(This is Part 1 of a two-part series.)
I am sick and tired of the negative media constantly ranting about how horrible everything is in our business. It’s time for our industry to fight back against these psychic vampires who seek to suck every bit of hope and optimism out of us just to build their circulation.
Newspaper headlines and buzzwords abound, such as: “Two million people will lose their homes in foreclosure in the next two years!” “Subprime Fiasco!” and “Mortgage Meltdown.”
These are the headlines we hear every day, yet where is the positive news about the real estate market? The answer is, buried in statistics on page 15 of section 3 of your newspaper, provided you can find them at all.
Here’s a typical example from USA Today, Oct. 26, 2007, page 1B:
New Home Sales Unexpectedly Rise
New homes sales posted an unexpected increase in September. But analysts were highly skeptical given the credit crunch and predicted further sales declines. The Commerce Department said sales of new homes rose 4.8 percent last month…”
By the way, here’s what they didn’t report. Sales in the West were up 36.6 percent. The media totally discounted these statistics. What about a different headline: “Great News! Real Estate Sales Surge Despite Biggest Credit Crunch in Decades”?
Here’s another example. In Sept. 6, 2007, article entitled, “New Mortgage Foreclosures Set Record,” Martin Crutsinger provided the following summary of a speech given by Doug Duncan, the chief economist for the National Mortgage Bankers Association. Here’s how it was reported:
“The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages. The Mortgage Bankers Association reported Thursday that mortgage-holders starting the foreclosure process in the April-June quarter reached 0.65 percent, marking the third consecutive quarter that this figure has set an all-time high.
“The delinquency rate has risen to 5.12 percent … The worsening performance was driven by two factors — heavy losses in the Midwest states of Ohio, Michigan and Indiana, and the collapse of previously booming housing markets in California, Florida, Nevada and Arizona … Analysts said the problems in the formerly red-hot housing markets of California, Florida, Nevada and Arizona reflected in part speculators walking away from mortgages they can no longer afford.”
This article ends with the negative media’s favorite theme for scaring their readers and/or listeners: “Two million people will face foreclosure in the next two years.”
Here are the numbers that the negative media did NOT report from Duncan’s speech:
1. Thirty-five percent of the homes in the U.S. do NOT have a mortgage.
2. Some 94.88 percent of the loans ARE performing.
3. The foreclosure problem in this country is really a story about seven states.
4. The biggest foreclosure problems are in Michigan, Ohio and Indiana. These are manufacturing states that had horrible job losses. Since 2001, Michigan has lost 300,000 jobs. These states would probably have had problems no matter what the market was doing.
5. The other four states — California, Florida, Nevada and Arizona — experienced significant overbuilding. Twenty-five percent of the foreclosures in these states are on properties that are held by investors who were speculating.
6. Only 25 percent of all mortgages are subprime, and of these, 75 percent are performing.
7. In the other 43 states, foreclosures have fallen in 2007 from 2006 (data from Michael Clawson, vice president, Central Texas Mortgage).
Furthermore, buyers who are waiting to purchase when the so-called bubble pops in California’s major metropolitan areas are going to be sitting on the sidelines, according to the latest data from a state Realtor group.
According to Leslie Appleton Young, chief economist for the California Association of Realtors, the areas being hardest hit in California are the outlying areas where there has been overbuilding. The resale market in California’s major markets continues to be strong. In fact, the closer you are to a metropolitan area, the better the sales are. In the million-dollar-plus price range, there has been essentially no change from 2006 to 2007.
There’s no question about the fact that there is bad news in some markets. What irks me is that there is also a lot of good news that is either being buried or is not being reported at all.
The question is, “What can NAR, the 50 state associations, and those of us who blog or write for the industry do to combat this trend?” The answer is “plenty.”
See Part 2 next week to learn how to win the war against the negative real estate media.
Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of “Waging War on Real Estate’s Discounters” and “Who’s the Best Person to Sell My House?” Both are available online. She can be reached at bernice@realestatecoach.com or visit her blog at www.LuxuryClues.com.
