Friday, April 22, 2011
Mainstream Media Puts Good Spin on Bad Real Estate Market
More and more, I am finding stories produced by the mainstream media where the headline doesn’t jibe with the actual story that follows. A USA Today (newspaper) story from the “Money” section yesterday is a great example of what I am talking about. The headline read “Rising home sales point to a recovery.” On the very next line, just under the headline, the sub-headline read “Prices expected to keep falling 5% to 7% this year.” So we have a recovery but prices are falling? What kind of a recovery is that? The story goes on to say, “Sales of existing homes rose slightly in March but prices fell as the U.S. housing market continues to struggle.” (Click here to read the complete USA Today story.) What are the writer and editor at USA Today thinking or even trying to say? This sounds like a story about a struggling real estate market and, in fact, all the evidence says the market is struggling. It is certainly not recovering.
For evidence of a struggling real estate market, I look no further than the USA Today story. It said, “Yet median prices in March dropped 5.9% from March 2010 to $159,600. Distressed homes accounted for 40% of sales, up from 35% a year ago, the NAR says. Distressed homes, such as those in foreclosure, typically sell at a 20% discount and pull down market prices.” Let me get this straight, “median prices in March dropped 5.9% from March 2010,” and the USA Today story is projecting prices will fall another “5% to 7% this year.” How is this a recovery in real estate? On top of that, the “Rising home sales” are comprised of “40% distressed homes.” That’s up “35%” from last year. That means 4 out of every 10 home sales are a foreclosure, and that seems to account for much of the increase in sales. This is a recovery?