Central Ohio Real Estate Market News

In 2007, the real estate industry feverishly tried to counter the erroneous spin that the media put on the real estate market. Yes, there were “issues”, but not to the extent being reported.

• The big price declines were in markets where speculators had driven up prices in past years by 20-30% because interest rates were so low that they could earn a better return on their money than in the stock market. Florida and California were the key areas and lots of people made lots of money during those years. When interest rates increased, the speculators moved their money to other types of investments. The lack of the speculator’s demand, increased inventory so prices began coming down to more realistic levels. However, the media’s spin made it seem as if it was a nationwide problem and in doing so, they harmed markets that had normal keeping-up-with-inflation price increases.
• The other overstated issue was the foreclosure rate. Yes, the rate of foreclosures has increased because some people either tried to use their home as an ATM or they bought homes without any money and thus had no wiggle-room to refinance or resell. But the actual percentage of people in this predicament is minute compared to ALL outstanding mortgages. The media makes it sound like it’s a huge percentage of people about to lose their homes.

Because of the sensationalistic spin the media used, they actually increased the spread of these two issues buy instilling fear such that it “became a self-fulfilling prophesy”. It’s irresponsible to the economy to report that foreclosures are “up 10%” (or whatever percent they chose) without also mentioning that those foreclosed homes might represent less than 1% of all mortgages.

Let’s face it - hype sells - and the media’s goal is to make money by selling ads. In order to command high prices on those ads, they need to gain circulation or viewership. As Pogo said, “we’ve met the enemy and it’s us“. Would we be as inclined to watch the nightly news team that reported only “good things”? Or does the latest soundbite on the Spear’s or Hilton’s family episodes get our attention more so than a report on a local person who is making a positive difference in their community?

The issue that triggered this post occurred last night while I was listening to the results of the Iowa caucus. The spin that was put on the two “winners” made it sound as though they won by a large margin. But while one of the “talking heads” was putting that spin on the race, there was a graph showing the actual percentage of the votes for the top candidates. There was only a 3-point difference between #1 and #3. IMO that’s not an outstanding margin, and it would seem that the race is still up for grabs.

Knowing what the media has done to the real estate industry, I would prefer that they don’t select the next President. I want the voters to actually do that. (I would still like to believe in Santa as well!)

My advice is to question the sensationalistic headlines. When you read or hear that 33% of the people feel/believe/think a certain way, remember that means that 67% of the people DON’T feel/believe/think that way.

Also, be aware of the ownership of the media companies as those owners often have their own agenda. Locally, a very powerful family owns several forms of the media and have used their power to influence for their own agenda. They punish or reward other companies with their reporting tactics based on what the family’s agenda is. Mix up your reading and viewing to include multiple owners, to gain a broader knowledge base.

I used to work in Marketing for a major company. The Marketing Research folks would joke with us by saying, “what number do you want, and we’ll provide it”. If you do your homework to find out the connections to the media you read or listen to, and you look beyond the headlines for the REAL data, you’ll be a more savvy and less gullible citizen.

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