Mainstream Media Puts Good Spin on Bad Real Estate Market

By Greg Hunter’s USAWatchdog.com

More and more, I am finding stories produced by the mainstream media where the headline doesn’t jibe with the actual story that follows.  A USA Today (newspaper) story from the “Money” section yesterday is a great example of what I am talking about.  The headline read “Rising home sales point to a recovery.” On the very next line, just under the headline, the sub-headline read “Prices expected to keep falling 5% to 7% this year.” So we have a recovery but prices are falling?  What kind of a recovery is that?  The story goes on to say, “Sales of existing homes rose slightly in March but prices fell as the U.S. housing market continues to struggle.” (Click here to read the complete USA Today story.) What are the writer and editor at USA Today thinking or even trying to say?  This sounds like a story about a struggling real estate market and, in fact, all the evidence says the market is struggling.  It is certainly not recovering.

For evidence of a struggling real estate market, I look no further than the USA Today story.  It said, “Yet median prices in March dropped 5.9% from March 2010 to $159,600. Distressed homes accounted for 40% of sales, up from 35% a year ago, the NAR says. Distressed homes, such as those in foreclosure, typically sell at a 20% discount and pull down market prices.” Let me get this straight, “median prices in March dropped 5.9% from March 2010,” and the USA Today story is projecting prices will fall another “5% to 7% this year.” How is this a recovery in real estate?  On top of that, the “Rising home sales” are comprised of “40% distressed homes.” That’s up “35%” from last year.  That means 4 out of every 10 home sales are a foreclosure, and that seems to account for much of the increase in sales.  This is a recovery?

Mind you, I have done no research for this story.  I got all the material so far from the USA Today story.  Here’s the kicker.  The story ends by saying, “High unemployment and underwater mortgages are also hurting demand. Almost 25% of homeowners with a mortgage owe more than their homes are worth. ‘This means many households that want to move can’t,’ Dales says. (Paul Dales is a U.S. economist at Capital Economics.) Home sales may rise this year, but ‘a meaningful recovery is a few years away,’ he says.”

“A meaningful recovery is a few years away.” Then, why is USA Today doing a story touting a “recovery” in real estate?  This is obviously good spinning on a terrible real estate market.  According to a Realty Trac report earlier this year, a “Record 2.9 Million U.S. Properties Receive Foreclosure Filings in 2010 Despite 30-Month Low in December.” (Click here for the complete Realty Trac report.) Banks took back a record 1 million homes, and the company is expecting another record foreclosure year in 2011.  Last month, the Thefiscaltimes.com reported, “Foreclosures are a necessary part of the healing process,” says Mark Zandi, chief economist at Moody’s Analytics. “And over the next two years, we’re going to experience a considerable spike in them.” Though some estimates are much higher, Zandi thinks 2 to 3 million more foreclosures will come through the system in the next two years. “The most severe ones are going to hit this year and in 2012,” he says.”  (Click here for the complete Thefinancialtimes.com report.) With two to three million more foreclosures in the works for the next two years, I don’t see how USA Today can report there is a “recovery” in housing.

Housing starts are also in the tank with the rest of the so-called “recovery.” In his latest report, economist John Williams of Shadowstats.com said, “Like a ball bouncing down a hill, the regularly volatile housing starts series remained in downtrend despite a statistically meaningless one-month bounce.”

Look at this monthly housing start graph from Shadowstats.com.  Does this look like a recovery?

I think the reporting in this story from USA Today is sloppy and inaccurate, at best, and outright spin doctoring a rotten housing market at worst. What do you think of the USA Today article?

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Comments
  1. Steven

    Great write up Greg!! But I do have a question. I’ve been reading through your site and find your articles to be A++. All I can say is you are the man. Here is my question. How do you explain the increases in commercial real estate sales and developments that are happening in NYC when compared to the past few years? And I noticed in one of your posts, you mentioned an economic collapse with a time-frame that has already passed. When do you now think it will occur?

    • Greg

      Steven,
      From what I can tell scanning the Internet the commercial real estate (CRE) market is really in no great upswing. It appears to be bottom bouncing. Sure there is some good news but there is waaaay too much CRE out there. There is 21 square feet of retail space for every man woman and child in the country. with more and more on line sales we will need less and less CRE. Also the real unemployment number is 22% (according to shadowstats.com) How is there going to be a boom in CRE with that kind of unemployment. I don’t know when the collapse will happen but it will happen will happen and it is the dollar that will be crushed. We are seeing that now with increasing food and energy prices. The U.S. just went past the $14.3 trillion debt ceiling. Congress will raise it again by more than $1 trillion and that will further weigh down the buck. I said in my last post ” I’m betting the crisis starts by the end of this year – 2011.” How long after after the currency crisis to a financial collapse is anyone’s guess. If there is another 9/11 attack on the U.S or another Katrina all bets are off. Thank you for reading the site and for giving me your support.
      Greg

  2. PatriotRider

    Greg:

    You and I both know why these rosy stories (headlines) are being painted, and not just in USA Today, but virtually everywhere in the MSM. When 90% of the people employed by the MSM are dyed in the wool Democrats and liberals, (that statistic/poll goes back the the Clinton Admin.) they are just simply helping their boy in the White House. This situation will get worse as 2012 nears and as conditions in this country deteriorate further, which they inevitably will.

    Editors know full well that the majority of news readers just look at the headlines and “scan” the paper, especially at USA Today. You catch the paper on the fly, and take a quick look thru the sections.

    The good news is that this tactic is becoming a loser. More and more people are turning away from MSM outlets and getting their information from the Internet, unfiltered by the liberal media. For those people that really want to know what is happening, the Internet provides the truth, via the blogosphere, social networking sites, and independent news outlets.

    At some point you can no longer hide the devastation, ruin and economic decline that we are experiencing. We have reached that point.

    Please keep posting your observations as you have done with the above article, eventually it will sink in and more a more sheeple will wake up from their government induced slumber.

    • Greg

      PatriotRider,
      You are correct sir. These stories are everywhere. I used the USA Today story as an example because it was so waaaaaaay off base. You are also correct about the editors, because nobody gets a story on any national mainstream media outlet without an editor approving it. Thank you for your comment and support.
      Greg

  3. Art Barnes

    Greg, more of the same from the MSM. I also have noticed many articles which feature a lead headline about recovery of one sector of the economy or another and then in the same article it contradicts itself.

    Reporting like that must be intended to prejudice the casual “headline” reader into the articles’ false “grabline” and still have some credibity of real truth to it. Newspapers long ago learned that a great percentage of readers never read furher than the headline or maybe a paragraph under that if any. So, I believe this type of reporting is intentional, having their case and eating it too so to speak. They can try and help the elite with false reporting and continue to report some real facts claiming some credibilty in their craft. Frankly, its ming boggling; CNBC does it many times a day every day! I quick watching it because of that.

    As to the Western Front and housing it is in the soup and not coming back. There are tens of thousands of people who are still in the homes and haven’t paid a payment in 2 to 3 years and the banks won’t finish the foreclosure and evict them – this keeps the price up as best they can. Then, when they feel they can withstand another home in the neighborhood on the market they finish the foreclosure and place it up for sale. This is a conspiracy of the banks and the illegal practice of price fixing. By the way, there is no way the average citizen can determine if his home is next or not, they live in limbo but they do live free which is helping kick the can of this pending third world toilet a little further down the road before it is flushed.

    • Greg

      Art Barnes,
      You and many other people are reporting the same thing. The headline contradicts the story all the time. This USA Today was especially bad. Thank you for your comment and all your support.
      Greg

  4. John

    At this point I don’t know why anyone is listing to the mainstream news media anymore.

    The Bill Moyers & William Black Investigative News Articles on PBS.com that came out in early 2009 called them cheerleaders & coverup artists for the major corporations & wallstreet along with the politicians & lawyers that service them.

    John

    • Greg

      Thank you John for the info and comment.
      Greg