Is The Bubble Catching The Attention Of Mass Media?
A common topic suggestion this week is the growing media awareness of the housing bubble. “The Washington Times has a big front page headline this morning: ‘Home Prices Fall; Sales Plummet’. This is probably also in a lot of other newspapers as well, given the recent sales numbers, but how many will put it up front like that remains to be seen.”
“This and other news stories this week does seem to indicate that the Housing Bubble is finally catching attention of the mass media. Once they start piling on and make this the latest ‘hot story,’ that will crunch the market. There are still people out there convinced that there s no slump; hearing it on TV and reading it on front pages might convince them otherwise.”
Another added, “The Today show had a big story on the housing bust. I couldn’t believe it. They actually had someone talking about how people used their houses as ATMs. The only thing that they don’t seem to be addressing is the fundamentals. If that kind of talk hits the news it will be officially over.”
One said, “PBS Newshour did an excellent report on the housing bubble last night. Nothing new to us, but a good overview for the common folk.”
Another reader looks ahead, “How long will it be before we begin to see Newsweek or Time Magazine articles about ‘The New Austerity’ or ‘Simple Living?’”
A reply, “I remember that issue. Even TIME admitted a year later that ‘the new simplicity’ was really the next recession.”
Another said, “The Big Media are excellent…at noticing trends that have already happened. At the top of the bubble in July 2005, Time Magazine had a cover-story about how great housing is doing.”
“Now the major media is noticing the giant popping sound. Since they usually get timing exactly wrong, will the market head up a little (gotta make that last shoulder in the chart, right?) before heading back down? Or is this headlong plunge unstoppable due to FBs whose financial state is so bad their sales will now be forced?”
One said, “I have not once heard any reference to the credit bubble that got us here. But I’m wondering if the media believe info is over the public’s heads.”
A reply, “And I’m wondering if the info is over the media’s heads.”
The New York Times. “The latest housing numbers seem like they could be a turning point. A real estate crash might not be the most likely outcome, but it certainly seems legitimate to think about what one would look like.”
“The fate of the housing market will influence whether the economy will merely slow over the next year, as the Federal Reserve forecasts, or fall into a recession for the first time since early 2001.”
The Guardian. “The downturn in the US housing market will force businesses to slash 73,000 jobs a month in the new year and could be more damaging to the world economy than the dotcom crash, economists have warned. ‘Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it’s the right one to use here,’ said Paul Ashworth, chief US economist at Capital Economics.”
The Vancouver Sun. “The odds of a U.S. recession have increased dramatically, a Canadian bank economist is warning. ‘We have long held the view that a bursting of the U.S. housing bubble would be bearish for the U.S. economy,’ the National Bank of Canada said in a statement.”
“‘It’s the single biggest risk to the U.S. economy and..we haven’t seen the bottom yet,’ said Patricia Croft, chief economist with Phillips, Hager and North Investment Management Ltd. ‘There may be a bit of a lag but if the U.S. goes down we’re going down with them.’”
The Burlington Free Press. “Fresh evidence shows that high energy prices and sagging home values are pinching the main driver of the U.S. economy; the average joe’s wallet. Homeowners are shelving plans to remodel kitchens. Families are dining out less and tightening their budgets.”
“”Meanwhile, this week’s housing numbers show that the real estate market is likely to decline further as the number of unsold homes grows, further pressuring prices downward. ‘I rarely find myself in a position where a single data release really snaps my head around,’ said Gregory Miller, chief economist at Sun Trust Bank. ‘I’m beginning to question my assumption that this housing correction will continue to occur in a controlled fashion.’”
There’s news coming out of all the mainstream media. You can’t turn on the tv news or pick up a paper without seeing a story about slowing sales or overbuilding. Everybody is getting on the bandwagon. This was a three beer blog last year. Now it takes a six-pack to get through all the posts.
You guys drive me to drink!
Is that a complaint?
MSM is piling on. Only months ago they reported re never goes down. Now they wonder why the prices haven’t dropped yet. They remain moroons.
MORONS
Where is Gary Watts when we need him?
Good question, Pismo.
Where is Gary and when will he capitulate?
In my mind, I think those latest Lereah PowerPoints show his “waking up” - if only to save his reputation (though it’s going to be hard to take back all those books).
I hope Mssr. Lereah can get a copy of MY new book,
“Are you missing the Real Estate Crash? Well, Good On Ya!”
Believe he’d find it sobering…
Nope. The usual real estate people I speak with think that fall will be the turn-around ( after the spring, then summer turn around that in not happen) . My BK clients are “sentinal species”. Ones that are indicative of impending potential harm to others like them. We are now giving back close to 50 homes in BK cases in the last 4 months. Keep your powder dry. . .
Another reader looks ahead, “How long will it be before we begin to see Newsweek or Time Magazine articles about ‘The New Austerity’ or ‘Simple Living?’”
Actually we have the time cover shot as of start of the declines…
http://en.wikipedia.org/wiki/United_States_housing_bubble
Fortune Mag had a beautiful cover too..
A guy in shock saying… ” and they told me Re never goes down”
That was sometime last year (2005)
Not only that, but readers of MSM are finally getting the financial relationship between local newspapers and the real estate business. Here’s an excerpt from a letter to the editor from today’s SF Chronicle…”I’m rather sad to see that our local press doesn’t have the gumption to report the true negative numbers that have come out about the local real estate market…How (and why) will you continue to spin it so that the average reader remains uninformed and makes a poor buying decision that could affect them harshly for many years to come…it’s time The Chronicle started informing its readers on this subject rather than pleasing its advertisers.”
Bingo.
Yes - exactly.
The San Francisco Chronicle successfully retains its title of “Lamest Paper in America”! (major city division)
There’s no way The SF Chronical could beat our local rag, The San Diego Union Tribune.
I second that motion. I steadfastly refuse to subscribe to the UT - at least the NY and LA Times have some semblance of realism to their news.
Believe it.
Chronicle=little Chatty Kathy McNewsBubbles.
oops I said bubblez…*coy
The Boston Globe* reminds me of my hometown (in the middle of nowhere, midwest, USA) paper growning up. And I grew up in a town of 7,000.
*And the Herald is not even worth mentioning.
What’s SF Examiner reporting? I always liked that paper better when I was living there.
I think that the Examiner and the San Francisco Chronicle merged.
Correct. But the examiner name lives on — but it’s just a tabloid now.
Santa Rosa Press Democrat is nothing more than a paid PR newswire acting as just a conduit for Real Estate Infomercials in print format.
I called in the San Francisco Comical when I lived in the Bay Area.
I called it the San Francisco Comical when I lived in the Bay Area.
The Chicago Tribune is totally in bed with the RE industry. The only bubble stories they print are reprints from other papers across the country. Any stories about the Chicago area are about new developments going up, the new “hot” area to buy. Three weeks ago they printed a special section for first time homebuyers that included articles about how now is a great time to buy, how to get financing (FB style), etc. 70% of the print was various advertisements for lenders, RE agents, builders. Very little actual content.
The Chronicle hasn’t turned the corner on this just yet. As the person who actually sent this letter to the Chronicle, I’m rather disappointed to see how it was handled. First, they chose to post it in the Business Editorials section under a separate letter by a person who believes the Chronicle has been TOO alarmist about the bubble. (yeah, right) And second, they chopped off some comments I made about proof of the shifting tide in the local market. Here’s the full text of what I sent on Wednesday, August 16th:
“I’m rather sad to see that our local press doesn’t have the gumption to report the true negative numbers that have come out about the local real estate market. DataQuick today reported the year-over-year and month-to-month price decreases for San Francisco. I even saw multiple “For Sale” signs on every block when driving down Park Presidio this past SATURDAY afternoon. Sorry, but that is not the almost rosy picture you painted in your article today. August and September’s numbers are sure to have at least another year-over-year price decline, and who knows when that trend will stop. How (and why?) will you continue to spin so that the average reader remains uninformed and makes a poor buying decision that could affect them harshly for many years to come? Luckily, my wife and I (who even with our dual six-figure incomes sold a year ago because of seeing how clearly unaffordable and unsustainable the market had become) chose some time ago to do our own investigation on this topic rather than relying on The Chronicle’s writing staff. Others foolish/greedy enough to be neck deep in soon-to-be resetting option ARM’s or who lied on their stated income loan applications won’t be so lucky. It’s time The Chronicle started informing its readers on this subject rather than pleasing its advertisers.”
They’ve got until September’s (SF’s peak) numbers come out to continue to try and get away with this dance. After that, they’ll have no choice but to acknowledge the proof.
Nightly Business Report on PBS has had several reports on the “slumping” housing market, plus they interview guest analysts from major investment firms who share their views on the economy/housing market, and every single analyst for the last few weeks has mentioned housing market concerns….even the analysts who are bullish on the over-all economy.
This change in direction by the main stream media is recent. And it is getting louder and louder. So the question is…Can the Plunge Protection Team once again “rescue” the homebuilders? It has quite successfully done so for the past two weeks but the headwind is stronger and stronger. And when it stops its efforts, how far will the HBs plummet?
Interesting week coming up.
What makes you think the homebuilder share prices have not reached a permanently low plateau?
- Another said, “The Big Media are excellent…at noticing trends that have already happened. At the top of the bubble in July 2005, Time Magazine had a cover-story about how great housing is doing.”
- The media is like a drunken sailor staggering on a pier. Soon enough they ‘bump’ there head into the next big thing.
The Option One banner ad on top of this site is a killer!
I have said before that the the bottom of this bubble burst will be when the Time cover asks “Has the Housing Bubble Burst?”
:-]
That will be one sign that it is safe to start thinking about buying a home, along with a number of others:
1) The masses warning everyone that real estate is the worst possible investment
2) Cautious lenders who only offer fixed rate loans and only offer them to those who can bring a downpayment and have good credit ratings
3) Home prices which pencil out as investments compared to what a landlord-owner can charge for rent
4) Average area home prices no more than 2.5 times average income level in the heartland, and no more than 6 (not 10+) times average income in coastal areas
5) Common realization that homes are an expense to the owner, not an income source
Sorry for all the reasons I have left out, but there are too many for my little brain to recall all of them in one comment.
I like Stucco’s number 4.
“4) Average area home prices no more than 2.5 times average income level in the heartland, and no more than 6 (not 10+) times average income in coastal areas”
I like this metric, as most people seem to be able to compute it. I also like it’s simplicity in explaining that home prices are due for some turbulence.
For in Marin (and SF for that matter), the median home is around $800,000 (and some of those are truly dumps). In Marin, the median household income is around $95,000.
Let’s use some rounding: $100,000*6 = $600,000.
$800,000 - $600,000 = $200,000.
If one believes that 8x household income is supportable, you think house prices there are “just right.” I think I’ll say that home prices could drop anywhere from $0 to $200,000 (inflation adjusted) in Marin in the coming years.
Let’s see how that turns out.
Actually 6X HH median income is significantly above the historical CA long-term average. 4-5X would be more reasonable. Of course, even a $200K haircut would leave virtually all recent buyers (post 2002) underwater.
I don’t plan on buying anytime this decade. The true bottom would be when the interest rate cycle maxxes out and basically nobody can afford anything unless they can pay cash upfront. And if I pull numbers out of my butt, that won’t be until 2015 when 30yr mortgage rates are at 12-15%. This RE downturn is going to be a very long, brutal awakening for a lot of people Imagine -5% to -10% declines every year for 10 years straight (Japan-style.
But why don’t they report the actual facts? They’ll report the most horrific news as it relates to crime and natural disasters - but getting them to say, “Hey, America - guess what? Housing is imploding. And it’s about time.” is so off limits? I see too many news clips about the topic that end with, “But this is just a little slump - it’ll get better!” that it makes me ill. Because THAT’S all the most of the viewers will take away at the end of the report. But it’s not truthful.
Are the big networks somehow in bed with the Realtors Associations?
The big networks will soon be in bed with “Credit Repair” businesses.
Yes indeed they will soon do that and then turn in a big on the Real Estate industry because they’ll have to in order to maintain credibility and the stream of advertising cashflow…it will just come a different advertiser(s) is all.
But why don’t they report the actual facts? They’ll report the most horrific news as it relates to crime and natural disasters - but getting them to say, “Hey, America - guess what? Housing is imploding. And it’s about time.”
Because they all own real estate.
Good question! I get Time each week, and I agree they do not hesitate to report horrific stories frequently. Perhaps the RE issues are considered too political. If they come across as bearish, that might be construed as “Liberal bias.” Then again who knows how many conflicts of interest Times-Warner has in this whole thing?
“They’ll report the most horrific news as it relates to crime and natural disasters - but getting them to say, “Hey, America - guess what? Housing is imploding. And it’s about time.””is so off limits?
They need to keep ratings/sell newspapers. Most people don’t want to hear bad news that directly affects themselves…and most people own real estate.
Intelligent outlets of information like the Economist, Barrons, Forbes, the WSJ, and to some extent this blog have been warning about the RE Bubble for a while, but most people don’t read these publications.
Crime and natural disaster stories help sell newspapers, which increases the value of ad space (for real estate and any other kinds of ads). Reporting that housing is in for a hard, not soft, landing reduces the value of RE advertising, and runs the risk of accusations from the REIC of causing a crash.
Read The Economist.
I gave up on the American “news” weeklies years ago. The Economist is published out of London and these are on the ball.
They did a detailed (nearly 20) pages on the Housing Bubble in 2003.
Since then, they continue to regularly update us on the unfolding disaster.
I read the Economist every week — cover to cover. It is hands down the best news weekly published on the entire planet. Time/Newsweek are like 3rd grade readers by comparison.
Have you seen all the TV ads by the major Realty Firms, C21, Remax, lately?
The Sunday SD Union Tribune Home section made no mention of the gloomy real estate stats coming out of official channels last week. This reminded me of the conundrum facing regional newspapers these days; failure to report on the same gloomy housing market news that the big boys are currently publicizing makes you look out of touch, but including these stories risks a kill-the-messenger effect, where your real estate advertisers accuse you of discouraging homebuyers by spreading false rumors about a real estate bubble. When in doubt, I guess the SD Union Tribune elects to ignore the national and international news, and keep our citizens focused on important local stories, like the new condotels at Hotel Del which start out at $2.7m.
It’s not just the SD Tribune. It’s also KOGO AM as well. Specifically that moron Chamberlin. I heard him this morning asserting that owning is better than renting because the owners pass their real estate taxes onto the renters..but he fails to mention the cost of renting versus owning monthly basis disparity due to outrageous prices. Sure, the owner is probably passing on those costs…if they bought before 2000 sometime. Otherwise, forget it. Rental properties haven’t penciled out here in SD for several years already.
Did you hear George this morning talk about his house? Sounded like a manufactured home in Vista. Also he said the real reason CNBC reports the bad news in housing is so everybody will in invest in the stock market. Btw his last name should be “Chamber-lame”.
I checked it out, and he actually made a tidy profit from the sale of a condo in Encinitas and bought a lower-priced house in Vista with the proceeds from condo sale. The Vista house is in a decent area. We actually have friends who own a house down the street from him. He still should have a fair amount of $$$ left over even after he made a 20% DP on the house.
Interesting thing is the two houses which sold after he bought his (which are identical to his — one next door) both sold for well under what he paid (one was about $65K less and the other $55K less than he paid for his — about 10-12% drop). This just might be the reason for his angst.
GS-
The insidious hits on real estate are coming from all directions.
First you read the real estate supplement in the Sunday Boston Globe with it’s touting of 1 bedroom Boston condo’s starting @ JUST t$600k…(snicker)
Then justa-positioned to the real estate is the pull-out section containing the “Letters to the Editors” commenting on a previous column about “Hub Snubbers”, or those who say to hell with city visiting w/ it’s rip-off parking outrageous costs, hauty/rude service, horrendous traffic, and indiscriminant crime.
City condo living anyone??????????
The entire game has become completely disfunctional.
From the PBS NewsHour report (which also has a nice video), the NAR shill laughably stated:
On CNN they had an “expert economist” who said:
“There could be a serious dowturn unless there isn’t.”
Even the 2 anchor ladies made fun of that statement.
“The Option One banner ad on top of this site is a killer!”
Yea, that’s like the Columbian drug cartel advertising at dea.gov.
I’m in Massachusetts, so the local paper of record is the Boston Globe. The Globe definitely continues to tip-toe around the housing bubble. For instance, here is the link to their online real estate section:
http://www.boston.com/realestate/
Aside from one obscure link to a story about identity fraud in real estate (”Housing dreams turning into nightmares”) the page is completely devoid of any stories about current market conditions and instead is chock full of fluffy garbage about local communities, moving tips and of course splattered with ads for local listings and brokers.
Any time a semi-serious bubble story pops up in the Globe, it’s in the business section — not the real estate section. I’ve wondered for a while if the Globe colludes with the Realty Clowns to keep the real estate section a fully dreamland of status-quo swill; presumably, FB’s aren’t reading the business section, which is enough to keep the Clowns happy.
What’s a FB? I’ve been trying to figure this out for some time now. I did a search in google. The only thing I thought might fit is: “Fart Burner”?
Really. It’s bugging me.
Hmmm that’s strange because your ID is I-M-NOT-A-FB and yet you don’t know what FB means. How about changing your name to this: imnotatroll. That’s even more obvious no?
In this post “imnotafb” Stands for I’m not a Fart Burner. In future posts it means - I’m not a F@cked Buyer or I’m not a Troll.
You been baptized, bro. Ben’s blog is a great exchange of humor, experience and insight, but it’s also a really tough room.
Foolish borrower works for me you can take it into the verbal world …of course after they foolishly borrowed they sure are Fu*k$d
FB is a f@cked borrower. See SoCalMtgGuy’s site http://www.housingbubblecasualty.com/
http://money.cnn.com/2006/08/25/news/funny/tall.reut/index.htm
You’re not a fart burner?
We’ll I figured I was neither - F@cked Buyer nor a Fart Burner. From the posts - FB didn’t sound good- I thought either - “First Time Buyer”, “Finacial Banker”, “Flipper Buyer”, etc.
I rent. I will be a First time Buyer when it makes more sense to buy versus rent - for me.
We’ll at least I can keep this handle - “imnotafb”
Sure you can. Welcome aboard.
CM-
The Globe does tip-toe around the bubble talk doesn’t it?
You see the friggin’ size of their real estate section this Sunday?
I’m in Ipswich, which is traditionally a thin market and there are scads of FOR SALE and RENT signs everywhere. Haven’t seen anything like it.
People are freaking with the thought of winter fuel bills.
Rumor on the street is that the FDIC was into Ipswich National to look at cooked books. One of their big projects is goin’ belly up.
Sign of the times-and more to come!!!!!!!!!
I’m a little south of you. Think the eastern end of Route 114.
Just read an article in the Globe (ironically) that the Farmer’s Almanac is predicting a record cold winter. Of course, the Farmer’s Almanac is as good as astrology, but hey, I’ll take any bad news I can get. F the FB’s, I say!
The for sale signs around here are like crab grass.
It’s not this month’s headline stories that will cause a panic. It is next month’s follow-up stories. The market tanked in mid-May as far as I have been able to determine, so all of the stories coming out now, in late August, (three months late) have been using June and July’s bad (”seasonally adjusted”) numbers, yet there is no panic. When third quarter actual numbers (July, Aug. and Sept.) become available, and the “seasonal adjusting” ceases or the NAR is forced to either reveal its methodology or make new, downward adjustments, then the truth will become obvious. Expect real disaster data from homebuilders, mortgage lenders, banks, mortgage and real estate brokers, and affiliated title and abstracting companies to become widely published in October. This will rip off the comforting veil of ignorance from otherwise complacent specuvestors, and the rush for the exits will become a stampede.
October is also generally a bad month for stocks and the markets in general, so this is particularly foul timing. I expect a mini-crash across several markets in October.
There is another variable at work as well, which will dramatically affect the October situation. This is, of course, the political situation in the middle east. Right now, oil prices are softening somewhat. There is still a premium because of concerns over Iran, and Iran is proceeding with its nuclear program. Israel just bought two nuclear-capable submarines, so it has first and second strike capacity, and considerable deterrent strength now, but the situation is still precarious. The administration’s actions, or even lack of actions, within the next sixty days will dramatically affect what happens in the markets in October. If the markets drop early, war may be chosen as a politically expedient method to avoid dealing with the domestic market problems and because it traditionally provides a boost to the economy. I think these are terrible reasons for war, and think that there will be no boost because the federal government has already been propping up the economy with wartime spending binges, but we’ll see. I find it highly likely that someone will think it’s a good idea to cover up the “pop” of the bousing bubble with the “BOOM” of war.
Very sad commentary Kia, but true. War is big business and the Military Industrial Complex that Ike warned about many years ago is now stronger than EVER…good insight, let us hope it is not correct.
MIC is transfer payments and will end when dems take over and focuss on FREE SHT for ALL !
Exactly. LOL.
The defense budget as a percent of GDP in the Ike years (which was when the term was coined) was anwhere from 10% to 15%
Today it’s what? 5%? At most?
Somebody who has the figures, feel free to enlighten.
“If the markets drop early, war may be chosen as a politically expedient method to avoid dealing with the domestic market problems and because it traditionally provides a boost to the economy.”
We are already at war in Iraq and Afghanistan. Can we really afford another one?
War may be good for the economy short term but longer term it is very bad. Simply, war results in the energy of a nation to be devoted to buiding non productive machinery ie tanks and planes. To make matters worse these machines are then used to destroy other simalar machines or worse productive equiptment or infrastructure in the opposing nation. WW11 was helpful because the US had huge excess capacity. There may be a decent argument that war does help due to the technologies develope to fight the war have civilian use.
I’m war’n out.
No. If there is there most certainly will be a draft. I am a 23-yo military brat and my father has already been over to Iraq for two 90-day tours and will return for a third probably next summer. The town I am from is entirely military and most everyone has been deployed with little break. The military are desparately short on ranks. I have two college friends that are young officers that will be deployed in the very near future. If a third war starts up (Iraq civil war, expanded Middle East conflict, Iran, North Korea), there is nothing the U.S. can do about it cause we do not have the manpower. This is why Iranian leader Ahmadinejad can say we have nukes, cause he knows the U.S. cannot attack with its lack of resources. Bush Sr, Clinton, and Bush Jr (via Rumsfeld in his BRAC) cut our forces and are now paying the price.
I’m counting down the days til I turn 25.
“What’s a FB? ”
F**ked Buyer. Even worse than a Fart Burner
“F**ked Buyer. Even worse than a Fart Burner”
LOL. And, presumably, a lot older.
When the local market was booming, it was always front page news in the SF Chronicle. And I mean huge front & center articles. Now the slowing market, rising foreclosures, etc. gets burried in the Business section.
At least it is buried. This week’s Sunday SD Union Tribune had the least commentary on the bursting bubble, on the week when the national and international news seem to have finally seen the Picture, and felt compelled to share it, including many examples (in the international media) very close to home for San Diegans. I guess their goal is to keep as many readers as possible in the dark for as long as possible?
What gets me is the few times that the RE downturn is reported people take exception to it. But when things were going good for RE they couldn’t hear enough good news.
The problem with the MSM is they work for advertisers, not the public. If a big advertisers calls up and complains, regardless of indistry, the company is more than likely going to side with the advertiser.
Where is their incentive to do the right thing? After all, these companies are driven by profit, not the public interest. To think most ever were driven by the public interest is laughable.
Yellow Journalism, 21st Century edition.
I was just learning about yellow journalism last semester. Funny how things make a complete circle!
I love how they talk about yellow journalism as if it was something that happened a long time ago. lol.
Yellow Journalism = Journalism. It never stopped.
If the MSM is now covering this, it suggests to me that the bottom may be closer than we think! Is this going to be a quick, sharp crash rather than a water-torture version?
I have wanted to alert friends and relatives to Ben’s great blog, but I realized that many of them are FBs, and I don’t want to appear to be gloating (which I am). It’s remarkable how many in our circle picked this year to try to sell.
No, it’s no where near the bottom yet. Although the MSM is beginning to catch on to this, by and large, they are still clinging to the “everything will be okay in end” message tacked onto whatever negative aspects they print/broadcast.
> Is this going to be a quick, sharp crash rather than a water-torture version?
It will be the “many false hopes” version. Lots of little dead cat bounces until the cat finally stays stuck to the pavement. The appreciation premium on price is gone.
As a SWAG, I’d say 2002 prices + inflation. That is a BIG drop.
I think it’s more like dropping a rhino from a 747. It will bounce when dropped from 10,000 feet but it will leave one hell of a splat pattern.
“The appreciation premium on price is gone.”
The appreciate premium may be gone (I think it is still only slowly disappearing, personally), but the DEpreciation _discount_ has yet to appear.
But I agree, it will be the long, slow, drawn-out crash… When the unwashed masses talk about how everyone knows real-estate is a bad investment, then we’ll know it’s close to done. Short of that, prepare for the long ride.
Jon
If these RE lending/mortgage/selling companies were people, they’d be called junkies -short-term, get my fix any way - damn the damage to myself and others — junkies. By playing into their wishes — by being watchdogs instead of enabling lapdogs — the press just prolonged the high and will make the crash more severe -for all parties concerned, including themselves.
Great, so countrywide, fannie, toll go under and we get a housing bust and a recession- and the MSM subsequently sees its ad revenues wither. A reward richly deserved for a job ill done. Maybe the press will take a clue from blogs and grow a pair (and a conscience, and a brain) next time - it’ll be the best thing for everyone, INCLUDING their own damn advertisers - not to play the role of enabler.
CNN just said that the tourist have to leave Florida . Isn’t it just a great time to buy in Florida . I wonder if the would be buyers are allowed to stay .
“I wonder if the would be buyers are allowed to stay.”
We have a special exception for would-be buyers. Yessirree, we do. Y’all come on down. Lakefront, ya say? Why, yes, ma’am we have some lakefront for ye. Naw, thanks anyway, let’s take my truck — it’s got four-wheel-drive — bit rainy this week.
The local Fox News in San Francisco carried a story
where they interviewed two people on the street.
They said they were both cutting on spending. Bringing
lunch instead of eating outside. One said it is time to
hunker down.
Reporter said how retailers were not doing very well
and asked the question “Does this mean we will have a
recession?”
At the end they interviewed this guy from the SF’s Pacific
Stock exchange who said “The Economy still has some strength”.
Looked like he knew it, but just did’nt want to concede.
Also on CNBC the other day. One of the guests said that we were
heading into a Goldilocks Economy. The anchor immediately interrupted and said, “But the data does’nt point to a Soft Landing”.
“One of the guests said that we were heading into a Goldilocks Economy.”
“Hello little Girl….”
“Who are you Mister ?”
“I’m the Foreclosure Wolf and boy am I hungry……!!!”
‘The anchor immediately interrupted and said, “But the data does’nt point to a Soft Landing”.’
Neither does David Lereah’s recent powerpoint presentation (on the NAR website). In addition to the dire picture painted by the data he presents, the picture of the polar bear on the title page, and the little bubbles in the slide background, provide insights to his view of the current situation.
The thing I found most amusing about Lereah’s PPT presentation was that in spite of the heinous data, he still had the gall to forecast a “soft-landing” (slide 28).
Jon
Jon,
As far as I can tell, the slides had two somewhat conflicting purposes:
1) To downplay the dire implications of some really ugly data;
2) To pressure the Fed into respiking the punchbowl, or if that fails, to blame them for causing a hard landing.
The fed can’t respike this particular punchbowl. If it lowers the rates, the dollar will crash, our massive foreign debt will be that much harder to service or pay off, and there is a very high probability that foreign investors will flee because they aren’t getting a very good return on their money.
This is why Volker says he’s glad he’s not Bernake. There are no good options left for the Fed.
Hapless Ben Bernanke reminds me of that funny commercial for a food product years ago — something like, “Give it to Mikey, he’ll eat anything.” Many of us, in our careers, saw a promotion opportunity that sat on a bridge under which there was a ton of dynamite and no hope of escape. That we are reading Ben’s blog quite likely is testament to our wisdom in letting such a sucker deal pass by. In a way, Ben will be the Jimmy Carter of the Fed (I’m Libertarian, so skip the partisan flame unless you hate Libertarians).
It seems that whenever the msm runs stories about booms and busts their timing usually signals that the bottom or top has been reached and things begin to go in the opposite direction. Sort of a reverse indicator. But I really feel that we are still in the second or third inning of a game that could go into extra innings due to all the related problems surrounding the housing boom. Demagraghics, employment, the balloning debt this country owes, the personal debt people have taken on, etc.etc. It seems like we have a way to go before this really all unravels. I don’t think the media is at the tail end of this story.
From the NY Times article linked above:
‘For a crash to happen, prices would have to decline significantly in some once-hot markets. So far, as sales have slowed and the number of houses on the market has soared, many owners have chosen to sit tight. If they were instead to decide that selling later would be even worse than selling now, this could change quickly.’
It is funny how the MSM often reports on “what if” scenarios which are already history. Significant price declines have already occurred on a national level, and the homebuilders are leading the way with price reductions, huge incentives, and continued addition of new supply to burgeoning unsold inventories. The price data from Dept of Commerce which Ben posted a couple of days ago shows a 17% drop in nominal new home sales prices (36% annualized rate of decline) from 4/06 through 7/06, and the rate of decline would be greater if the effects of inflation and massive incentives were taken into account.
‘If prices do decline, some of the first victims would be families in a financial bind that are unable to rescue themselves by refinancing their mortgage. Foreclosures would then rise, damaging banks and increasing the number of homes for sale.’
Here is another example of contemporaneous reporting, recast as forecasting for those who are not paying attention. Aren’t foreclosures already rising rapidly in many markets formerly known as “frothy?”
“. . . many owners have chosen to sit tight. If they were instead to decide. . .” Debtors don’t get to decide; creditors do.
GS — great points. The MSM is stuck in a great quandry with which it has relatively little experience: it knows that the Internet and blog world will eat it alive if it does not report enough facts (read: accurate information — sad that this has to be emphasized) quickly enough. I (an old fart) do not use a cell phone because I consider one to be a leash, but every young person does and they know how to send messaages and articles to everyone but me in an instant. And young persons who can do this are part of the buyer pool. And they’ll be a bigger part of it next year, and so on. Soooo, if the big boys want their advertisements read, they’d darned well better pay attention to publishing, *right now*, the facts that will bite those young buyers in the ass if same buyers don’t get the facts quickly enough to make (in this case) a correct buy/rent decision.
I love it. I have not seen, relatively, this much “freedom” since I was able, via my father, to order whole boxes of cherry bombs from a place in Ringgold, Georgia, in the 1950s. As Charley Reese, my favorite columnist, would say, if I blew my hand off, it was my own damned fault.
I opened my Sunday paper this morning, and was shocked to see ZERO coverage of the July sales stats released this week. ZERO coverage of the first cracks in housing prices. You call this thing a “news”paper? I suspect their coverage is heavily influenced by the amount of advertising developers/realtors do in the RE section.
It was the Seattle Times, BTW. Yeesh. Good thing I get my real news online.
Jon
The sheeple don’t read the newspapers. They blog and watch MTV. The reporters are told by their editors,’Don’t be negative, keep pumping’. ‘ok boss’
Considering the hatred and contempt aimed at many of us by friends, family and co-workers upon our former predictions and current parroting of housing news, I am not sure I blame the big newspaper for not reporting this bad news.
Wars and natural disasters sheeple can read about safely from their living rooms. Housing devaluing affects them directly - not many people want to admit that 10% of their wealth has disappeared over the last year. Personally if I was a FB I would ignore any media that indicated how F’d I was. Plus, if my income came from promoting one sector, well I would find another job since currently I can work without any type of undue influences, but most people would sell what needs to be sold.
I will buy, and advise buying to those that will still talk to me after everything I’ve been saying for two years come true, when Time Magazine has a cover and most of an issue talking about the bust of real estate and why it is the worst investment ever for the average American.
wapo same deal- chineese firewall my butt
they’ll lick boots for ad dollars
‘Their prediction looks better than it did a few weeks ago, but even they aren’t sure whether this is the beginning of the end or another false turning point. “The funny thing about bubbles,” Mr. Shiller said, “is that you never know when they’re over.”’
I guess we will have to wait for word from the Fed that there was a bubble, as they maintain that it is not possible to recognize a bubble until after the fact.
(When third quarter actual numbers (July, Aug. and Sept.) become available, and the “seasonal adjusting” ceases or the NAR is forced to either reveal its methodology or make new, downward adjustments, then the truth will become obvious.)
Mid-to-late October. The temptation to fudge the numbers will be enormous. If they come out as expected, let’s give the NAR eco team some credit. If not, well, I’d be suspicious.
That’s when we’ll have wall to wall coverage not of “is there a bubble” or “is it bursting” but “what does this mean to you?” In other words, it gets out of the newspapers and onto Oprah and Montel.
As God as my witness I will no longer turn to the dated, biased and stale MSM to get my news.
Maybe he’s A god, but some people may be offended by calling Ben GOD.
(not me, though)
‘Already, the housing slowdown has begun damaging the job market. Builders, mortgage lenders and real estate agencies have stopped adding to payrolls. Defined broadly, the real estate sector has accounted for 44 percent of jobs created since 2000 and employs more than one in 10 American workers, according to Moody’s Economy.com.’
Please carefully note that first sentence. Because we have heard again and again from RE bulls that no real estate downturn could possibly occur so long as the labor market remained strong. I guess this time is different?
Agree. I can’t understand why more people(including these economists on Wall Street) don’t quite get that. I suspect their attitudes will change soon as the numbers roll in. Here in AZ where I live, RE accounts for a huge percentage of employment, but most are oblivious, or in denial…
> “I can’t understand why more people(including these
> economists on Wall Street”
People on Wall Street understand perfectly the situation. One think that I learned from dot.com bust is not to listen to Wall Stree “experts”. They all have agendas.
Really, where is your news feed coming from. 95% of the economists on Wall Street don’t mention the implications of housing related job losses. This is most evident by the fact the same percentage don’;t expect a recession in the next few months. Maybe by tuning into this community you don’t feel outside the mainstream but I assure you that most people (including Wall Street) still don’t fully grasp the implications for a housing bear market this time around.
I just reread the comment, but if you mean they are being purposefully deceptive, that is possible. One cannot know these things. But I derive my conclusions from my immediate circle of friends and family who still don’t get, so I believe those who think things will be bad are still in the minority. Sure some people think home prices will fall but miss the bigger picture which is employment. The United States does not have a viable economy. It is a consumption based economy, fueled by excessive debt, and seriously lacking in production and savings.
There is difference what they tell us (and admit) and what they really believe. Maybe that is called … something like some river in Egypt..
“most people (including Wall Street) still don’t fully grasp the implications for a housing bear market this time around.”
quite true. in fact, i am flabbergasted (and extremely impressed) at how ANYONE who has not lived through a housing bubble and bust as i have can so thoroughly appreciate (depreciate??) the magnitude of the tsunami that’s still barely shown up on the horizon. bravo to all of ben’s bubbluminati!
“I can’t understand why more people(including these economists on Wall Street) don’t quite get that.”
It really doesn’t comport with the their models. All previous recessions have caused housing downturns. Now, though, the situation has been turned on its head. This will be the first recession caused BY a housing downturn.
Here are some reassuring comments about the eventual outcome of a bursting bubble. The quotes of Mayer and Gillespie are from the NY Times article Ben linked:
‘Christopher J. Mayer, director of the Paul Milstein Center for Real Estate at Columbia University, argues that the recent drop in sales does not suggest that a larger bust is coming. “So far we have only seen people asking pie-in-the-sky asking prices and not getting them,” said Mr. Mayer, who expects housing to continue slowing but not enough to create a recession.
He believes that the boom in house prices was largely a result of the appeal of “superstar cities” like New York and San Francisco that are unlikely to lose their allure. In the much of the rest of the country, prices are not unusually high, considering the relatively low interest rates.
Moreover, few borrowers are falling behind on their mortgage payments, and the economy looks fairly healthy outside of housing. So if prices start falling, new buyers may jump into the market and prevent any extended slump. “The fundamentals of real estate are solid, still,” said James Gillespie, chief executive of Coldwell Banker, the real estate company.’
Which brings to mind some economic reassurances from US presidents past and current:
‘I’m going to put two quotes on the screen and ask you if this was an honest mistake on the part of the White House, or if the speechwriters had no sense of history. The first quote is, “The economy is fundamentally sound.” Herbert Hoover [uttered that memorable sentence in] 1929. And here is George W. Bush today, “The fundamentals of our economy are sound.” Is this an honest mistake by White House speechwriters, who must know the difference or similarities in this case?
Brian Williams interviews historian Robert Dallek
CNBC’s The News with Brian Williams (30 July 2002)’
http://www.leithner.com.au/newsletter/issue39.htm
It is interesting what Jim Cramer was telling in late March about homebuilders:
http://tinyurl.com/l8kvr
Cramer was more optimistic on homebuilders, with Lennar (LEN:NYSE - commentary - research - Cramer’s Take) set to report earnings on Tuesday. “When you’re near the end of a rate hike cycle, the playbook says to buy them, not sell them,” Cramer said.
Hmm…. And we should listen to these Wall Street “experts” (not that Jim Cramer is expert, but he does claim to be one).
I can’t watch that guy for more than a minute or two. Occasionally I will stop on his show when I’m flippin’, can’t tell you why. The strange thing is that I always seem to catch him when he makes an emphatic call about this or that stock. For kicks I follow it and most times it’s horrible info. Especially the homebuilder picks, which sealed my negative opinion of him.
I shorted LEND (accredited home lenders) at $51 and $55 after he pumped it in March. I covered 1/2 last week at $34. It closed at $31 on Friday. I plan to cover the rest under $15.
Thanks Cramer!
Kudos!! I have just watched his picks for entertainment, the thought never occured to fade his advice. I’m actually quite familiar with that stock, had friends who got the IPO at 7-8 bucks about 3 years ago. I would check to see if they are having trouble laying off their risk by selling in the secondary market. If they are, then hold. The falloff in origination volume was a given but now may be priced in, hard to tell.
“(not that Jim Cramer is expert, but he does claim to be one).”
No, but he DID stay at a Holiday Inn Express last night.
Ultimately CNBC has to be run off the air.
Why? Because the channel doesn’t work unless there is a bull market, as people don’t want to watch bad economic news. Therefore, CNBC has to create good news, whether it exists or not.
Looked at cnnfn.com today. There was a headline about house price myths so I prepared myself for some realtor happy talk and clicked. Surprise! The story was about the housing bulls beliefs that prices never fall!