Media bias in real estate reporting?
Paulb posted a link to this surprisingly negative article in The Toronto Star this weekend - I say surprising because we’re used to seeing a much rosier outlook in the mainstream media. That kicked off a discussion on media bias that I think is worth continuing. As suggested by ‘burden of proof’ I’m going to post this as a few poll questions. Feel free to elaborate on your opinions in the comment section.
Loading … Loading … Loading …Extra: Conjuration_imbeciles sent in this link to another article in the Toronto Star. One of the authors that predicted the US housing crash warns Canadians thinking about buying a property in the US that it’s still too early to buy. He predicts that there are more losses to come, particularly in markets favoured by Canadians (ie. Arizona & Florida).
RSS 2.0 comments feed. Both comments and pings are currently closed.
March 9th, 2008 at 8:35 pm
3 br detached house in City of Toronto for 210K
Incomes in Toronto are higher than in Vancouver, and rents are about the same. But Vancouver prices are 70% higher. Run that through your calculator.
I think Bizarro logic has taken over Vancouver - the more ridiculous prices get, the more sustainable people think they are.
March 9th, 2008 at 9:44 pm
I think one CBC reporter was surfing the blogs regarding recent presale sensationalism but never surfing for material for a “forest instead of the trees” article.
Come on, reporters! Have some fun and take a bit of a risk! There are some smart people posting and commenting in the Vancouver RE blogosphere and you should easily be able to figure out who they are (it sure didn’t take me long) and draw your own conclusions.
Reporters, if you bother reading this, read the comments on some of the local blog posts on local real estate articles put out by the MSM. Not all the comments make sense but there are many that do. Also remember it was the blogs in the US (and a minority of analysts that actually got airtime) that first called the US crash. Maybe, just maybe, the Canadian blogs will be vindicated in time.
Now that’s a story: “Blogosphere nerds could outsmart the market.”
March 9th, 2008 at 9:46 pm
They’ve been pro-liberal from day one, they consistently emphasize the “happy” news - Vancouver is always pretty, always polite - they’re real estate whores, and they’ve let down the people of this province
but that’s just my rant
March 9th, 2008 at 10:00 pm
Canada not immune from subprime crisis: Garth Turner
The U.S. real estate crash is about to sweep into Canada, says Garth Turner in a just-published book entitled “Greater Fool.” Turner – the Liberal MP, entrepreneur and real estate investor – says the problems underlying the American subprime crisis “go far beyond mortgage products and also reach into Toronto, Calgary and Vancouver.”
In a nutshell, Turner urges his Canadian readers to sell their real estate if it makes up much more than a third of total family net worth and consider renting until the storm passes. He suggests baby boomers sell their “McMansions” while they can still get decent prices and find more reasonably priced modest homes located near hospitals, public transit and other amenities.
The book is timely enough, considering it includes such recent news reports as the line-ups for downtown Toronto condos: line-ups he says were largely fabricated for the benefit of gullible media types. “When bungalows in Vancouver cost $900,000 and resale homes with no parking in midtown Toronto are $1 million, it’s only forty-year mortgages and an embracing of debt that sustain the unsustainable,” Turner writes in the Key Porter published book, subtitled The Troubled Future of Real Estate.
He warns that overextended young Canadian couples are buying into several real estate myths, “egged on by real estate marketing machines and reassured by economists paid by our largest lenders.” They “cling to the absurd belief that paying too much for something is okay” and that “there will always be a greater fool willing to pay more.” Turner does not believe the American housing crisis was caused by subprime mortgages extended to otherwise unworthy borrowers. “That was but a symptom” of the real disease, which was the rush into real estate that followed the flood of cheap money Alan Greenspan unleashed following the shock of 9/11.
With 5% down mortgages and the new 40-year amortization schedules, Canadian homeowners are just as overextended as their American counterparts, Turner argues. He also notes that subprime [or near-prime] loans are also available in Canada through firms like Toronto’s Exceed Mortgage. “The inevitable conclusion is that the current Canadian real estate market is floating on a sea of unrepayable, and perhaps unserviceable, debt.”
March 9th, 2008 at 10:29 pm
Where is the blue Kryptonite?
I don’t think the media is very homogenous. In fact there are different biases in different parts of the media.
1. With regards to the basic articles that appear from time to time, I think the bias is related to laziness. The reporter simply quotes whoever will speak on record, and those are mostly biased views of the bullish kind (CMHC, realtors, builders). The reporter doesn’t have the incentive, inclination or competetence to put these talking heads on the hot seat.
2. The real estate section is obviously a massive infomercial.
3. The editorial style is a place where we ought to see some tough questions asked, and the application of good old common sense. Olsen has done a good job here, but I can think of few others. The Province/Sun did jump the gun with that front page item about the Fraser Valley (especially White Rock) drop. I presume that you can sell papers by playing on people’s fear.
4. If and when the market turns, we will be swamped with bad news stories.
March 10th, 2008 at 5:21 am
March 10th, 2008 at 6:29 am
They get a release from the real estate association, call Muir or an ‘analyst’ with a local credit union and that’s basically the extent of their digging for information.
This shallowness largely largely applies to most subjects in the press: politics, the environment, business.
Journalists are people who spent four years studying how to write a lede and avoid libel. They bring no expertise to the table, and it’s increasingly evident in the Internet age.
March 10th, 2008 at 6:54 am
Yeah, I know, “this time it’s different”.
March 10th, 2008 at 6:58 am
Just an unrelated data point, perhaps….
March 10th, 2008 at 8:08 am
More accurate about what? The facts? I don’t think so.
More accurate predictions to this point, yes. But people who make predictions about the direction of the market are only right until they are wrong. As they are in every bubble.
March 10th, 2008 at 8:23 am
Absolutely correct. Journalism programs generally have a single Intro to Economics course, and that course tends to be more disliked and has a higher failure rate than any other in their program. Journalism students tend to be mathematically challenged and don’t see why they need to know anything that involves numerical analysis.
Scullboys comment re. “mile wide and inch deep” is accurate.
March 10th, 2008 at 8:27 am
Of course, because the market continues irrationally upward. We saw a lot of these one-note acts during the dot.com bubble. Talk about your stopped clocks. He’ll continue to be absolutely right until the market changes, when suddenly he’ll be Oh, so wrong.
March 10th, 2008 at 9:04 am
You should also consider how many pundits in the US were calling for a major housing crash and financial chaos as far back as 2004/2005 yet were only reported in the fringe media. I would imagine there have been some contrarian mouthpieces commenting on the Canada west housing bubble but it’s up to the MSM to give them an outlet.
I doubt the MSM would have a hard time finding sources to support any argument they care to make.
March 10th, 2008 at 9:18 am
March 10th, 2008 at 9:19 am
March 10th, 2008 at 9:48 am
forum/viewtopic.php?f=2&t=40
March 10th, 2008 at 10:22 am
I wouldn’t call the New York Times “fringe media” (Krugman, “That Hissing Sound”, summer 2005), nor would I use that label for The Economist (”In come the waves”, Jun 16th 2005).
Of course these are liberal publications (in the US and British senses of the word respectively) so they would be negative wouldn’t they?
March 10th, 2008 at 10:51 am
March 10th, 2008 at 10:54 am
“[Electricity from solar power] is doubling now every two years. Doubling every two years means multiplying by 1,000 in 20 years. At that rate we’ll meet 100 percent of our energy needs in 20 years.”
Ray Kurzweil, quoted in Live Science
http://www.tcsdaily.com/article.aspx?id=030608A
March 10th, 2008 at 11:23 am
As far as Vancouver Sun goes, look at the amount of advertising done by the RE industry-it is freaking huge. Any local reporter with a desire to keep his job would be crazy to do anything even mildly critical of the market. This is of course assuming the reporter can do any analysis. Frankly, the mile wide and inch thick comment meshes with what I have seen, and most newsrooms really are not in the business of encouraging critical thought.
March 10th, 2008 at 11:26 am
the biggest problem is the lack of available polysilicon for the panels - and of course the time it takes to build a polysilicon plant -
but we could probably be at almost 100% alternative energy usage in 20 years - if we have the willpower to do it
March 10th, 2008 at 11:40 am
http://www.cbc.ca/canada/british-columb … condo.html
Okanagan condo developer leaves pre-sale buyers in limbo
Last Updated: Monday, March 10, 2008 | 10:45 AM ET Comments3Recommend25CBC News
Another B.C. condo project has run into problems, leaving buyers with pre-sale agreements wondering if they will ever get to move into their new homes.
The Willows condominium development in the Okanagan town of Lake Country, just north of Kelowna, is in receivership, leaving about 78 purchasers in limbo.
Developer Divergent Environments published this picture of the Willows development on its website in July 2007.
(Divergent Environments) The condos were being built by Divergent Environments, a Victoria-based company, whose website says it has 16 years of development experience in Western Canada, including at least four condominium projects.
One of the disappointed Willows buyers is Heather Brown, who until recently lived in an upscale condo in North Vancouver.
After retiring, Brown wanted to live a less stressful life. So, with the aim of retiring in the Okanagan, she signed a pre-sale agreement for one of the Willows condominiums.
After selling her North Vancouver home in preparation for the move, Brown said she was shocked to discover the development company had gone into receivership leaving the project only 75 per cent complete.
“This was a retirement investment. Stress free! I’ve had more stress than I’ve ever had in all my years!” Brown told CBC reporter Gary Symons.
Brown has been paying to stay in a local hotel with her dog, and she is not happy about having to pay those costs.
“Because I’m on a very fixed income, I can’t just keep spending my disposable income with no reimbursement for that. It’s wrong, and with no end in sight!” said Brown.
Now she regrets signing the pre-sale agreement.
“I’m a pretty positive person and everything, but this has taken all the joy, the excitement, everything. I just don’t even want to go there,” said Brown.
Realtor Burt Chapman told CBC News he believes the project will be completed, but it could take another couple of months.
The development is now being handled by a receiver, BDO Dunwoody.
Pre-sale agreements are common in the red hot B.C. real estate market. Under the agreements, developers sell off some of the units before construction begins, allowing them to finance part of the cost of construction.
Buyers generally benefit from fixed prices, which can result in considerable savings.
But the Willows project is at least the fifth development in B.C. to fail in recent months. In most cases, developers have blamed the rapidly escalating costs of construction for making the projects financially unfeasible.
In some cases, buyers have been forced to pay extra money to hang on to their units when a new developer steps in to complete the project. In other cases, the original developer has returned deposits and torn up pre-sale contracts, telling buyers they would have to sign more expensive contracts to secure a unit.
Real estate experts recommend only signing pre-sale deals with reputable developers with a proven track record of completing similar projects on time and on budget.
Even so, Brown said she did her due diligence and even got a realtor to look into the project for her. Now she says, she would never take the risk again of pre-purchasing a home.
March 10th, 2008 at 12:13 pm
If you consider the reading habits of the average American (or Canadian) you might.
March 10th, 2008 at 12:18 pm
Thanks for the belly laugh. My puppy doubled his weight in 6 mths; I guess he’ll be the size of a Brontosaurus soon.
March 10th, 2008 at 12:25 pm
http://tinyurl.com/2tuqam
This will now be a markedly cash-flow-negative property.
March 10th, 2008 at 1:04 pm
I think this phenomenon should be called the “Kurzweil Effect” or maybe even the “SATV Effect” (as relates to Vancouver RE).
March 10th, 2008 at 1:42 pm
Ray Kurzweil, quoted in Live Science
Kurzweil is a frigging nutbar. He also believes that computers will have emotions by 2029. There is absolutely noway that solar can meet 100 percent of needs in 20 years.
March 10th, 2008 at 1:45 pm
Solar cells won’t be able to compete with thermal solar for a long long time. Picture a acres and acress of mirrors out in the desert, all aimed at a tower where steam is generated which drives a turbine. Basically, the problem to solve is cost effective transmission of electricity from remote places.
March 10th, 2008 at 2:53 pm
March 10th, 2008 at 3:13 pm
India has been using solar for some time. I visited a tiny village in the desert some years ago that had a solar panel on a light tower in the middle of the village. Charged during the day, lit at night. Stand alone. Pretty cool.
They are also leaping to wireless phones having skipped the wired telcom infrastructure. Again, pretty cool.
March 10th, 2008 at 3:30 pm
“As a species we already use more energy than falls on the planet as sunlight.”
Ok, that’s insane. I do not believe you, did you make that up or do you actually have a source?
Here’s what I found.
Worldwide energy consumption was 0.471 ZJ in 2004.
Oceans absorb approximately 2850 ZJ of solar energy per year.
So you’re only off by a factor of 20,000 or so. Nice try though.
March 10th, 2008 at 4:15 pm
It doesn’t take brains to say “more of the same”. Any fool can. It’s inherent in most systems that if you predict “more of the same”, you will be right most of the time. So where’s the skill in saying “more of the same”? Being right in such cases provides no evidence of a functioning brain. Think “monkey see, monkey do”. Think “parrot”.
Predicting change … that’s difficult … it requires intelligence and to some degree courage.
Predicting when change will occur … more difficult … people will mock you every time you get it wrong … so it requires guts.
Saying “more of the same” … intelligence and courage are optional.
March 10th, 2008 at 5:32 pm
And that is a key point that I keep trying to hammer home. There is a HUGE difference between being right about direction and being right about magnitude.
Example 1. A boy cries wolf. Most of the time he is wrong, but about 1 in 4 he is right. Even though he is wrong more than he is right (direction) his opinion is still valued because of the severity (magnitude) of consequences when he is right.
Example 2. Weather forecaster A is 99% accurate about whether it will rain the next day (direction). Weather forecaster B is only 1% accurate. However B is 100% accurate on his hurricane predictions (magnitude). Which forecaster would you prefer if taking your boat out on the ocean?
Humans have a flaw where we tend to favor the person being right more times (direction) than the person being right in the value weighted sense (direction AND magnitude). That is one reason bubbles form. Extrapolating forecasters get a following.
March 10th, 2008 at 5:37 pm
As pointed out, we consume a miniscule amount compared to the solar energy reaching the earth. However, Kurzeil is still a nutbar. I don’t know why he gets as much MSM time as he does.
Also don’t forget that wind and water turbines also use solar energy, albeit indirectly. We let the earth’s surface concentrate the energy into moving air and water, and then harvest it. Of course these opportunities are in not limitless, though off shore windpower holds HUGE promise once the transmission prolem is solved.
March 10th, 2008 at 9:30 pm
Here’s what I think got lodged in my cranium as that fact. It’s this study
http://globalecology.stanford.edu/DGE/D … hange1.pdf
that was cited in Tim Flannery’s The Weather Makers (that I was reading 4 pages a night of until falling asleep, abandoning it after 6 weeks and an ill-digested chapter and a half)
The study says something like current fossil fuel use (fossil fuels being derived from ancient plant matter) consumes more than 400 times the current net productivity of plant matter.
Flannery’s use of this study (and I just reread it a moment ago) careens forward into a statement that by 1986 we had reached the point of consuming all sustainable production, and since then we’re in a kind of “consumption deficit”. It’s not clear what “sustainable production” means or how it relates to this study on fossil fuel use.
I guess I conflated that statement about consumption deficits — which in rereading seems poorly founded — with its origin a page earlier in this energy analysis and it lodged in my cranium as an energy deficit.
Anyway, I wasn’t “trying” anything — except to read myself to sleep with pop science.
I did see that solar panel in India though.
March 11th, 2008 at 12:13 am
March 11th, 2008 at 12:58 am
Type 1 – false positive: Diagnose that the patient has cancer, but patient actually is healthy (Bull market)
Type II – false negative: Diagnose that the patient doesn’t have cancer, when patient has cancer (Bear market)
A good way for doctors to minimise false diagnosis is to do more and more tests on the patient presenting with particular signs and symptoms. This is not only costly but could be an over-kill.
A simple rule of thumb is to use the age of the patient as the guiding factor (if the symptoms are ambiguous). Subject the older and elderly patients to more lab tests since they are more likely than the younger patients to have a serious illness.
Say, the bull is lumbering in its run and snorting away, how do we decide whether this is actually still a raging bull or a decrepit bull running out of steam which might just drop dead from exhaustion? Use the age of the bull as a guide in the decision making process.
Well, the BC RE property market’s bull run is now in its 6th or 7th year (very middle aged in human terms). Thus, diagnosing signs and symptoms to represent bearishness rather than bullishness seems more sensible and in fact advisable.
Still, a Type I error can be committed if undue assumptions are made about the signs or symptoms. But certainly, at this stage, a Type II error is unlikely to be made by anyone.
March 22nd, 2008 at 7:50 am