I awoke one recent morning to the news of the results of a hot-off-the-presses Pew study: 63 percent of Americans polled believe that media news stories are often inaccurate. Sixty percent feel the media is biased in its reporting, and 74 percent said news organizations tend to favor one side in their dealings with social and political issues.
Call me a cynic, but this public sentiment seems neither surprising nor off-base to me. Keeping in mind that I hail from the San Francisco Bay Area, the land where alternative viewpoints are the norm, I see myself as more of a realist than a skeptic or conspiracy theorist when it comes to the mainstream corporate media and their inclination to slant stories. To my mind, the media is in the business of grabbing eyeballs, which has, historically, been more effectively executed with drama, frenzy and fear than through "all calming, good news, all the time."
I see it as neither bad nor good — it just is. And if you don’t like it, do what I do and don’t watch it, or cull your news from sources you find to be less slanted (or at least sources that are slanted in the same direction as your own opinions, which does tend to make one feel pretty good).
But I digress. When I read the new study, my puzzlement was not at the results, but at this conundrum: Since we all are apparently aware that media reports are often biased, why do real estate consumers allow news reports to make them crazy?
I’ve had a couple of meetings with new clients who evidenced symptoms of "media market mania." One got so worked up just talking about it that I started sweating for her.
Here’s how she presented, "Should I buy now? Or wait? I’ve been wanting to buy for 10 years now, but I decided to wait for the bottom. I started to look at the end of last year, but I kept reading articles that said the market hadn’t bottomed out yet. Now I’ve waited, and all I read about are multiple offers and overbidding — that’s what I was trying to avoid in the first place!
"Oh — but then I just heard on the news that I should be trying to make sure I close escrow by Nov. 30 to get the tax credit. First they said wait, now they say hurry. I’m not really sure what to do, but I’m going to take time off work so we can just look at, like, 10 houses a day until we find one."
And she was right. Well, not about taking time off work, but about the crazy-making potential of hanging on the media’s every word about what to do and when to do it, when it comes to your real estate decisions and moves. The messages can be so contradictory and extreme, from an urgency and emotional perspective, that consumers taking them to heart often succumb to total overload, overwhelm and either panicked, impulsive action or total paralysis (cue scene with first-time homebuyer twitching and drooling into a folder of good faith estimates, complete with fetal position, on the couch, with the news announcer’s voice audible in the background).
Unfortunately, the mainstream media’s real estate news and advice does not buck the biased-and/or-inaccurate trend Americans have detected in the media at large. (Although this is definitely a generalization — there are a few beacons of consistently good information and advice out there. An example that comes to mind is The New York Times’ Your Money Column, written by Ron Lieber.)
There’s no malice aforethought implicit in this, if you ask me. The reality is that real estate markets and, thus, recommendations for how any given individual should best maneuver within them, are uber-local phenomena. A buyer’s market in Sheboygan could be (and, in fact, likely is) a seller’s market in San Francisco. By its very nature, the national news must generalize, which necessarily renders monolithic real estate advice inaccurate for some of the readers almost all of the time.
And as for bias — "The Sky is Falling"; "Bubble Has Burst"; "Market is Terrible"; "Prices are Down"; "Foreclosures are Up" — these doom-and-distress headlines with which we’ve been bombarded for the last couple years belie the essential dichotomy inherent in real estate, that is non-existent in other markets and asset classes.
The fact is, the real estate market is never "bad" for everyone. Unlike the stock market, where the vast majority of people suffer in a down market (fancy options traders being the exception), a real estate market that is bad for sellers is, almost by definition, great for buyers.
But it’s not just buyers who fall prey to this media market mania. You should hear — or perhaps you have — the mental gyrations into which this madness propels homeowners. I hear it all the time, usually right after someone asks whether they should "just walk away" from their home.
ME: "Why would you do that?" …CONTINUED
HOMEOWNER: "Well — have you seen the recent news about home prices?! I’m upside down! I owe $25,000 more than my house is worth! I’m out of there."
ME: "Let me ask you a few things first. Has your mortgage payment adjusted? Did you lose your job? Has your income been reduced? Are you struggling with your payment?"
HOMEOWNER: "No."
ME: "So, mmm, how long were you planning to live there before you started hearing and reading about ‘upside down,’ ‘underwater’ and ‘walking away?’ "
HOMEOWNER: "Well, I’d planned to stay there forever, but now I’m mad because I saw in the paper that the house next door sold for less than what I owe, and I asked the bank to reduce my principal and those you-know-whats refused! Like that guy on TV said, they can just have it back, then! That’ll show them."
Right. Like "Chase Fargo of America" will be reeling in financial distress and learn its lesson when you ruin your credit and move your kids out of your family home in order to walk away — something that would have been utterly unthinkable before you heard about it on TV.
It sounds nuts, but it happens all day, every day. Consumers are allowing the media messaging, that we all know to so frequently be off-target, to inject these notions of what they should and shouldn’t do into their subconscious (and sometimes into their very "conscious" conscious).
This often spirals into decisions that have less to do with what is right for them, their families and their futures and more to do with knee-jerk reactions to the gut-level emotions that arise from promises or threats to our shelter and largest financial holding: our home.
So, I’m embarking on a personal mission to stop these "shoulds." Inspired by Bill Maher’s "New Rules," I’m declaring a New Real Estate Rule: Make your real estate decisions, like whether and when to buy and sell a home — based on what makes sense for your life, not what you read on the news. Having a new baby? Saved up that downpayment finally? It might make sense to buy. Job relocating? Need to downsize? You might want to consider selling.
As a smart consumer, obviously you’ll want to take advantage of our era’s unprecedented access to information. Obviously. So go ahead and decide what you want/need to do based on your life. Then, when it comes time to strategize about how you will execute your decision (e.g., selecting your home’s list price, or deciding how much you’ll offer for your new home), that’s the time to go to the most recent data you can find for specific information that is relevant to your strategy decision. My clients who experience their real estate transactions with the most calm and are able to make the most well-reasoned, deliberate decisions are those who eschew the hype as a matter of personal preference.
Real estate values and market dynamics go up and down. Yes, we’re coming off of a "down" that has been a particularly brutal experience for many homeowners. But it’s also been a boon to many homebuyers. Do these cancel each other out, making things neutral? I don’t know. But I do know that if you want to neutralize the emotional ups-and-downs that seem to go hand-in-hand with the market, your best bet is to unplug from the media market mania.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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