want it you better buy it now because it’s going to be like Naples in two years — it would be worth a lot more than you’d every dream of.’”

The Buckeye Lake Beacon in Ohio. “The average sale price of a home during the month of February was $180,527, which is a 10.4 percent gain over February 2014. The median sale price in February was $150,000, up 11.4 percent from a year ago, according to the Columbus REALTORS(r) Multiple Listing Service. ‘The increase in homes sold and in contract is an indication that buyers are hungry and ready to pounce on inventory,’ said Kathy Shiflet, Columbus REALTORS(r) 2015 President. ‘Buyers are eager, engaged and not wasting any time!’”

KSHB Kansas City on Missouri. “Sally Moore, Real Estate Agent at Keller Williams is telling clients it’s a seller’s market. ‘If you’ve ever thought of selling your home, now is the time to do it,’ said Moore. ‘We’ve sold one house the same day before we could even get the sign in the yard.’”

“Reggie Maggard is trying to buy a house as an investment property. He said he’s made offers on four homes and it was too late. ‘On one house, I put in an offer the first day it was available and I thought sure I would get it; but it turned out that someone made an offer and the homeowner had already accepted it so fast that other Realtors didn’t even know an offer had been made,’ Maggard explained. ‘It’’s definitely disappointing.’”

The Denver Post in Colorado. “Denver’s tight housing market has morphed into a version of ‘The Hunger Games,’ with buyers scrounging for whatever weapons they can find to remain the last bidder standing. ‘Everything is flying off the shelf,’ said Chad Ochsner, a broker with Re/Max Alliance in Arvada. ‘We are used to a market where the buyer has a house to sell. It is now a market where a seller does not have a house to buy.’”

“By some estimates, as many as a fifth of metro Denver home sales may be happening outside the multiple listing service, as buyers and their agents hunt down prospective sellers before they list. Of those that do list, a new sales approach, which looks more like an auction, is becoming the norm, especially for the most affordable homes. In spring 2013 — the last time mortgage rates dipped below 4 percent and buyers went into a frenzy — the local housing market was still recovering. Presenting the first and best offer often won the day.”

“With 30-year mortgages averaging about 3.78 percent today, the newer game still requires speed, but a buyer must outsmart and outlast 10, 15 or 20 or more contenders. To tip the odds in their favor, some buyers write ‘love letters’ or send videos pleading their case. Others bake cookies or send flowers. But agents give those tactics mixed reviews, and some don’t present the offerings to clients.”

“Two years ago, agents said higher home prices would restore balance to the market by bringing out more sellers. Prices did rise substantially, but the inventory of homes for sale remains tighter than ever. Of the active listings, only 1,212 were priced under $400,000, the part of the market in highest demand among buyers. Most are existing homes offered for sale. The volume of listings normally doubles in April versus January in metro Denver. But buyers this year have been out in force since mid-January after a sharp drop in mortgage rates.”

“Buyers entering the arena in coming weeks need to realize they will drop into hand-to-hand combat with battle-scarred competitors who are frustrated and still hungry for a home.”

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