Era of pay-for-spin real estate news coverage is past
Struggling in the Internet era, newspapers increasingly rely on real estate advertisements for survival, corrupting the integrity of their coverage.
The Internet changed the way people stay informed. A single reporter can publish a story on the web, and millions of readers can access the information for nothing. Rather than paying the cost of printing and distributing paper with the printed words of local reporters, citizens eliminated the middleman distributor and turned to the web more and more over the last 20 years.
Since most news reporting was redundant, and since citizens had less expensive and higher quality alternatives, many newspapers stopped print publication, scaled back staff, and consolidated into conglomerates. Despite these measures newspaper advertising revenues spiraled downward.
Car dealers and realtors continue paying, mostly because few viable alternatives exist. As a result, newspapers increasingly depend upon realtors for their survival, and real estate reporters and editors adapted by becoming outlets for realtor spin and nonsense.
I can’t fault the reporters. If my livelihood required me to pander to realtors, I would likely do what was necessary to feed my family. I feel bad for them because rather than being independent reporters of fact, they devolved into quasi-marketing staff of local real estate agents.
It’s so bad that most days the “news” stories are contributed by local real estate agents, and most of them read like the useless, fluffy garbage that pollutes most real estate agent sites. It’s a wonder that anyone bothers to read them, assuming anyone does.
Evidence of deterioration
Back in January, the OC Register reported that OC New Home sales fell 41%, a remarkably bearish and accurate reporting on the poor new home sales performance this year. Unfortunately, it looks like that must have been too bearish because it was shortly followed by a report discussing how the market was on fire, a report I lampooned in Did the OC housing market come alive in February 2015?
How exactly does the market go from very slow to “on fire” in two weeks? It doesn’t, but agents needed some spin, so the newspaper gave them what they wanted.
For those who wanted the truth, I covered the facts in OC for-sale home inventory up 45%, sales down 3.6%. My report wasn’t loaded with spin about the market being “on fire” or anecdotes from biased real estate agents; instead, I provided data, verifiable data, with charts to facilitate a deeper understanding.
Sales volumes nearly always rise during the spring; therefore, everyone expects an uptick in sales volumes. Based on the recent reporting, everyone also expects more realtor spin from the mainstream media. The OC Register doesn’t disappoint.
[Notice the headline mentioned good sales twice. Very good spin.]
Orange County home sales lifted off in March, climbing 8.9 percent above where they’d stood a year earlier, CoreLogic reported Thursday.
Did sales lift off? Was the increase a rocket heading into orbit?
The March increase was on the strength of existing home sales, while new-home sales continued their downward slide of recent months. Existing house and condo transactions rose 13 percent, compared with a 17 percent drop in sales of newly built homes.
Surrounded by the good news was the bad news of a huge drop in new home sales, a technique designed to disguise bad news. A 17% decline can’t be making the OC hombuilders happy.
A total of 3,140 houses, condos and townhomes changed hands last month, the biggest tally in eight months and the most in the month of March – traditionally considered the start of the homebuying season – since 2006.
These higher sales volumes are a welcome change over the dismal sales of the last eight years; however, when you get down two more lines into the report, the spin is countered by the fact that the March total is 14.5% below the March average of the last 27 years — not exactly robust, is it? By separating the facts from the spin, the reader more easily absorbs the spin, which is why the data is buried further down the page.
The median selling price of an Orange County home, which is the midpoint of all sales prices, was unchanged from a year ago at $580,000, CoreLogic reported.
The first big annual sales gain in nearly 1 1/2 years was magnified by the fact that homebuying had been depressed since late 2013 following a huge jump in home prices.
Last month’s sales were also still 14.5 percent below the March average of the past 27 years.
Sales jumped last month across the region, as Southern California housing transactions rose 11.1 percent to 19,603.
“Sales increased year over year, which is something that’s only happened in a few months over the past year,” said CoreLogic analyst Andrew LePage. “Sales have been hampered by low inventory, especially in the lower price ranges, rising prices and lingering credit hurdles.”
An increase in the number of homes for sale “could support higher sales and tame home price appreciation,” LePage added.
Orange County had just over 5,400 homes listed for sale by the end of March, still about 2,600 listings below normal, according to Steve Thomas of ReportsOnHousing.com.
I really don’t know where Steve Thomas gets his data. He consistently underreports the actual number of homes for sale. Redfin shows that March ended with 7,360 homes for sale, which is about normal according to Steve Thomas’s numbers (5,400 + 2,600 = 8,000). The real shortage mirrors the remaining underwater borrowers in Orange County as prices still haven’t reflated to bubble peaks yet.
Steve Thomas needs to check his numbers, or he needs to challenge Redfin’s data, data that shows an increase in listings of 42.7% over last year.
The March data gave mixed signals about the direction of the market, with prices stagnating even in the face of growing demand. LePage speculated that the median price flatlined because sales in March were skewed toward less-expensive homes.
Or it could be that the median price flatlined because house prices aren’t going up. Did anyone consider that possibility?
Some local agents say increasing demand is resulting in multiple offers on properties.
“I had a home close that had four offers, all at asking price or higher,” said Seven Gables Real Estate agent Phil Schaefer. “Another two closings went full price.”
“The south O.C. market is very busy. If a home is priced right, you can expect multiple offers,” added Mission Viejo broker Eileen Oldroyd. Still, buyers are more savvy, thanks to the proliferation of real estate websites, Oldroyd added. “They are less willing to overpay for a home.”
Apparently the proliferation of real estate websites is impacting realtor’s ability to cajole buyers with misinformation. They must pine for the good ol’ days.
Housing economist G.U. Krueger said there appears to be more move-up activity, a sign of a more traditional housing market.
“Mortgage rates are extremely low, and jobs are growing nicely, which helps the turn to a conventional market,” he said.
Do we still need to turn to a conventional market? I thought the housing market was already fully supported by fundamentals? I guess not.
It’s sad and unfortunate that newspapers no longer objective report news. I suspect it won’t take much longer before readers tire of reading spin and nonsense and turn to alternate sources for real estate data an analysis.