Housing 'Recovery?' Not So Fast
Despite media attempts to talk up the economy and journalists' optimism regarding the housing market a couple of years ago, the S&P/Case-Shiller index showed home prices have dropped to "eight-year low" according to Bloomberg.
"Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, showing housing remains mired in a slump almost two years into the economic recovery," Bloomberg wrote on May 31, 2011. They cited the "backlog" of foreclosures for the depressed prices, along with high unemployment and tighter lending.
That bad news on housing wasn't what the broadcast media were banking on. After all, they had reported that housing recovery began in 2009. In July of 2009, the broadcast networks were convinced that prices were "bottoming" and said that the data "suggest[s] a modest recovery is underway."
The Obama administration proclaimed summer 2010 "recovery summer," although it didn't turn out that way.CBS's Katie Couric followed Obama to Ohio as he opened his "recovery summer" tour. Her report touted the "milestone" of the 10,000th project paid for with stimulus money. Couric had no criticism of the president's handling of the economy.
Throughout Obama's presidency the broadcast networks tried to support claims of an economic turnaround. But with summer 2011 only beginning, the housing sector in particular looks bleak.
In a statement, David Blitzer, chairman of the Case-Shiller index committee at S&P called it a "double-dip." "This month's report is marked by the confirmation of a double-dip in home prices across much of the nation."
The Atlanta Journal Constitution's own analysis of home prices around the Atlanta area found that "In one area the median price of a house was $15,250 - the median price! That means half the 260 houses sold there fetched less than that."
The AJC's report on June 5, 2011, quoted Sandra McCrary, managing director of ReMax Advantage in Henry County. She said, "We're only going to know we've hit bottom when it goes back up … If you're a buyer, it's fabulous. If you're a seller, it's not so good. I've been in real estate for 33 years and it's probably the most challenging for people trying to sell homes."
But in 2008, the news media predicted that the housing recovery would happen in 2009. USA Today interviewed stock experts on Dec. 31, 2008, who forecast a "stabilization of the housing market" in 2009. The Los Angeles Times was a bit more cautious, citing forecasters who predicted the economic recovery wouldn't happen until 2010.
This mirrored the White House talking points as well. The Obama administration cited housing in an interview defending its stimulus package on "Meet the Press" June 14, 2009. In that interview, Vice President Biden said "things are getting better." One of the things he cited was that "housing is starting to improve."
In July of 2009, The New York Times was "Looking for a Housing Recovery." Broadcast reporters including CNBC's Jim Cramer were too. On Nov. 24, 2009, Cramer spoke about economic "areas of encouragement" despite "horrible" unemployment numbers on the "Today" show with Matt Lauer.
"Yeah. November, not bad. We don't have a lot of cars, excess inventory. There's not a lot of excess inventory at retailers. Retailers are saying that November's been pretty good. We also saw a very good number for existing home sales, some stabilization. Those are all three very good signs, Matt," Cramer said.
The latest Case-Shiller data suggests that the media spoke too soon.
Part of the reason for that false start in housing may have been the Obama administration's attempts to artificially stimulate demand. The National Association of Realtors reported in April 2010 that March home sales had been boosted by the homebuyer tax credit.
That tax credit was just a piece of Obama's plan to fix the housing market. Another piece, a $75-billion program "to protect homeowners from foreclosure" was "widely pronounced as a disappointment," according to the Jan 1, 2010, New York Times. The Times went on to say "some economists and real estate experts now contend it has done more harm than good."