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Negative Media: Is It The Scourge of Real Estate?

The National Association of Home Builders has beganin 2006 to offer a new PR kit for members to help pump up sales. The need for such an effort was obvious. As NAHB explains, the kit “provides a starting point for public relations campaigns to galvanize prospective home buyers who have been discouraged by negative reports in the media to go out and see for themselves the range of opportunities that have opened up in today’s slower marketplace.”

Yes folks, the reason more buyers are not snapping up homes is because of those negative, gloomy news reports. Real wages don’t count, affordability is not important and reduced speculation is not a factor. It’s the damned media.

Right.

It seems to me that the past few years have been pretty good for real estate. Existing home prices rose from $139,000 in 2000 to $212,400 in July 2008, according to the National Association of Realtors. If it’s true that negative news reports are causing the downturn, is it not equally true that “positive” news reports must have been the sole and only cause of the booming real estate market seen during the past five years? If yes, shouldn’t reporters and columnists get free houses or something for their good work? Where are the keys to my new home from a grateful constituency?

Let’s say home sales slowed and that reporters and columnists did their part and hid such trends from the public. Does anyone believe the public would not notice that homes in many areas are on the market longer or that prices are stagnating? Can it be the public follows in sheep-like fashion whatever it is that appears in the media? Judging from my email, there are lots of smart readers ready to discuss and debate just about any topic, often with great insight, wit and knowledge.

There are any number of reasons why the real estate market has slowed, none of them having to do with the musing of a few real estate writers.

“A faster-than-anticipated decline in housing following its unsustainable boom during the past three years has become a major drag on U.S. economic growth,” said David Seiders, NAHB’s chief economist, “and it is likely to subtract about a full percentage point from the Gross Domestic Product during the second half of this year and half that amount during the opening quarter of 2007.”

Imagine that! The boom has been unsustainable according to NAHB’s own chief economist. Now this is a piece of news that should be kept from the public.

Here’s another one: “Recent declines in mortgage interest rates and energy prices have buoyed consumer attitudes and home buyer demand,” Seiders said. “Surveys of consumer sentiment show that increasing numbers of households view this as a good time to buy homes.”

Is the evil media to blame for the growing number of households who believe this is a good time to buy homes? How did such buy-now attitudes evolve in the face of ongoing negative press reports?


Could it be that the public simply wants a better deal from new home builders? What would happen if home prices were cut? Here’s what:

“More than three out of four builders are offering substantial sales incentives to move their product and limit cancellations, and this aggressive strategy is working — making this an opportune time for home buyers to enter the market,” said NAHB President David Pressly, a home builder from Statesville, N.C. “The market correction appears to be approaching the bottom in terms of sales volume, and we expect the supply-demand balance to improve considerably before long.”

Is it fair to report that when builders lower prices — whoops — when builders offer “substantial sales incentives” — that buyer interest goes up? Doesn’t this seem like a fairly-obvious example of cause and effect, supply and demand?

Alternatively, some could believe there IS a cabal of evil real estate reporters and columnists. If so, it might work like this:

A bunch of journalists meet at my place about once every two weeks to set mortgage rates and then decide whether home sales nationwide should rise or fall. We cause such marketplace changes by deciding to produce positive or negative media coverage.

We can also levitate. We each have Swiss bank accounts and we’re all members of an ancient cult. We know who will win football championships and horse races months in advance and bet accordingly — that’s how we finance operations, get money for political contributions and control the government.

Perhaps I’ve said too much … . No doubt every paranoid blogger will soon be quoting the two paragraphs above as if they were something other than a joke.

Instead of mooing about “negative reports in the media” homebuilders ought to read their own news releases and data. Too many new homes are priced beyond what people are now willing to pay. The result is that unit volume will fall unless prices are reduced, regardless of what scribes and scriveners might write.

If you don’t believe it, come to the next meeting. Party with the press. Learn how to levitate ….

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Published originally by Realty Times on November 7, 2006 and posted with permission.

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