Real estate

N.Y. Times Tells More Tall Tales of Recovery


Yesterday we analyzed a reporter's economic hallucination published on page A1 of The New York Times. Today the Grey Lady again gives its front page over to some fiscal flimflammery, but reporters Shaila Dewan and Nelson D. Schwartz are largely blameless. The headline promises a story on the real estate recovery, but that turns out to be the journalistic equivalent of a Rickroll. 

This house is going to keep going up!

I presume Dewan and Schwartz were assigned to write about the "nascent" real estate recovery. (The same recovery that has been a-borning for a good four years now, yet somehow never seems to leave the womb). The two reporters duly note that there has been a recent month-to-month pickup in the number of completed real estate sales. 

They also cite recovery news from a report by the scrupulously neutral and disinterested National Association of Realtors®. And they quote the S. & P. executive responsible for the Case-Shiller Home Price Index, who avers, "The broad opinion is that housing is definitely improving and on the upswing." (This news should gladden the inventor of the Case-Shiller Index, who says house prices may not recovery for another generation.) 

But nearly half the article actually describes how market forces are working to depress prices and slow sales. 

The headline? "Signs of Revival, Slight but Sure, for Home Sales."

Here are some of the sure signs: 

Analysts are hailing the beginnings of a recovery in the nation's housing market. But to beleaguered homeowners, it will not feel like much of one for many months to come…

Yet the nascent recovery is still a convalescent one, with the pace of activity uneven and far below the levels reached before the bubble burst. Home prices remain under pressure in many markets…

Wednesday's report from the National Association of Realtors showed that average sales prices actually dipped slightly from June to July. This seeming contradiction — increasing demand but anemic growth in home values — could represent a new normal in the housing market, experts said…

Real estate agents across the country cited the weak job market, stagnant wages and tight lending standards as continuing restraints on prices, despite pent-up demand and mortgage rates near record lows….

"Inventory is lower and construction is incredibly depressed," [a Bank of America economist] said… 

"I think people are really scared right now; they're not spending the money," [a retired farmer] said…

While new buyers might take comfort in the fact that deep declines in home values seem to have passed, more than 11 million current homeowners owe more on their mortgages than their homes are worth… 

More typical is Chicago, which hit a low in March 2012…

Concerns that a flood of distressed properties will soon hit the market were also receding…

Short sales, the practice of allowing homeowners to sell their property for less than they owe before the home reaches the auction block, are on the rise. Some banks have recently introduced "deed for lease" initiatives to convert delinquent owners into renters instead of evicting them….

[I] nvestors who had been fueling the market with cash purchases were starting to get cold feet, fearing values would not appreciate further as long as incomes lag and jobs are scarce…

In some areas, real estate brokers were skeptical that any improvement would be sustained…

Case-Shiller is still showing a slight decline nationally in average prices over the past year, but analysts will be closely watching data due out next week for signs of a turnaround…

"You're going to have a catfish market," [a Las Vegas real estate agent] said. "You know, catfish stay on the bottom and they occasionally jump up to the surface."

The reader comments are particularly choice. Here's a good one from Edmund Dantes of Stratford, Connecticut: 

The headline does not match the article. The housing sector is doing poorly, and if interest rates begin to return to normal it will do even worse.

When Bush was President, the NYTimes spun every economic hiccup as a catastrophe, in order to talk down the economy and aid the Democrats. Somehow, with Obama, even bad news can be relabeled as good news. Evidently the agenda setters hope that no one actually reads beyond the headline to the underlying data.

Leaving aside the Times' fondness for the current president, why is a reinflation of real estate that in most markets is still historically overpriced considered a "recovery" at all. The real estate recovery is what has been happening since 2007. Prices need to keep dropping, and fortunately, they will


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  1. Shouldn’t we move the Statue of Liberty to a place more deserving of its symbolism? Like, I don’t know, South Dakota?

    1. The Forbidden Zone.

      1. That’s unnecessary, as it’s already there.

  2. I’m repeating this quote again from last nights thread about the Housing Market because it is relevant.

    Obama has no idea how the housing market works, as evidenced by the following quote from his presser on Monday-…..ress-corps

    Number two, we have put forward an idea that I think a lot of Americans think makes sense, which is we’ve got historically low interest rates now, and the housing market is beginning to tick back up but it’s still not at all where it needs to be. There are a lot of families out there whose homes are underwater. They owe more than the house is worth because housing values dropped so precipitously, and they’re having trouble refinancing.

    We’re going to be pushing Congress to see if they can pass a refinancing bill that puts $3,000 into the pockets of the average family who hasn’t yet refinanced their mortgage. That’s a big deal. That $3,00 can be used to strengthen the equity in that person’s home, which would raise home values. Alternatively, that’s $3,000 in people’s pockets that they can spend on a new computer for their kid going back to school, or new school clothes for their kids, and so that would strengthen the economy as well.

    The depths to which Obama will go in order to buy more votes for his re-election are limitless, regardless of how much it prevents the housing market from recovering.

    1. If it helped his reelection attempt, he’d send his kids to a Congolese diamond mine.

    2. funny how it is no longer shocking how the media steno pool accepts bullshit like this without the slightest hint of question or skepticism.

      1. Yeah, I’ve been surprised that no one has followed up on this quote. Not even Cavanaugh. If there was a better indication of how completely clueless this Administration is about what the cause and solution to the current Housing market issues are I haven’t seen it.


        On the one hand, I suspect the administration knows this but wants to buy some more votes with tax payer dollars and couldn’t care less about market recovery, but I prefer believing he’s just an idiot.

        It makes me sleep better anyways.

  3. Seattle has been having a bit of a real estate boom/bubble recently. Inventory gets snapped up in no time. What seems to be happening is that since the market crashed, properties are put up for sale at a lower price, properly reflecting the crash, but then buyers come in, decide they really like the property and oh wow what a great price, and then get involved in a bidding war with everyone else who did the same thing. Suddenly, everyone’s gone over what they said their limit was, someone wins, and the house went for significantly more than it listed for.

    I’ve seen this happen with several people I know, both buying and selling, including one person who is in real estate and is also currently looking for a place, and he watches the stuff coming through the MLS feed constantly. Properties sell within a few days. It’s crazy.

    I’m not saying this is indicative of anywhere else.

    1. got a lot of nerve in Seattle, not waiting for The Obama’s plan to take hold and letting the market sort itself out. Folks act like they’re free to make decisions independent of govt.

    2. It’s indicative of what I just saw buying a house in San Diego.

      There isn’t a recovery in *house* prices, there is a recovery in people who want to WIN. Which occasionally bumps things up above the floor set by rents.

  4. Edmund Dantes? I thought he was a shipping captain out of Marseilles?

    1. He’s had plenty of time in the Chateau d’If to contemplate both vengeance and the economics of the US housing market.

      1. We could use a man like the Count of Monte Cristo today.

        Tough on his enemies. Generous to his friends. And rich beyond belief. Vote vengeance. Vote Monte Cristo.

        1. Tough on his enemies. Generous to his friends. And a Delicious Sandwich. And rich beyond belief. Vote vengeance. Vote Monte Cristo.


          1. Yes, thank you. I forgot his sandwich. . .of retribution.

            I love, love, love that book. I’ve read the unabridged version at least three times. Which is, for those of you unfamiliar with Dumas, eleventy billion pages long.

            1. Yeah, I read the unabridged version when I was in 8th grade, awesome book. I liked it to the point where I was disappointed with the otherwise good film adaptation with Jim Cavizeal and Guy Pearce which cut out like 2/3rds of the story.

              Ah the good old days when authors were paid by the length of their stories since they were published in installments in newspapers.

              1. It cut out like 100% of the story. I couldn’t stand that film.

                I was okay with the French miniseries, though one must make allowances with a much-too-old-and-fat G?rard Depardieu in the lead role.

            2. My favorite book. My book club still hasn’t forgiven me for making them read the unabridged version. The babies took two months to read it.

        2. Monte Cristo / Dos Equis Man

          That’s a strong ticket.

      2. …the economics of the US housing market. Which probably made him contemplate vengeance again.

        1. Yes, in France, he learned the cost of revenge and repudiated his role as God’s avenger. In the U.S., he is repudiating his repudiation.

  5. Leaving aside the Times’ fondness for the current president, why is a reinflation of real estate that in most markets is still historically overpriced considered a “recovery” at all.

    Because they’re a bunch of inflationist Keyensians that think the only way to recover from a burst bubble is to inflate another bubble.

    1. Hair o’ the dog, doncha know

      1. More like the whole fucking dog with these jokers.

  6. I’m currently selling my house – first buyer, who bailed out due to “financial issues”, made an offer after my house was on the market for only three days. I now have a second offer on the table. I’ll probably break even and will be happy with that.

    Even rentals – which I plan to do temporarily until some issues are sorted out – are priced quite high since plenty of people want homes, but they don’t want to buy them.

    1. Rent your own house!

      1. and then sub-let it.

        1. And then don’t pay your rent.

  7. From those who refuse to believe the true value of their houses and insist on over-pricing them when they try to sell, to those who think it’s a really great idea to buy a house now because those inflated prices have gone down a bit, there lingers in the general populace a fundamental and financially deadly inability to shake the lifelong-held “understanding” that house prices will go up – now known as “will recover”.

  8. From working at a foreclosure defense firm, all I know is that I am not buying a home until I can pay down 80+% (80%+ ?) of it, and it will definitely not be in a neighborhood with an HOA.

    1. So, renter for life?

  9. so you’re saying the media is in full re-election mode?

  10. Bill thinks we stay the course of the uber-successful Obama Plan.…..r_embedded

  11. I guess they wanted housing to be affordable, but not _this_ affordable.

  12. Meanwhile

    Only Half of Fannie Mae’s Previously Foreclosed Homes Are On The Market Or Being Prepared For Sale…..ously.html

    So the market is being propped up by banks and the government holding onto foreclosure houses.

  13. It is only a matter of time. We have all of these baby boomers sitting on prime real estate. At some point they are going to die off or move to a nursing home or smaller condo and all of it is going to come on the market over the course of a relatively few years. But thanks to student loans and the great recession, there won’t be anyone there with the money to buy the houses at current prices. Housing has to take a huge fall.

    1. It’s funny how people still act like house prices falling is a terrible thing. Sure it is bad for people who counted on it as a short term investment, but in general, lower house prices is a good thing. Everyone pretty much knows that housing has had a big bubble, but no one seems willing to accept that prices should be quite a bit less than they were at the height of the bubble.

      1. Clearly the way to national prosperity is everyone paying 50% of their disposable income on housing.

        But housing is a cult with some people and worse people who should no better. Talk to any financial planner sometime. They will swear on a stack of bibles that you must buy a house and that every house will appreciate as an investment. There wasn’t ever a bubble, just a slight short term correction. It is just nuts.

        1. Talk to any financial planner sometime. They will swear on a stack of bibles that you must buy a house and that every house will appreciate as an investment.

          None of the firms I worked in during my financial advising days ever advised that. That’s stupid beyond measure.

          1. I have talked to any number of them and the first thing they all remark is how crazy I am for not owning a house.

            Maybe I have just met the wrong ones. But that is always the subject and the advice. Drives me nuts.

      2. Speaking from experience, it’s also bad for people who wanted to get a fairly inexpensive starter home, and then upgrade to a larger one once they were further along in their career and had a larger family.

  14. The private sector is doing fine.

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