It’s less than a week before an election and you’ve spent four years insisting housing market is a bubble on the verge of popping – jeopardizing the economy. What do you do? If you’re CBS, you raise the specter of the worst economic calamity of the 20th Century.
“A new study by Moody’s Economy.com forecasts overall house prices will fall 3.5 percent next year,” warned CBS reporter Anthony Mason. “When’s the last time we saw that,” he asked economy.com’s Mark Zandi in a story filed on the November 1 “Evening News.”
“It’s unprecedented,” the economist replied, adding that “You’d have to go back all the way to the Great Depression to find a year in which house prices declined."
That does sound dire, but only when divorced from context – like a massive increase in home value over the past five years. The Great Depression also saw bouts of unemployment around 25 percent and was essentially a prolonged economic recession. The economy in 2006 has been growing steadily for years, with 37 straight months of jobs growth, unemployment at 4.6 percent, and economic growth at 3.3 percent for 2006.
At no point in Mason’s story did he remind viewers that the housing market has seen two consecutive record years, according to the National Association of Realtors (NAR). Mason didn’t include that perspective from the NAR, although it did cite an NAR statistic showing a 1.1 percent decline in homes under contract in September 2006.
Had Mason turned to NAR for an analysis of the market, he’d have found a far more optimistic viewpoint than he presented to viewers.
“The present level of home sales is relatively high in historic terms, and we can expect generally minor movements around this level,” NAR chief economist David Lereah [1] said in a November 1 press release.
“The market currently is a little lower than expected as buyers try to time their entry. In the meantime, there’s some buildup in demand that will move when consumers realize that conditions are optimal for them,” Lereah added.
In other words, buyers are slowly realizing how good the market is for them and will soon be getting in while the getting’s good, ringing up home sales and stabilizing home prices. Buyers also can enjoy interest rates that are low by traditional standards.
Two months ago, “Evening News” anchor Katie Couric greeted viewers of the September 25 program [2] with the suggestion that “If the housing bubble hasn’t burst, it sure is leaky.” That’s just one of numerous examples the Business & Media Institute has documented of the media’s five-year run of housing bubble bias.
Indeed as BMI reported in a Nov. 30, 2005 special report [3], the media drumbeat about a housing bubble began before 9/11 and picked up by late 2002 with papers such as the Chicago Tribune warned of a potential housing price “plummet” while USA Today warned of a “possible crash.”