Ah, I sure love reading "if the media would just shut up, housing prices wouldn't fall" articles and opinions.
As if it were the media's job to look the other way so that we could have our precious homes continue to over-inflate.
As if it were good for the country to have this ponzi scheme continue. And good that first time home owners are priced out of the market. And good that only 3% of homes in LA are purchaseable by people at the median income.
Feel free to send this reporter a note. Let him know a good blog or two to check out. And also a few studies to read, and also maybe some suggest books on economics, bubbles, markets and manias.
Then ask him what his ties to real estate are and if he should have disclosed those in his article.
Here are some of this sage's enlightened remarks:
With that said, I continue to boil at all the negative talk that seems to be bent on driving down home prices. Every real estate report ---- and even other economic reports ---- are constantly being skewed to suggest the worst possible scenario.
And of course, we are led to believe that most families are a paycheck away from bankruptcy. Those big mortgages and home equity loans are going to break the family bank.
Speaking of the bubble, I'm tired of people trying to compare real estate today to the tech stock debacle of 2000. Bubbles occur when there is a mania. Investors back then were clamoring to buy any tech stocks at any price. Ask a real estate agent today and they will tell you clients want to wait until prices drop 20 percent before they buy a new house.
December 11, 2005
Another one for the "media is causing the housing bubble" camp - feel free to send this gentleman a note
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16 comments:
It was respected economists from major universities, Fortune Magazine's Cover Article, and Greenspan's "Froth" discussion that ginned up the Media to look into the Housing Bubble. And YES there has been housing bubbles before. The classic of course is Florida in the Twenties. Back then the term for flipping the property before construction is finished was called "passing the baby".
But now the Real Estate Industry starts the blame game. The best one I heard was where the Real Estate Industry felt it was a conspiracy by major stock brokerage companies to shift investor money back into the market. Then they blame the media! Frankly I think it was the Gold Sellers who wanted the money shifted to GOLD... HA what a joke. No one blames the real estate agents for churning the market. Why don't they blame Greenspan for raising the interest rates! And so it goes.
Regardless of what they say, the bubble is REAL!
It was the ECONOMIST MAGAZINE.... and it's cover article.
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There was a mania, George ... people paid whatever price to get whatever house. Remember the bidding wars? If this guy doesn't remember the house buying frenzy, how can he assess his own bubble signs?
George Chamberlin claims that by virtue of the articles they print, the San Diego Union Tribune is actively engaged in a war against real estate.
I want to know where was his outrage when the same newspaper kept publishing article after article glowing about 24% YOY appreciation.
George believes that somehow, if we ignore the fundamentals, things will continue to climb and his daughter Sarah will not find herself in a negative equity situation.
Great idea. Let's stop talking about the housing bubble at all such that it will simply cease to exist.
The media over-hyped the upside and is being very conservative on the downside. I believe things are much worse than the mainstream media makes them out to be.
Yesterday the bird of night did sit,
Even at noon-day, upon the market-place,
Hooting and shrieking.
Julius Caesar, Shakespeare.
Who are those birds of night Hooting and shrieking?
nicely said
Go to Happynews.com and have a drink.
Here in Baton Rouge it seems the local media has been more responsible vs the national media. Since it's a college town there is a definite difference between what the academics say and what anyone associated with real estate says. Local media has been acceptably objective in reporting facts as well as opinion.
Interesting to note that even in Baton Rouge, where according to our media we were losing around 2500 folks a year pre Katrina, housing was being built and bought up at about twice that rate. The big question was, "who was buying it?" Right about when we were going to find out, all hell broke loose.
Now there are no rentals to be found anywhere in the city, and there was a buying frenzy up until recently. The factors to watch now are when the FEMA rent money runs out, and how many displaced folks got home loans after they lost everything, including their jobs. With all the disaster related "no payments until 2006" deals going from the lenders, I'm thinking a lot of these folks have no intention of making a single mortgage payment, and will walk away when forced to make a decision to stay or go. With the pace of New Orleans recovery, it looks like they will not just go, but go far away leaving behind another potential disaster area.
Remember, the same people who ran the disaster are now running the recovery.
As a point of responsible reporting and considering it's not enough to just buy a house, you have to maintain it and heat it, here's somehting to note as well. Keep your eye on any reporting about a place called Henry-Hub. It's a little speck of a town on the coast of Louisiana just south of a speck of a town named Abbeville. Henry-Hub is a major intersection of gas pipeline that acts at the natural gas price point for the whole nation. I believe about 50% of the nation's gas distribution runs through this place. Last I heard the tidal surge drowned Henry-Hub for a bit and put a hiccup in production while they made repairs. I'm not sure how this will affect places like the Northeast and Midwest, or when but here's hoping for a moderate winter. I'm still boggled by the disinterest of Washington in the nation's investment in South Louisiana.
So George, when this country goes into the worst financial crisis it has ever known all because of this housing bubble, who are you going to blame then? All of this has been caused by simple human greed and by real estate professionals like you, telling everyone, THROUGH THE MEDIA that you just need to get into a house and it will take you on the financial ride of a life time. Real estate is a cant loose investment, yeah right!! I hope that you are still around to help all of these SUCKERS that fell for your "advice". So many people have ruined their financial lives and dont believe it yet. Boy will they get a surprise!!
The housing bubble won't be over yet, at least not in Illinois *grin*, thanks to our favorite governor!
http://www.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=1&RecNum=3842
Media, especially newspapers, have a big stake in this game. Real estate advertising is huge for them. Advertising in real estate sections of the paper will run you twice as much as any where else. That being the case, do you think your going to get nonbiased reporting? I know of a local newspaper that was "black-listed" by a real estate brokerage for negative comments about real estate. The media stands to lose money if they start telling the truth about this. The recent river of money fom real estate has been running through their doors too.
think about it too - newspapers cash cows are classified advertising, real estate advertising, and auto advertising
* classifieds going away as craigslist takes over
* real estate going away as new sales plummet
* auto ads going away as Ford and GM dealers close and cut back
Then add that nobody is reading the papers anymore as people go online..
Not good times for newspapers
nice job readers. here are comments below his article now:
Comments On This Story
Dave wrote on December 13, 2005 1:09 PM:"Scott said - "Of course, by renting you build no equity, which is another way of saying you're only paying for someone else's PIT" How many people on IO loans will be building equity when prices stop rising? I would rather pay a landlord $1200-$1500/month for a nice two bedroom pad close to the beach as opposed to paying the bank $3000-$4000/month for an East County dump.. I'll build my equity by investing the 2K/month I save by renting. Moron "
laughOrCry? wrote on December 13, 2005 1:04 PM:"I guess the fact that real estate prices have lost almost all connection to incomes and rents couldn't have any bearing on this George? "
betamax wrote on December 13, 2005 12:22 PM:"George begins by admitting his ignorance and establishing his impartiality, then immediately contradicts himself by declaring his anger and pretending to know something after all. The reason people believe in a RE bubble is because there exist compelling reasons (http://tinyurl.com/b5lzm) to do so, and RE fluffers like George are unable to offer persuasive evidence or arguments to the contrary."
Irrational Exuberance wrote on December 13, 2005 11:49 AM:"Actually, the tech stock bubble is a terrific analogy for the current housing bubble. That's the primary reason Robert Shiller released the second edition of his book _Irrational Exuberance_ this year, documenting the real estate bubble, and predicting it's ultimate deflation. The tech bubble popped just one month after Shiller released his book in April 2000. See Wikipedia for the housing/tech bubble details: http://en.wikipedia.org/wiki/US_housing_bubble "
adam wrote on December 13, 2005 11:11 AM:"Allright, Mr. Chamberlain, I have a bone to pick eith you. I've been watching you be a cheerleader for real estate industry on the news for the last couple of years. You always have seemed to take glee in disparing us "bubbleheads". All I want is the same thing that you already have. A nice house in a nice neighborhood that has decent scools. I don't want a 2br shack in the ghetto, because that is all I can afford at today's prices. Enough of bashing us. "
Duh! wrote on December 13, 2005 11:00 AM:"This is in response to Scott's reply. Apparently the only simpletons I have read from lately are you and the author. The majority of the recent "bubble" yes, I said it, is not from people buying homes as a place to live, it is the short term speculators that have created a false demand and the availability of cheap money and creative financing that has caused this mess. Nobody here has even tried to dispute that in the long run (10 - 30 years) prices will go up. If your buying a home for a place to live and using a conventional 30 year loan, you will be fine. You may not have any equity in your home for a few years and will be overpaying, but in the end you will be fine because ultimately at some time in the future it will be worth more than it is now. WAY IN THE FUTURE!!!! A bubble is a bubble my friend. "
Troubled times wrote on December 13, 2005 10:58 AM:"George - The wealth gains you quote are a big illusion. They have been created by the FED's stimulatory policies of the 21st century. Its funny you quote the 2000 stock bublle. The FED created that one with loose monetary policy, and in response to it popping, they decided to create this one. This one makes the 2000 bust seem like small potatoes, since then we didn;t have the twin deficits. I wonder what they will do when this one pops? "
GetStucco wrote on December 13, 2005 10:48 AM:"I applaud all the posters who cited the uncanny resemblance of George's "article" to real estate ad copy. I invite anyone who has not checked it out to look at Ben Jones' Housing Bubble Blog for some lively discussions which are backed up by citations from large market newspapers (NY Times, Wall Street Journal, Washington Post, etc.) and actual, not fictitious, data. www.thehousingbubble2.blogspot.com"
Confused? wrote on December 13, 2005 10:38 AM:"If you don't care which way the market goes then why take all the time to research and write this article? If your in your home to live in it and not get rich off it then why worry about a correction? A correction would mean more of your family and friends could afford a home. You don't want that to happen?"
Jay wrote on December 13, 2005 9:31 AM:"Earth to George, the tech stock bubble is actually a great analogy. THAT bubble was the previous record holder for creation of "wealth". Thats what asset bubbles do. You have to realize that if the holders of that asset class actually tried to convert that "value" into currency, suddenly, the values would no longer exist. Also, holding stocks, is no more or less a necessity than owning a second home or buying a McMansion when you could have been as happy in a flat. What a homowner should be expecting is for his house to keep up with inflation, that isn't really a gain, although you'll be taxed as if it was. The correction is coming, the only question is when. The longer this bubble goes, the worse the correction will be. I think many of the people talking up the bubble are hopping to prick it before it gets so big it destabilizes the larger economy (probably too late). One thing about housing statistics, they're mostly collected by the real estate industy, so keep that in mind. Case in point, average time to sell: If I have a 30 day contract with the listing agent to sell, and I relist it 3 times for a lower price each time, the reported average listing time is less than 30 days, not the 60-90 days it should be."
Adam wrote on December 12, 2005 8:36 PM:"I'm really not quite sure what this Chamberlin guy is smoking... all he has to do is go and walk around the sales offices in Bressie Ranch and La Costa Greens to see the faces of desparation for a buyer, any buyer. Total inventory of homes on the MLS now exceeds 15,000, up from a low of 3-4,000. And have you seen the sales figures for San Diego? Not only are we down month to month, we are also down year to year. It is a good thing that UCLA study didn't include SD, because the picture would have been far worse!!! I think NCTimes is getting a little too much advertising dollars from realtors and builders, looks like the whole paper is on its way to a future as a complete and total real estate advertising paper that's not worth the paper it is printed on. "
Cheerleader wrote on December 12, 2005 8:08 PM:"Wow George, I have enjoyed your anecdote immensely. Thank you for speaking out against the bad Real Estate reporters trying to drive down the prices in San Diego. Yes I agree with you and Tech Bubble money was not green and it was worth a lot less then the money you have invested in your house. No the laws of Economics and supply and demand do not apply in San Diego and your house will be worth as much as you want in your head. This is exactly the kind of dribble the Internet was invented to publish and I applaud you on being published."
Andrew wrote on December 12, 2005 7:19 PM:"Do more research before you write an article like this next time."
Bill wrote on December 12, 2005 2:39 PM:"It appears you are confusing your perspective on home ownership (a place to live) with the fact that up until recently something like 30% of homes in San Diego county are being bought by investors and speculators. When they see a better place for their money - they will be out of the market and the market will correct. My guess is that a 25% correction would be expected and it could exceed 30%."
where's the objectivity? wrote on December 12, 2005 2:30 PM:"Mr. Chamberlin, did your buddy Kevin Forrester at the North County Association of Realtors put you up to this? What kind of journalistic standard is this? Finally there is truth in reporting in regard to the steepest and fastest real estate run-up in history, and what are you doing? repeating the same propaganda your friend Mr. Forrester tries to espouse. What is wrong with waiting for that 20% drop in real estate prices? Mr. Chamberlin, plenty of buyers in Carlsbad are kicking themselves because had they waited 6 months, they could have gotten their new homes for a 15% discount!! And quite frankly, there may be another 15% discount if they are willing to wait another 6 months. Are you telling your children who just graduated college or just got married to get that ARM I/O loan to get into an overpriced $600,000 home just so they can build equity at the top of the market? I think not! "
Scott wrote on December 12, 2005 11:54 AM:"Mr. Chamberlin is right on the mark in this article. There is absolutely no analogy between the tech bubble and the real estate market. Simply because there is no built in necessity in owning tech stock. There is a built in necessity in having a place to live however, whether you own or rent. Of course, by renting you build no equity, which is another way of saying you're only paying for someone else's PIT. The real estate market is fine. Prices go up, prices go down. It's the nature of the market. The only bubble is in the minds of simpletons who know nothing about real estate."
duh wrote on December 12, 2005 11:53 AM:"Wow what a horrible article and starts off with such a stupid point. The more articles about housing bubbles will drive house prices down, how lame is that. Crunch the numbers do some reading before writing something as clear unresearched as this!"
Charlie wrote on December 12, 2005 11:27 AM:"The boom is pricing out a generation. Tell someone that is 24 years old that they “should have invested sooner.” And what is the prudent advice now? A reasonable buyer is bringing a knife to a gunfight. How can that person compete for a home against a field of investors and caution-to-the-wind buyers ARM’ed with the latest weapon from the mortgage industry? I understand that homeowners range from amused to egotistical about the values their homes have gained, but perhaps they could sympathize with the plight of their own children."
Are you Kidding? wrote on December 12, 2005 8:37 AM:"First of all, negative newspaper articles about real estate dont cause markets to correct, FUNDAMENTALS DO!!! Whether you believe it or not, the tech bubble is a great comparison to this real estate market. There actually were some professionals that warned people at the peak that things were out of whack and due for a correction. Imagine if more people actually listened back then. I would imagine that you were probably somebody that took a beating on their stock portfolio during that correction. Your inability to see the writing on the wall is straight up silly!!!"
SellingNow wrote on December 12, 2005 1:42 AM:"George, you wrote a great article! However, I'd like to dispute your perspective. First, household assets are up due to overvalued real estate. Second, foreclosures are not a reality, yet. By 2006 or 2007 at the latest, when the ARMs reset, they will be a reality. The slowdown in home sales is not 33 days in November or December. The AMT (average time on market) is 60 days, and you should expect it to take 3 months to sell your house according to realtors I've talked to (and I'm currently listed with a realtor). The # of sales - I don't have local figures. Maybe you're right that the # of sales went up slightly, but that would be because new builders have dropped their prices tremendously just to get a buyer (one condo owner giving away VWs!), and because some buyers wanted to get in before the interest rates rose. There are lots of optimists out there who took advantage of those factors. UCLA Anderson Forecast. Good digging. I did not realize they excluded SD. However, on what basis is SD any different from the other Southern CA cities? We've tracked along with their booms and busts since 1976, so why not this time? We have the same economy, built on the real estate bubble. In closing, I like how you digged deeper, but nothing you have found contradicts my finding of a 40% - 50% collapse in the next 3 - 5 years. I am selling my custom house, which I just finished building, on that premise. You might say I'm betting my bank on it."
David wrote on December 11, 2005 11:14 PM:"I agree with you on many things but I think you are WAY out of touch with reality on this one. Suppressing news about the impending Real Estate correction does not do anything to help those trying to get out at the top. As with any pyramid scheme, there just aren't enough people willing to pay the exorbitantly high prices. Home prices will come down and yes, the market will over-correct on the way down. Short sales will become commomplace once again. "
BagHolder wrote on December 11, 2005 10:32 PM:"Here's some facts: 1) Interest rates going up. 2) After 100%+ appreciation, most upside is gone for many years. 3) High prices also mean high property taxes. 4) No increase in incomes and low affordability. 5) Inventories suddenly way up (supply & demand). Do the math. The market has finally started to run out of dumb people and speculators (i.e. the non resident squatters/scalpers) who are going to need to lighten up. Others will try and ride it out, with clenched fists. Prices are highly likely to top out and then decline as over-leveraged owners come to realize the propery is not going to provide quick flip income. Hence find a "bag holder" (like me) who got caught up in the "can't lose" hype. As for me, I just hope I can trade back into something I can really afford without getting screwed on real estate commissions. I'm tired of being "house poor" on hopes I could just get rich by upgrading the counter tops in my kitchen! Doh! "
TheGuru wrote on December 11, 2005 7:53 PM:"What a goober this guy is. Residential real estate is so overpriced right now it is almost surrel. "
Walter wrote on December 11, 2005 6:01 PM:"Where was your outrage when TV and newspapers were publishing huge RE gains? You have to realize that a great portion of the population has bitten more than they can chew. RE prices have gotten out of whack with reality and a healthy correction is under way. Why should I pay today's overly inflated prices? Just because the home will end up in the green 10-15 years from now does not mean I should overpay for it now. "
brian wrote on December 11, 2005 5:09 PM:"The "property always appreciates" meme has had a long free ride in the press. The press has been coddling this industry. This is no surprise, look at the advertising column-inches devoted to real-estate and you'll understand that community newspapers rely on it. Unfortunately we can't hide from fundamentals forever. A mania is "An exaggerated desire or enthusiasm" for something. If everyone who bought property did so to live in it, or to rent it out for a profit, we would have a healthy unexaggerated desire for property. When prices rise as rapidly as they have over the past couple of years it's human nature for some people to speculate on property and assume that it _must_ rise in price. Others are buying property out of fear and panic that prices _will_ rise. Your industry has fed into and thrived on these fearful buyers and the speculators and this has led to an exaggerated desire for property. In other words, a mania. I don't expect that you'll believe me. I just hope you leave your article online for a couple of years as a warning to those who fail to recognize whatever bubble follows the property bust."
brian wrote on December 11, 2005 5:05 PM:"The "property always appreciates" meme has had a long free ride in the press. If anything mainstream press has been coddling this industry. This is no surprise, look at the advertising column inches devoted to real-estate and you'll understand that community newspapers rely on it. Unfortunately you can't hide from fundamentals forever. A mania is "An exaggerated desire or enthusiasm" for something. If everyone who bought property did so to live in or to rent out for a profit, we would have a healthy unexaggerated desire for property. When prices rise as rapidly as they have over the past couple of years it's human nature for some people to speculate on property and assume that it _must_ rise in price. Others are buying property out of fear and panic that prices _will_ rise. Your industry has fed into and thrived on these fearful buyers and the speculators and this has led to an exaggerated desire for property. In other words, a mania. I don't expect that you'll believe me. I just hope you leave your article online for a couple of years as a warning to those who fail to recognize whatever bubble follows the property bust."
Eva wrote on December 11, 2005 3:17 PM:"I appreciate your comments. Media, as we know, is not required to report "just the facts". It's bottom line is enterprise, just like anything else we pay for. And fear sells. Bubbles have been a pet topic for many years, yet people still buy and sell real estate. The current slow-down in the market points to a seasonally predictable trend. Facts don't support a popping bubble. Read between the lines."
Tim wrote on December 11, 2005 1:12 PM:"In 1991 my house in the high desert of LA lost 50% of its equity and I had to sell. This was 3 years after I sold another house at the tippy top. It takes time to flush all the cash out of the optomist. Oh, after I sold, things got worse! "
Chris wrote on December 11, 2005 12:23 PM:"George, would you like to join the rest of us in reality? The housing market is a mirror image of the tech stock bubble. You claim that "investors then were clamoring to buy any tech stocks at any price". What do you think people engaging in bidding wars, sleeping on the ground overnight to buy property and purchasing multiple houses on speculation are doing? They are clamoring to buy any real estate at any price."
Nate wrote on December 11, 2005 10:55 AM:"If people want prices to drop 20 % till they buy does that not point to a correction or over priced market. What about the housing affordability index?"
Former Home Owner wrote on December 11, 2005 9:14 AM:"George, keep your head in the sand my good man. And I'd suggest reading some books on finance, markets, manias, bubbles and housing. And also http://housingpanic.blogspot.com And for the record, the media isn't causing the bubble - they're doing their job, which is to report the facts. Also, please disclose your real estate holdings for the record. Obviously you have a vested interest in this bubble not popping. "
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