Coping with the Structural Changes in Housing
I recently received an email from a Twitter follower accusing me of “yellow journalism,” the practice of presenting biased, exaggerated or distorted stories as objective fact with little or no effort to substantiate the claims being made. The email even included a definition of “yellow journalism” from Wikipedia.
The writer was complaining about my constant posting of negative news regarding the housing market and implying that my posts as well as negative stories in the media were responsible for consumer perceptions of the housing market; and to a degree, that part is correct. Consumer opinions are based upon the information they receive each day; and some of that is from news reports. But more importantly, such stories are generated by what’s actually happening in the housing market and overall economy. And what’s happening is the worst housing market in memory.
The writer continued that real estate professionals should be eternal optimists and should always speak positively of their industry, aware that it is consumer confidence that drives economies. The email ended with: “The smart people and the ones who know what’s going on are the ones that do the least talking.”
As you might expect, I felt obligated to respond:
While it’s healthy to remain optimistic in the face of crisis, ignoring the facts is not only foolhardy but harmful. And some recent facts are:
* Both the NAHB Builder Confidence Index and new home starts continue to hover at historic lows, with new home starts falling to a record low in February.
* Existing home sales remain far below historical averages, with more than 8 months of supply.
* Government efforts to save homeowners from foreclosure have been dismal failures.
* Homeowners have lost trillions in equity and fully one-third of homeowners with mortgages cannot sell for an amount that is at least equal to what they owe.
* The U.S. is experiencing the longest period of high unemployment since the Great Depression with little hope of significant improvement in the near-term.
Now you may choose to ignore these facts and try to wish a different scenario into place, but neither wishing nor positive thinking will change current conditions. Consumer confidence is low because of economic conditions not yellow journalism. To believe that the mere reporting of positive news stories will somehow inspire those without jobs or whose income has been drastically reduced to suddenly go out and restore the housing market is mere folly.
Of course local conditions vary, and some areas of the country are doing quite well. And while I sometimes report local news stories, I write for a national audience; and nationally housing and the overall economy continue to struggle.
Contrary to what you seem to believe, I am an optimist; but I am also aware that housing has undergone structural changes that will dramatically alter the market for years to come. I write and post on Twitter to make others aware of what’s happening in our nation’s economy and housing in particular so that we can work together to create solutions to the very real problems we face.
Finally, regarding your suggestion that I substantiate what I Tweet, the great majority of what I forward comes from reliable news outlets; and my posting is a way of sharing news that my followers might otherwise have missed. There are many varied opinions regarding the economy and housing; neither I nor anyone else can predict with certainty what the future may hold. If you believe we need more positive news, do your part in sharing what you discover.
Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things. Winston Churchill
I believe it’s critically important for all of us in real estate to be aware of current conditions and to try to analyze what the future holds. Doing so allows us to make prudent choices in both our business and our personal lives. Optimism is important, but blind optimism is destructive.