The Doctor is In
CNBC Real Estate Reporter
I was struck by a line toward the end of Hovnanian Enterprise Inc.'s very dour Q2 forecast. After detailing how earnings losses would be more than double expectations, including all those land losses of course, and how the "results reflect a continued challenging operating environment in most of the company's markets," the conclusion was as follows: "The adverse publicity surrounding the sub-prime market has further damaged home buyers' psychology."
Yes, that's precisely it. You know, I've been trying to put my finger on the real culprit in all this housing hullabaloo. I mean, how could we have gone from a real estate market where hungry bidders elbowed each other across the front porches of America, begging to overpay for over-hyped, over-embellished abodes to Sunday realty sports pages that tout "Price Drop" and "Seller Offers Extras!"?? How did it happen so fast?
Now I get it. Media hype. Yup, it's all about me. You see, I keep getting up on TV and telling people all about these numbers, these numbers from mortgage bankers and realtors and home builders, and they're not very encouraging.
Then I go and tell people that mortgage companies are going bankrupt and Wall Street firms are getting out of the loan biz, and lenders are tightening standards. And then those pesky Congressional hearings; I go to those! I put microphones on Senators screaming about how thousands of people in their states are in default on their mortgages and in danger of losing their homes. To top it all off, I actually talk to those same people who claim that aggressive lenders pushed them into loans they didn't understand and couldn't afford.
My bad. I mean, had I known that all this stuff I put on the tube was going to -- what was it -- oh, "damage home buyers' psychology," then trust me, I would have just shut my mouth and done a couple of features on the renewed interest in geodesic dome homes.
I certainly wouldn't want anyone to feel badly about the housing market, because that might make them stay home and count their money instead of gambling it on a no-money down, 6-month-adjustable rate-negative amortization-no-doc loan with a teaser rate on a million dollar home.
Five cents please.
This is not a hype based pop. Hype is not causing the mass foreclosures. Hype did not take 1/3rd of buyers out of the market with the subprime implosion. Hype caused the bubble. The reality of the fundamentals is bringing down the house of cards.
- Darrell S.
There definitely is a problem that you are exacerbating by continuously talking about it, the more you do the worse it gets, because the more people hear it the less they want to buy, so its a vicious circle that you are perpetuating. Some positive talk by all would begin to relieve the housing crisis.
It isn't hype, these are the realities that nobody wants to talk about in America. Truth hurts!!!!!!!! Law firms are making fortune off of lenders and borrowers and in GA it has almost become monopoly business in entire state. Imagine that!
The same media entities being blamed by Hovnanian now were raising red flags years ago and it didn't slow the market at all. The people caught up in this market do not base decisions on the WSJ, CNBC etc. If they did they would have better protected themselves going into this.
As a small investor I have for sure been affected by your reporting, it is turning into a negative factor for the real estate industry.
I have 4 rental properties and my tenants are demanding lower rents based on what they "hear on CNBC." My properties are in middle-class neighborhoods and are rented by professional people. The hype is turning into a self-fulfilling prophecy.
Well it is about time someone in the media admitted to the world how they manipulate the economy and financial markets. I have much more to say but I have to get off the computer because the CIA is tracking my every move. Are those black helicopters I see outside my window?
- Mike B.
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