Real estate journalism in the mainstream media is not exactly the stuff of Pulitzers. But even by that low standard, this “news story” from MarketWatch (via Realtor.com) is amazingly incoherent. Titled “Half of Americans Can’t Afford Their House“, the main thesis of the article is that housing affordability is a serious crisis:
Over half of Americans (52%) have had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years, according to the “How Housing Matters Survey,” which was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates. These sacrifices include getting a second job, deferring saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools.
Just based on that paragraph, the baseline assumption of the researchers and MarketWatch, appears to be that a life that does not involve “major sacrifice” is one in which people have:
- Only one job
- Full and complete retirement savings that have not been deferred
- Full healthcare without any “cutting back”
- No credit card debt
- And live in safest neighborhoods with the best schools
That only one job? It is supposed to generate adequate income to support all of those other things.
If this is the baseline assumption of what constitutes a life without “major sacrifice”, I’m frankly shocked that only 52% of Americans don’t get to live that life. Seems to me, outside of the 1%, the rest of us have to make choices and sacrifices like choosing to live in a “less safe neighborhood” compared to the absolute best possible.
But that base assumption isn’t what made me laugh. No, there’s more to the unintentional humor.
Oh, Woe Is the American Consumer!
The “news” apparently is that Americans are having financial difficulties:
Although mortgage rates are still quite low, down payments, poor credit and tighter lending standards remain three of the biggest hurdles for buying a home, especially among young people, Blomquist says. “The slow jobs recovery for young adults has made it harder for them to save and to get a mortgage.” Some 84% of young people are delaying major life decisions due to the poor economy, according to a 2013 survey by Generation Opportunity, a nonprofit think tank based in Arlington, Va.
That’s news? Down payments, poor credit and tighter (compared to?) lending standards are three of the biggest hurdles in buying a home? Who knew? Why, in the 1990’s, the three biggest hurdles in buying a home were (1) beating away legions of mortgage bankers throwing sacks of cash one’s way, (2) picking out the appropriate paint color for the wet bar, and (3) limiting oneself to buying merely one home instead of say a dozen or so. What an awful conundrum the American consumer faces needing to have things like good credit to buy a home! Somebody oughta do something about that problem.
Plus, apparently some 15% of Americans (living in one of 78 counties) were living in a financial hellhole where the monthly mortgage on a median-priced home was more than 30% of the monthly median household income. Cited as examples of particularly egregious such counties: Manhattan and San Francisco.
Are you kidding me? There’s a housing affordability crisis in the 78 most desirable urban and suburban neighborhoods in America? Stop the presses! Who knew buying a nice townhouse in Manhattan, or a condo in San Francisco, or a beachfront home in Laguna Beach was expensive?
Again, isn’t the news here that 85% of Americans live in a county where the median mortgage payment is 30% or less than the median household income? Perhaps those 15% living in those 78 counties ought to think about relocating to one of the 3,066 other counties in the U.S. if housing affordability is making them not save for retirement and cut back on healthcare?
But then the punchline…
My favorite part of this “news article” comes at the end. Here is the final paragraph:
The good news: Rising prices have lifted millions of homeowners out of negative equity. Since the lowest point in the housing market crash, rising prices have led to an additional $4 trillion in housing equity, going to existing homeowners, smart investors and those who can afford to buy, Yun says. Home prices, including distressed sales, increased 10.5% in April 2014 year-over-year, according to the latest survey from mortgage-data firm CoreLogic, representing the 26th consecutive month of annual increases in home prices.
Um. Sorry, good news is that rising prices have lifted millions of homeowners out of negative equity? Did we not just spend time and energy bemoaning the crisis of housing affordability? Remember those 78 counties and the Americans who have to cut back on healthcare, or have to move to less safe neighborhood (the horror!) because of affordability problems?
Isn’t rising home prices absolutely terrible news then? All of those young people facing a slow “recovery” and have poor credit and have trouble saving up for a downpayment… aren’t they even more screwed when housing prices rise? But suddenly, MarketWatch wants to celebrate that as good news?
Look, clearly, this article isn’t the height of logic, reporting, or writing. Maybe some reporter was on deadline to churn out a bunch of words and just threw press clippings together: housing affordability is bad! people in San Francisco pay a lot for a mortgage! good news — rising prices lifts people out of negative equity!
I have a suggestion for MarketWatch (and the rest of the News Corp media empire).
Realtor.com Editorial Oversight
Since the “journalists” who cover real estate apparently have no clue what they’re writing when it comes to real estate, it seems like good news that News Corp now owns Realtor.com. The men and women at Move and at Realtor.com do know real estate. They wouldn’t write nonsense like “housing affordability is da worst evah, but good news! rising prices lifts folks out of negative equity!”
Rather than just showing news stories from MarketWatch and New York Post and WSJ into Realtor.com, I’d like to recommend that all real-estate related stories across News Corp’s American media channels be vetted by the people at Realtor.com for accuracy, logic, and reasoning before they see the light of day. Someone like Suzanne Roy, Director of Social Media for Move, could save News Corp’s media properties some embarrassment if she were given editorial oversight.
This is one synergy that needs to happen right away.