News About The News

DENVER - APRIL 02:  (L-R) Prospective home buy...
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I would imagine anyone calling him/herself a real estate investor watches TV news, reads newspapers and surfs the Internet for news on this thing called the housing crisis. I know I do.

Last weekend I happened to see a segment on national TV by a talking head (TH) telling the world real estate prices and home sales were going up. As proof, he was in a for sale home with the listing agent. The agent was telling the TH the owner of the property had just dropped the price from $255,000 to $245,000 for a quick sale. The property was in a suburb of Atlanta, GA.

As the TH was walking down the hallway to show us the patio, he said, “the investor bought this property from a bank for $55,000 and has lowered the price to sell the property.” When I heard that, I about fell out of my chair.

Here was a TH doing a piece about home sales going up along with their respective prices. Then he spits out the above zinger. This poor boob did not, or at least it appeared he didn’t, have a clue what he was talking about.

Granted, the home did sell, but not at retail. The bank unloaded it to an investor (read smart person) for a fantastic price. But, the price was far from being an indicator housing prices were on the move upwards. Let’s say the investor sold this home. Does anyone believe it will sell for even anywhere near what it could have sold for two/three years ago?

A Smart Move For The Above Investor

According to me, if the above investor priced the house closer to $135,000, he would have sold it quickly. I don’t know that for sure as I am not familiar with the Atlanta market. However, thinking $80,000 over purchase price has enough of a profit margin to satisfy this particular investor, that too wouldn’t let the TH make the bold statement home prices are rising.

Yes, it would have been more than the investor paid, but it certainly would not have been an indicator prices are moving up. I repeat myself, but think about it. How in the world can this be considered as home sales rising and prices going upwards?

Geesh, why even do a story with this kind of garbled message in the first place. It didn’t even make good filler material in my opinion. But that’s me.

A Better Way To Do The Story

Had the TH framed his story from that very same home with information saying:

  1. a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure
  2. the housing crisis is spreading to borrowers with good credit
  3. the wave of foreclosures isn’t expected to crest until the end of next year according to the Mortgage Bankers Association
  4. the foreclosure rate on prime fixed-rate loans doubled in the last year
  5. nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process
  6. almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure
  7. the pain is spreading throughout the country as job losses take their toll
  8. the number of people receiving unemployment benefits was the highest on record

then opened with a statement on the brilliance of the investor in buying the home at a bargain based price and pricing it to sell immediately, he would have done more to advance the thought theology that the real estate market is still alive and vibrant. That’s according to me. But, think about it for a minute.

Wouldn’t my suggestion better present the picture as we know it? Aren’t people buying homes today at ridiculously low prices and selling them for what we would, by comparison, call low prices? Of course they are. Are they making money in a market where most people are losing their tail bones? Of course they are.

The Rest Of The Story

Sorry Paul Harvey but I couldn’t resist borrowing your famous phrase. It seems to be appropriate for this post. I believe the media has a responsibility to do a better presentation on the housing crisis. If this national broadcast had put this story in its proper perspective, I think we would have seen the reality of the market in Atlanta and could have related it to our local market.

This lets us put a handle on our particular situation. This lets us frame our tactics and strategies. This reinforces our willingness to push on despite all of the problems we face. In other words, it takes the positive out of the negative and lets us keep believing what we are doing is right not only for us but for the country as a whole.

If we keep believing our small positive contributions will help the economy as a whole, won’t they? After all, one website has sprung up that is devoted to nothing but telling us to take matters into our hands so we can right the ship. They are speaking to you and I and not the politicians because it will be you and I who will get us back on course.

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