How would you report this?
What readers I have must wonder why I rail endlessly against the sloppy, broad-brush, momentum-driven coverage typical of real estate reporting.
Maybe they think I'm mining a quick and easy market niche. But anyone who thinks bashing the media and its sacred cows is the way you win friends and influence people should read all 152 reader responses to the online Wall Street Journal's May 1, 2008 story "Home-price data has its flaws", which has the temerity to mildly criticize the Case-Shiller Home Price Index preferred by nine out of ten market death-watchers and sloppy broad-brush momentum-driven reporters. The brave soul who wrote it, veteran reporter Chris Plummer, may have to go into a witness protection program.
Probably the lowest blow thrown at Plummer came from a "former financial writer" who questioned Plummer's professionalism. Folks, from what I've seen of the work of the average financial writer (and I can only wonder about the work of a "former financial writer") that's like a "former fry cook" questioning the professionalism of a world-famous chef with a string of restaurants.
Naturally the media and the people who uncritically consume its real estate reporting indignantly deny that reporters rarely get it right, or that editors reflexively focus on the most dire aspect of any story, real estate or not, to thrill and chill that large segment of the public that, as every editor apparently knows, mistakes melodrama for information.
And certainly Broderick Perkins, one of the better and more experienced real estate writers, resents this charge. "It is counter productive, irresponsible and a position of denial", he says, "when industry leaders dribble on about the media...". Perkins stands ready to defend reporters from those who "whine, rattle cages and crack whips to bind and blind". The reporter's sacred, time-honored mission is to, as Perkins puts it, "offer fair, unbiased and balanced coverage designed not to placate those covered, but to imbue the reading public with objective information it can use to make its own decisions".
Well! I guess that put all us knee-jerk media critics in our place.
But let's take a moment to look at Perkins' recent article, "Wild, Wild West: Silicon Valley Price Fall Spreads". I won't editorialize about it, won't do any knee-jerk media bashing. I'll just quote it. I will interpose in italics how I think Perkins's "reading public" would react to his "objective information". Then I'll give you some additional information that somehow didn't make it into his article, I say "somehow" because it's information from the same source Perkins based his story on. Then, in light of this additional information, I'll let you, the reading public, decide how you'd report the story.
Perkins: "California's last major metro holdout in price increases [Silicon Valley] has hit the wall—and hard."
Silicon Valley homebuyer who believes everything he reads and hears on the news: "Yippee!" Silicon Valley homeowner who believes everything he reads and hears on the news: "Ruined! I'm ruined!"
Perkins: "The market's overall price decline indicates high-end homes are finally beginning to feel the pinch. Starter home prices have been declining for nearly a year, but stronger high-end home sales helped buoy the median price—until recently."
My clients who are trying to buy a home in Palo Alto, one of the Silicon Valley high-end cities supposedly feeling the pinch: "Then why does every home we want sell for 10 percent more than it would have two months ago?"
Perkins: "Silicon Valley is nearly a full-blown buyer's market..."
My Palo Alto clients: "Then why does every home we want sell with multiple offers for $150k more than the last sale?"
You'll notice that we have two differing story lines here. So how do we explain this?
"Silicon Valley Price Fall Spreads" is typical of a large segment of real estate reporting: it's a summary of someone else's work product, usually a press release but, in this case, a real estate agent's weekly online newsletter. Perkins "fleshes out" his article with two links to Zillow. He also provides a link to the agent's newsletter, which I follow. I spend maybe two minutes poking around there and easily find two items that contradict the thrust of Perkins' article.
The first item is the newsletter's assertion that "the expensive communities (Palo Alto, Los Altos, Sunnyvale, Cupertino, Saratoga and Almaden Valley) are doing well and are at or near their record high prices".
Wait a second. Didn't Perkins just tell us "high-end homes are beginning to feel the pinch"?
Next is a link to a dandy chart that shows "expensive" Silicon Valley real estate appreciating sharply. In this case, "expensive" includes the cities of Saratoga, Los Gatos, Los Altos, Los Altos Hills, Menlo Park, Atherton and—remember my clients—Palo Alto.
Wait a second. Didn't Perkins just tell us "high-end homes are finally beginning to feel the pinch"?
The newsletter's chart shows declining prices in every other segment of Silicon Valley real estate. "Mod-exp", the price range immediately below "expensive", shows a gradual decline in average sales price. Moving down the range, "mod", "condo/town" and "south county" sales prices all decline more steeply, while "affordable" drops off the table.
Which might explain that "overall price decline" Perkins mentioned a whole lot better than "high-end homes are finally beginning to feel the pinch". You think?
Yes, it's the same old same old, in other words, trends in Silicon Valley's various price ranges that, as Perkins says, have been going on for almost a year. So what's new? Why did Perkins suddenly decide that Silicon Valley real estate has "hit the wall"?
And—the real question—how does this reporting happen? And the $64,000 question we won't even get into: is this sort of thing confined to real estate reporting?
I keep returning to the same idea: nuances. The real estate market—any market—any news story, for that matter—is a matter of nuances. In fact, the real story is nothing but nuances. The real estate market isn't just numbers, it's people. Different groups of people, working with markedly different financial constraints, making up the different sub-markets that make up the Silicon Valley real estate market. Life smiles on Silicon Valley's elite these days, as it almost always does on almost any elite. Life can be hard and is getting harder for Silicon Valley's non-elite these days, and the more non-elite they are the harder life is, as it almost always is for non-elite almost everywhere.
None of this—the nuances, the sub-markets, life—lends itself to broad-brush reporting. But broad-brush reporting is alive and well because it sells, and it sells because it usually goes undetected, and it goes undetected because only a minute fraction of its readership can spot it. Anyone who does and protests is either an industry shill or a knee-jerk reactionary or worse.
And in this case we have a real estate reporter who seems to recognize that a story has nuances—and misses them anyway.
"Nuances" is one idea. I have a few others as well.
There's the idea of pajama journalism, the fond and expedient hope that a reporter can cover a market without getting dressed and getting in a car. I know the nuances of the real estate market because every day I shower, dress, strap myself into the mandatory black Mercedes and make like a real estate agent. My active clients—the clients who immerse themselves in the market rather than just dipping their toes in it—know the nuances of the real estate market because they are the real estate market. To paraphrase Woody Allen, 90 percent of market knowledge is just showing up. Not showing up on the sidelines, as so many "experts" do. Showing up in the game.
Then there's the idea of balance that Perkins refers to, journalism's sacred tenet, apparently more honored in the breach, that every story has more than one side and every credible side should have its say. "Silicon Valley Price Fall Spreads" has one side. Had Perkins gone to the agent market reports section posted on the same Realty Times Web site that posted his article, he would have found a quote, ready-made and suitable for insertion, from a Palo Alto agent who says "prices have remained stable with homes selling usually within 14 to 30 days. Weekend open houses are flooded with buyers...and homes that are priced and staged well are in high-demand. Inventory is still lagging the demand for this area, so this is really a sellers market, but a realistic seller's market". Use that or a similar quote and bingo! "Silicon Valley Price Fall Spreads" has the balance Perkins lauds.
Then there's the idea that real estate reporters are human, all too human, something that, if we suspend our child-like faith in the media for a moment and let ourselves believe, might diminish its stature as the god-like dispenser of Truth. In an expensive, affluent region like the Bay Area, the average reporter is priced out of the housing market. And for years the average reporter has covered other people—homeowners, investors, agents—supposedly, and sometimes actually, getting filthy rich off real estate.
Then there's the idea I'm beginning to get from reading the comments on online real estate articles: that the only people reading these articles are the ones with a vested interest in hearing bad news about real estate, bubbleheads and first-time buyer wannabes (and often the line between the two is blurred). Could a real estate writer, reading these comments and those sent to his inbox, be blamed for consciously or unconsciously tailoring his story line to his audience? And is it coincidence that buyers at the top end, invariably older, more experienced and confident in their judgment, are still buying homes while the first-timers hunker down awaiting the all-clear signal from the media?
Then there's the emerging idea that, as one economist said recently, "prices can't fall 40 percent in Stockton without also falling in the Bay Area's affluent neighborhoods". No reporter wants to be late for that band wagon, even if it hasn't left.
Finally, there's the idea that the media built up the real estate boom into one of the biggest, splashiest and, inevitably, most vacuous stories of the decade. Now the media watches, fascinated, as real estate totters like a mortally wounded King Kong atop the Empire State Building. Who can blame them for being tempted to give King Kong a final shove?
But it's all good: I've finally figured out what all this talk is about "Internet transparency". It's when an online news report that contradicts your own experience gives you a link to its source—and the source contradicts the report.