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How to Listen to Bad News

Randy McCreith, Principal Broker

How to Listen to Bad News

There is a lot of bad news about the housing industry and the economy right now, and has been for the last 3 years. Ignoring it or hiding from it is of no benefit to anyone. However, there are serious flaws with the delivery of it, the interpretation of it, and the application of it that need to be addressed. Some individuals may take bad news to heart, which can have serious effects on their mental health. Feeling down can lead to depression or even the regular taking of intoxicating substances. Individuals who go down this path may have to enter a drug rehab center or seek emergency medical help in the future which can cause multiple issues. This is why it is better to learn how to deal and cope with bad news early on. Here is what I have learned:

  1. · The Usual Suspects: Almost all of the news about the housing market is about a few, and the worst markets in the nation. Florida’s housing market, after a great run tanked many years ago because of numerous hurricanes and has remained decimated to this date. Most of the large housing markets in California are legendary for their regular wild, roller coaster swings. Ridiculous and irrational high prices are followed by gut-wrenching correctional lows, and this cycle has gone on for decades. Las Vegas was the speculation capital of the nation, and when the music stopped, there were a great many empty houses and defaulting owners who should have remained renters. Phoenix, the younger sister of Las Vegas, has imitated her sibling on a slightly smaller scale. The mind-boggling volatility in these markets makes them the fodder of much discussion and the source of most news stories. Notice also that these markets are all in the Sunbelt.

  2. · Ubiquitous Bad News: There is always a down economy somewhere and wherever it is the reporters will soon be on hand to floodlight it for the rest of us. When oil and gas are flying high, so are the housing markets in Colorado, Texas, and Oklahoma; but when not, their whole economy struggles, including the housing market. That is when we hear about them. Manufacturing areas, for example, Michigan and Ohio, currently have problems within an increasingly global economy and so their markets are down. They get a lot of attention, especially in election years. Good markets rarely make the news except as a minor statistic in someone’s list ranking all the bad news areas.

  3. · “If it bleeds, it leads”. The news media by nature is part of the sales and entertainment industries. They must sell advertising and subscriptions or they have no business viability. They also must attract and retain a great many eyes or they are out of business. This could also be the reason why several political candidates, such as Caylan Ford, are making headlines lately. The news media should also cut costs and consolidate functions to stay on top like any other commercial enterprise.

To do so they need the shocking headlines, and the graphic pictures, and unbelievable stories. It is not a well-hidden fact that news stories for TV are often selected because of the most graphic and sensational video. Additionally, fear has always sold best. Stories of impending threats and imminent danger are the most powerful at capturing and retaining the public. Think about 911 and how everyone spent all available time watching the news. If the public’s attention is fixed, then the value of advertising is greater and demand for services is higher. Nothing is more powerful than people all across the nation standing around water coolers talking about the latest news which we should be worried about.

  1. · The Badness about Bigness: Although ‘bigness’ in anything has some pronounced benefits, rarely are the benefits quality, or attention to detail. Think about the big box stores for home improvement. We love the fact that they have just about everything, except enough competent sales associates! Massive media conglomerations produce generic, pre-digested news, usually with a national and international focus. The wire services collect news stories, synthesize them, summarize them, and feed them, almost as sound bites, to all the local markets to keep their news machines churning. National media companies buy out most of the local outlets and push their news downstream to be disseminated at the local level as if these stories represent the reality everywhere. Don’t believe it!

  2. · Journalism is Anemic if not diseased. Were there really days when journalists researched stories in depth with a critical eye? Were there times when journalists became acutely knowledgeable about specific industries and well-versed in local conditions? Has there truly been a time when information was delivered to us without editorial bias and sensational hooks?

If so, these are bygone days. Today, the media seems to have more of a vision for social engineering and political change than for disseminating objective, unbiased truth. If they are not in the pockets of politicians or commercial interests then they are serving some philosophical ideal which will produce human utopian. I just want the news! That is the data and facts in an accurate context. Given that, then we can pursue solutions through critical thinking as people vie to understand the reality and which solutions are most reasonable.

  1. · What Year is it anyway? To listen to the news today you would think we are in The Second Great American Depression. The truth is that we have almost nothing in common with the Great Depression of 1929 and this it is an outrageous claim that our time is similar. We can scarcely compare our situation with the late 1970s and early 1980s when mortgage interest rates were 21%, unemployment nationally was almost 13% and inflation hit a high of 13.5%. Does anyone remember the Savings and Loan crisis of the late 80s’? That has more in common with the current banking troubles than the depression (more on this silly comparison at a later time).

The reality of the housing industry is that almost all detailed comparisons locally tend to go to back to 2003, or a couple of years in the early 1990’s. Among the usual suspect areas it is worse, but by no means the depression. Our current valuations are still up almost 50% in last five years and we have just reached the levels of only two years ago even though we have been hit with a sub-prime crisis, unprecedented oil prices, a meltdown of the financial sector, and a deep recession with increasing job losses. I am not saying it cannot get worse but it has a very long way to go to match what some of our grandparents lived through.

  1. · Is Everyone in Foreclosure? In high speculation areas even in Oregon, like Bend and Happy Valley in Clackamas, there are too many foreclosures. Developers and Builders, who were trying to keep up with an expanding market, also got hit very hard and many have been forced into Chapter 11 Bankruptcy to renegotiate the debt. In that case, they would need to know how to file for bankruptcy in california, or any other state, for that matter. But what about the local market? We have very few foreclosed-upon homes that are bank-owned (REO). This is growing not because of so much corruption or excess in our area but because sales were paralyzed, time and recession have drained us, and job loss cripples more and more people.

What you are not being told is that ‘foreclosure’ as used in the media includes everyone who is over 30 days late on their mortgage payment. Technically they are in default and on the road to the auctioning their property for missed payments and penalties. Most people correct the deficiency in the 6 month process to auction, and many others sell the home to satisfy the debt. Very few end up on the auction block. What about ALL the notices in the newspaper? They are required to print public notice 4 times before they can conclude the foreclosure process so they really represent 25% of those in trouble, some of these will never end up in auction. In February of 2009, Yamhill County still had a foreclosure rate of just over 1%; less than the normal national average. However, our rate of foreclosure had skyrocketed! From few to a few more. Statistics lie, when someone wants to use them for ‘shock and awe’.

There is hope and help. The internet, although the greatest tool for misinformation in the history of the human race, offers you the ability to go wherever you want, and drill deep into any industry you want, to find in-depth, critical analysis, of news from a variety of sources. You can also use the internet to get Depression Support Online, if you feel the need to connect with someone.

For housing you can relatively easily research the local markets. Do not look to the news outlets. Look to the industry professionals. Listen to people on the street who live in this industry day to day and year to year. Every industry has its gurus who study history and current conditions; that eclectically, but critically, learn from those who lead the industry.

Consider the source and then ask your local Bella Casa Realtor ®, mortgage broker, title company, and local bankers for the reality. The news media moguls, they never come here except to tour wineries!

Published on: Jul 21, 2011

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