Feeding the obsession

From PBS:

Newspaper, Bubble Blogs Feed the Real Estate Obsession

Have you ever gone to an open house even though you knew you weren’t interested in buying the property? Have you ever pored over housing price data on Zillow or read through housing ads on Craigslist just for fun? You are not alone. There seems to be a growing obsession with real estate in the U.S., as home prices have soared in the past few years, only to come back to earth a bit in the past year.

But during that boom — and the current correction/bust — blogs of all stripes have sprung up to feed the need for instant real estate information, photos of noteworthy homes for sale, and the off-color stories related to city living. While some newspaper sites have had some recent success with real estate blogs, independent bloggers who have called the boom a speculative bubble — a.k.a. the bubble bloggers — have found a rabid audience for their bearish views.

“Bloggers have moved into bubble coverage because the media hasn’t done a very good job of covering the reality, and reporters are more conventional and look for the story of the hour and what the statistics are,” said Carol Lloyd, who writes the must-read Surreal Estate online column about the San Francisco Bay Area market. “And some of the statistics are produced by the NAR [National Association of Realtors], and they look like they’re just covering the industry for the industry.”

Lloyd wrote a fantastic primer on bubble bloggers, who she says “have become the sages of the day.” Matt Carter, a reporter (and blogger ) for the real estate trade site InmanNews , says the bubble bloggers’ popularity can be traced to a bad case of schadenfreude among some in the public.

“The bubble blogs feed the intense desire many people have — including those who got burned investing in real estate, and first-time home buyers who feel they’ve been priced out of the market — to see housing prices crash,” Carter told me via email. “As was the case during the dot-com bust, people who got left behind want those who were riding high during the boom years to feel their pain.”

One of the strongest aspects of these blogs is the online community of readers that sprouts up around the subject of real estate. At the Housing Bubble Blog, Jones regularly asks his readers to contribute “Craigslist finds” (listings of interest), and often gets more than 100 comments on each blog post.

Toscano (pictured here) dings mainstream real estate reporters for relying on expert quotes from analysts who are in bed with the real estate industry — meaning, the quotes are likely to give a positive spin to any negative news. “The other [problem] is that they tend to mirror conventional thought and to shy away from contrarian or non-mainstream analysis, regardless of merit,” he said. “As one example of this phenomenon: Despite the fact that we had been in an obvious speculative bubble for a long time, the media didn’t seriously address the possibility of a bubble until AFTER the housing market had slowed down substantially.”

“These sites are guilty of the same sin they accuse the real estate industry of: presenting only one side of the story,” Carter said. “They highlight the most dismal news from the most stressed markets — that foreclosures are up, inventories are rising, and prices falling — without providing any context. A lot of these blogs would have you believe that all of the runup in prices was artificial, fueled by speculation and the easy availability of credit. The fact is, housing prices remain stable or continue to appreciate in areas where jobs are plentiful and housing is scarce. There are sound fundamentals in some markets, but you would never know it from reading the bubble blogs.”

But what will happen if the market does crash and boom again, or whether it’s just a slow poofing souffle? Will people still be enamored with every economic report coming out of Northern Iowa or a suburb of Phoenix? Or does the universality of everyone having a home — whether rental or as an owner or landlord — mean this topic will be fresh for years to come? Perhaps online aggregators that sum up real estate news from all sides, from bear to bull, will be the most valued in the future. Time will tell.

This entry was posted in Housing Bubble, National Real Estate. Bookmark the permalink.

27 Responses to Feeding the obsession

  1. James Bednar says:

    From Knowledge@Wharton Real Estate:

    Going Up: Real Estate Is on the Rise Again in Japan

    Nothing symbolizes Japan’s bubble economy, or its subsequent long slump, more than real estate. Now, after dropping by as much as 70%, real estate prices are ticking up, signaling a renewed Japanese economy.

    A major restructuring of the nation’s financial system, along with an injection of foreign capital and the introduction of publicly traded real estate investment trusts, are driving the real estate revival, according to Wharton faculty and real estate analysts working in Tokyo. “The no-growth swamp is over. Not only is real estate coming back, but it’s coming back strong,” says Wharton real estate professor Susan Wachter.

    For the first time in 16 years, land prices rose in Japan’s top three markets — Tokyo, Osaka and Nagoya — during the 12 months that ended in July. Commercial land prices were up 2.6% while residential property was up O.4%. In addition, new development is visible in Tokyo, rents are on the rise and investors are returning to the market.

    Perraudin notes that prices for commercial buildings have recovered about 30% to 50% from the bottom reached in 2002-2003. However, the gains are concentrated in Central Tokyo, Central Osaka and Nagoya. In other major cities, the market is flat, and small cities and rural areas are still experiencing declines. “Demand for real estate in central areas is limited,” he says. “Demographics are bad, with the Japanese population and workforce shrinking.”

  2. BC Bob says:

    “As was the case during the dot-com bust, people who got left behind want those who were riding high during the boom years to feel their pain.”

    Bad analogy!! Did anybody say pet.com??

  3. bklynrenter says:

    Bubble blogs do an incredible service to both homeowners and potential buyers. The RE market is inefficient because the brokers/realtors/banks etc control the data and when they do divulge anything its so stretched, pulled and spun that its almost meaningless. Blogs are successful because they give data (and Grim’s NJreport is excellent at this). Everyone reads the MSM so everyone gets the spin, but anyone that really wants to do homework on the largest investment of almost anyone’s life, needs information, data and context. The failure is in the NAR/regulatory/Media infrastructure that allows an effective conspiracy against buyers to continue.

  4. James Bednar says:

    Personal Income/Spending/Savings data out tomorrow. My favorite day in the economic month.


  5. It's crashing says:

    It’s the only placwe to come to get real hard facts on real estate. Smart buyers take note.

  6. It's crashing says:

    I found this interesting:
    “‘I’ve been in real estate here for 18 years,’ says Mia Edsall, an agent in the southern part of the valley. ‘I’ve seen it slow but never like this. There are no buyers, and the reason there are no buyers is because they can’t sell the house they have. A lot of us (agents) are getting second jobs.’”

  7. rhymingrealtor says:

    My favorite day in the economic month.

    I’m sorry, that just made me LMAO. Your a funny man… Mr. Grim.


  8. James Bednar says:

    Just an FYI, we’ve got another link:



  9. Pat says:

    Hey, JB, what happened over on the other thread?

    Was that issue boring or did I miss the resolution somewhere- Prices…what’s up?

    This is what I got out of it. Nobody can quite define each non-transparent transaction detail such that its impact on median can be quantified. Because of the non-transparency, some people have lost faith in median.

    Others respond that the numbers are the numbers, and the faithless wouldn’t be complaining if median were decreasing.

    If you were an investor, and the NAR report was a prospectus, what could be done to that report going forward? Should it be relied upon, or how should the uses of the report be limited?

  10. James Bednar says:

    I locked the other thread when it got out of hand. Of course, it doesn’t seem so out of hand when you read it now, but that’s only because 30 comments, or so, were deleted.


  11. Lindsey says:

    OK, I’m so late with this that the thread it relates to is closed.
    I’m going to post it anyway because I think Chicago Finance posed a very legitimate question in post 15 of the previous thread when he acknowledged that he expected big price declines by now and was wrong about that. What follows is quite long (to me at least), but I think it addresses his point:

    This blog in general and many individuals here perceived the problems in the market very early, but they didn’t see the factors that would allow the market to inflate. I know I personally thought RE was so far overvalued in 03 that I couldn’t see how prices could hold, let alone rise.

    Obviously I was wrong. I was wrong again in 04 and sort of wrong again in 05 (though my December 04 call that it couldn’t last past July was correct. Hurray for me, I’m batting over .300).

    The main thing I learned about what I didn’t know in 03 and 04 was how important liquidity is to RE financing. Simply put I did not understand that all of the excess and ready capital in the system would provide the fuel needed to sustain the fire in the housing sector regardless of the ridiculous run-up in prices. I was looking first at income/cost ratios. My own conservative nature didn’t allow me to understand that someone would be crazy enough to buy a property with negative cash flow because they were counting on appreciation of the asset. I did know that people always perceive themselves as smarter than they are (regardless of what they believe), but I didn’t consider that as a factor in the RE price run-up.

    Just as obviously as I was wrong about how long and how high the market could rise, the massive liquidity and historically low interest rates that allowed the bubble to inflate could not sustain it in the face of the fundamental problems noted indefinitely.

    In July of 05 the market did indeed turn. The signs of the turn were large enough to be seen by almost everyone by September 05.

    The market has clearly softened dramatically in the last year. Inventories are at unprecedented levels, and while prices may best be described as having stalled, they certainly are not in freefall.

    In a way, I think the mistake we are making now is very much like the mistake we made before. We understand the fundamental problems, but we still have trouble seeing the mitigating factors (at this point I would guess they are primarily inertia, greed, massive liquidity and low interest rates, not necessarily in that order).

    Also, having seen the problem for a very long time, we have a hard time accepting that the solution is taking longer than suits us.

    Having read the history of earlier housing crashes, I have learned that it takes longer for the crack-up to occur than I would have previously thought. Rising inventory comes first (we’ve got that) and any drop in prices comes later. We certainly have seen some price drops, but not nearly enough to be seen across the broader markets. I believe those drops will get under way in earnest (in the neighborhood of 10%) by the early summer months of 07.

    For the record, I think the people calling the bottom now aren’t simply lying, they, as we did, are applying something that they know, which is that this month is worse than last month, and some factors they understand and reaching an incorrect conclusion because there are things they are either ignoring or are ignorant of. Just as we were wrong longer than we expected while things were going up, they are wrong about the downside.

    I think there is plenty of bad news to come, both in the economy as a whole and in the housing sector in particular. I will take no pleasure in being right, but I’m going to be a lot better off than people who don’t think there will be any problems in the future. We are a nation of Candides.

  12. It's crashing says:

    A friend told me today the realtor called him up about a house he looked at 5 months ago, and encouraged him to just make an offer. Sounded like some panic is finally setting in here. Good news. Just need to wait some more for maximum impact. No rush everything is happening just like the smart people here have been saying. Thanks all.

  13. Lindsey says:

    BTW, I can say with certainty that median asking prices for single family homes and condos/townhouses are lower in Monmouth County right now than they were in July.

    The difference is not great, between 2-5%, but asking prices are indeed down in Western Monmouth and Eastern Monmouth. SFH prices are actually up about 2% in Southern Monmouth, but there is more volatility in that region because of a small sample size. Also, the market is not at all representative of any general trend because the area is excessively skewed to the high end.

    For the record, the median asking price for an SFH in Southern Monmouth last Friday was $795K, On July 21 it was $780K. During the last few months it has been as low as $760K.

  14. Rich In NNJ says:


    I find that Bergen County SFH median SOLD price has been dropping YOY since August and continues to do so. Right now, due to the rise of median sold prices in the first half of the year, it looks as if prices are up a 1% YOY.

    2004 $510,000
    2005 $520,000
    2006 $525,000

    2004 $469,000
    2005 $539,000
    2006 $535,000

    2004 $460,000
    2005 $520,000
    2006 $494,000

    2004 $460,000
    2005 $545,000
    2006 $480,000

    2004 $455,000
    2005 $520,000
    2006 $490,000*

    1/1/2004 – 11/30/2004: $450,000
    1/1/2005 – 11/30/2005: $510,000
    1/1/2006 – 11/30/2006: $515,000 as of 11/29/06*

    *Keep in mind that this data is still preliminary.


  15. Clotpoll says:

    “Slow poofing souffle”. Not a bad analogy. Cataclysmic events, such as full-on economic collapses, are- by their very nature- extraordinary and rare. From a probability standpoint, especially given the relative economic health of the US, a full-out RE bust still seems unlikely to me.

    Not to be too anecdotal, but my agents are still cranking out a thin, but decent, stream of sales. I’m seeing just enough seller capitulation to keep things moving. As those sellers establish value in their respective price ranges, other motivated sellers adjust accordingly…and the “wishful” sellers either languish or exit the market.

    Will those wishful sellers re-enter the market in the Spring (possibly because they MUST sell at that point)? I don’t know. If inventory surges in the Spring, we’re in for another drop in prices. However, even that outcome will not be the apocalypse so many here posit.

    I had a client who hired me to sell his house in ’99, as he was convinced that the world would end on 1/1/00. Packed up his wife and kids & moved to a trailer in E Tennessee. I wonder what he felt like after 1/1/00 passed.

    Probably very similar to how many here will feel when the current correction passes.

  16. James Bednar says:


    It’s the use of cutesy analogy that upsets me most. The only reason to describe the market in terms of tasty deserts or luxury cruise liners is to manipulate public perception of the issues.

    Kind of like telling a cancer patient that his metastatic tumor is not unlike the stamen of a beautiful lily, casting it’s pollen into the warm sunlit countryside.


  17. bergenbubbleburst says:

    clot: you again mention the health of the over all U.S. economy, but again ignore what is going in NJ. Looking at the housing market in NJ as somehow seperate from the overall health of NJ’s economy, and the sad state of affaira in Trenton, makes absolutely no sense.

    And being close to NYC does not change that..

  18. James Bednar says:

    I had a client who hired me to sell his house in ‘99, as he was convinced that the world would end on 1/1/00. Packed up his wife and kids & moved to a trailer in E Tennessee. I wonder what he felt like after 1/1/00 passed.

    Probably very similar to how many here will feel when the current correction passes.


    This is a non-confrontational question, I’m asking this in a sincere way.

    Why did you take the listing? I mean ethically, if you thought he was making a terrible move (you obviously did, since you ridicule him for it now), why didn’t you make that clear to him? Why did you choose to take part in the transaction?

    Why didn’t you just say, “Thanks, but no thanks” and walk away?


  19. James Bednar says:

    I realize this ties in with what you said the other day. Something along the lines of simply acting to bring buyers and sellers together in a brokerage fashion, regardless of reason or market condition.


  20. Clotpoll says:

    To JB (from #20):

    This is one of those “you shoulda been there” moments.

    First of all, there was not going to be ANY talking him out of his conviction that the world was coming to an end. Trust me on that…I’ve never seen eyes that glazed blink so slowly. His desire to move was sincere…and lawful, so from an ethical standpoint, it was actually my responsibility to follow his wishes. He was also of sound- though misguided- mind, so there was no question of his fitness to enter into a contract. Why should any agent decline to help someone in that position?

    Second, even though the market was running well at that point, he had a maxed-out FHA ARM facing adjustment within the next year. To make matters worse, he had trashed his house. Fortunately, there was just enough equity there to get him out the door with enough $$ to follow his dream (or delusion).

    It is a misconception that a good agent will list any house, anywhere, anytime. Within the past month, I have counseled potential sellers to stay put and advised a couple of buyers to wait longer. I would never knowingly walk someone into a bad deal, and there are other good agents out there who’d do the same. The current run of business IS enough for a quality agent to make a living…it’s the marginal ones who are falling.

    I only used him as an example of what happens when people emotionally invest so heavily in an expected outcome that never materializes.

    I only wish I could write like Tolstoy…he had that subject down cold!

  21. Cultural Infidel says:

    “I had a client who hired me to sell his house in ‘99, as he was convinced that the world would end on 1/1/00. Packed up his wife and kids & moved to a trailer in E Tennessee. I wonder what he felt like after 1/1/00 passed.

    Probably very similar to how many here will feel when the current correction passes.”

    Maybe he was happy to get out of this over-taxed, corrupt state. And I probably will feel very similar if the current correction passes.

  22. Clotpoll says:

    To Cultural Infidel (from #23):

    Ever been to Tennessee? I grew up there (Memphis). Trust me, there’s no more corrupt state in the US (have some fun and Google Ray Blanton; straight from the Governor’s Mansion to prison…they had to remove him from office early, because he was selling pardons to convicted murderers). Relatively speaking, the property taxes in Memphis are worse than here…

Comments are closed.