MSM Spins Housing Recovery-Again
Greg Hunter’s USAWatchdog.com
The latest Case-Shiller Home Price Indices report came out yesterday. This report is considered one of the best measures of the housing market nationwide. It didn’t take long for the mainstream media (MSM) to, once again, spin a non-existent “recovery” story. ABC News’ headline read “Home Prices Rise for Second Straight Month.” The Wall Street Journal headline read “S&P Case-Shiller: U.S. Home Prices Rise 2.2% in May.” While both headlines are 100% true, there is quite a bit of spin in the message. (Click here for the ABC News story and here for the WSJ report.) Reading these headlines, one could easily get the impression the housing market is making a significant turnaround, but the actual Case-Shiller data reveals just the opposite.
Sure, month over month, there’s an uptick in home prices, but who looks at the value of anything month over month? The best measure is year over year, and according to Case-Shiller, from May 2011 to May 2012, home prices dropped—again! The Case-Shiller press release said, “. . .home prices fell annually by 1.0% for the 10-City Composite and by 0.7% for the 20-City Composite versus May 2011.” (Click here for the complete Case-Shiller release.) I am using the exact same press release the MSM is using. Even though the price declines in housing slowed from recent months, they are still declining! This should be especially frightening considering mortgage rates have been hitting one new low after another. Recently, 30-year mortgage rates hit a new all-time low and are less than 3.5%! The housing market should be taking off like a rocket instead of continuing to sink like a rock. Home prices are back to where they were nearly 10 years ago!!
Sure, there are some bright spots in the latest Case-Shiller report. In Phoenix, home prices are up 11.5% year over year, but the housing market there was cut in half. Atlanta, on the other hand, is down 14.5% year over year in the latest report. Remember, this is with near record low mortgage rates! So, what happens when interest rates (which are being artificially suppressed by the Fed) start going back up to more normal levels? What would a 7 %, 30-year mortgage rate do to prices? If you guessed crash home prices–bing, bing, bing, you’d be correct.
You think I am bearish on the long term value of home prices? I don’t hold a candle to Professor Robert Shiller, co-creator of the Case-Shiller index. I did an exclusive interview with him just three weeks ago. Here’s some of what I posted on the site: “. . . When asked, ‘If the current housing crisis was a baseball game, what inning would it be?’ Shiller replied, ‘Maybe we’re in the fourth.’ Shiller recently said that home prices may not recover ‘in our lifetime.’ He cited the Florida land boom in the 1920’s, where prices did not rebound for a ‘half century.’ Shiller adds, ‘There are a lot of long term doubts about home prices right now.’ If real estate does not recover ‘in our lifetime,’ what about the banks still holding it? Shiller called that a ‘dark scenario.’ Shiller says, ‘A lot of people have the mistaken impression that we must be at a bottom.’ He goes on to say real estate could go up in price but ‘There is also the risk of further substantial drops in home prices.’ “ (Click here for the complete USAWatchdog.com One-on-One interview with Professor Shiller.)
The folks in the MSM evidently feel it’s their job to put the best spin on any housing story. In reality, it’s their job to be fair and accurate. The more accurate headline would have been: “Housing Prices Continue to Drop Despite Record Low Rates.” I guess the honest truth is just too scary for the masses, so the MSM spins the housing recovery-again.