Networks 'Cherry-Pick' Data to Blame Slowdown on Housing Woes

     Although there have been some signs of a settling housing market, as new home sales [1]rose an unexpected 3.3 percent in April from March, actual home prices fell 14 percent in the first quarter of 2008, causing a network news frenzy on May 27.

     That night the three networks tied the housing crunch to struggling small business owners and people raiding their retirement accounts, while “Kudlow & Company” reminded viewers how many people own their homes free and clear.

     “The downward slide for home prices is only picking up speed,” CBS correspondent Anthony Mason said on the May 27 “Evening News.” “The 14 percent plunge nationally was led by Las Vegas, where prices have fallen more than 25 percent over the past year. Miami is down more than 24 percent, Phoenix – 23 percent. Among the 20 major cities surveyed, only Charlotte showed a meager gain and analysts can’t see a bottom yet.”

     “NBC Nightly News” wasn’t much better, presenting the same figures and echoing the exact same sentiment.

     “If it feels like the worst housing market in a generation, today’s numbers proved it,” CNBC correspondent Carl Quintanilla said on the May 27 “Nightly News.”

     ABC’s May 27 “World News” at least mentioned the 3.3 percent increase in new home sales amid its negative coverage.

     Despite the network negativity, not all analysts see this as the crisis that some in the media portray. In fact, one expert, Zachary Karabell, president of River Twice Research, said the media are making the situation sound worse than it really is by “cherry-picking” the parameters of their reporting.

     “They just kind of cherry-pick the beginning point to make it seem as bad as possible,” Karabell said in a May 27 appearance on CNBC’s “Kudlow & Company.” “And hey, you know, news and media are culpable in this because in order to generate attention and audiences, you sometimes have to sometimes ratchet up the rhetoric.”

     “Well, you know nobody ever says ‘the most incredible home rise increase since x,’ which is basically happened from 2001, 2002 through late 2006,” Karabell said. “And while it’s true that if you bought your home in 2006, you’re in a world of hurt, if you bought your home before that, you’re still probably in a majorly positive equity position and people don’t talk about that.”

     Dennis Kneale, a fill-in host for the May 27 “Kudlow & Company,” echoed Karabell’s point. If the housing market is looked at in its entirety, the crisis is not as bad as it is made out to be – only one-third of the existing homes in the United States are even at risk – although far fewer than one-third are experiencing problems.

     “[T]here’s 120 million homes in America,” Kneale said. “Now 40 million are owned free and clear – no mortgages. They are not at risk. And of the other, if you look, 40 million were bought before the year 2000. That means you are up 53 percent. So if you sell your home today and your price is down 15 percent from a year ago, you’re still doing okay.”