Search Listings

USA Today Housing Report Is Shameful Journalism

Shameful Journalism Picture USA TodayHave you ever started reading an article and realized that its author was hell-bent on making a point, who just started grabbing clips and pieces of conversations that supported her point? I found a shameful piece of "journalism" yesterday at the USA Today Housing website, and thought I would write a rebuttal piece for people who are on the fence about buying a home.

Just to clarify my position from the start, I make my living helping people buy and sell homes, so I obviously have a bias as I sit and write this. But also know that I authored the article "Why Now Is Not The Time To Buy A Home" in January 2010, and I provide a regular stream of analytical real estate reports designed to create public awareness of housing market conditions. So yes, I own a real estate company, and yes, I have a bias towards real estate ownership, but that does not make me a sing-song REALTOR® who always is preaching "now is the time to buy!"

I would expect a journalist working on behalf of CNBC.com and USA Today Housing to be held to a higher standard than a typical online marketing person. What ever happened to the days of diligently researching a topic before going to print? Does Shelly K. Schwartz, the freelance writer engaged by CNBC.com and USA Today, not realize that many people read and trust both CNBC and USA Today Housing? For that matter, do these news sources still have editors? The trustworthiness of these organizations seems to be about the same as one would expect from Twitter.

There are many valid points made in the article, and many by wise and influential "thinkers" in our society. I concur with most of the points, it is the analysis and thus the conclusion that makes me wonder just how long it took the author to slap this story together. For example, quoting Yale economist Robert Shiller, when discussing the purchase of a home for residency, Dr. Shiller states

This is not a financial investment. It's an investment that provides you services and you have to answer for yourself how you value that.

The biggest dividend of real estate, says Shiller, is the lifestyle it affords. Some are willing to pay a premium for kid-friendly neighborhoods, quiet streets, a historic home or a condo close to work.

Agreed. And he continues:

If you're doing it more with investment motives, then I think you have to be careful, I wouldn't be overly influenced by the idea that home prices are low, and they might suddenly take off — that's what's coloring some people's thinking now.

Amen. As a matter of fact, I report on this each week in my Tallahassee Real Estate Newsletter. We know we're in for a long and bumpy recovery.

USA Today Housing Report Drops The Ball

I wouldn't be writing this rebuttal though, if I agreed with everything in the article. In fact, when the author starts to quote people on numbers, it is apparent that she "got what she needed," and just moved on. For example, she quoted former Federal Reserve economist Jack Francis in comparing asset classes:

From 1978 to 2008, he found, the S&P 500 returned an average of 11% a year, while U.S. small-cap stocks produced an average return of roughly 13%. Single-family homes posted less than a 6% gain.

I'm wondering how she jumps to comparing apples with oranges? Do you think somebody who chose not to buy a home instead chose to live in the street so that they could shrewdly invest their monthly rent in the S&P 500 or a group of U.S. small-cap stocks?

I don't think she considered the fact that people who choose not to buy a home must choose an alternate method for sheltering themselves and their families. It's not "buy or don't buy", it is "buy or rent". I wonder what the rate of return was for those tenants who invested in rent compared to the S&P 500? [note: sarcasm: rent is not invested, it is spent]

The author doesn't stop there, she jumps right into another apples to oranges comparison. She writes:

Moving from an apartment to a single family home often means commuting from the suburbs, which requires you to purchase a car, pay insurance and fill it with increasingly pricey fuel rather than using more affordable (and planet-friendly) public transportation.

Huh? Is she implying that tenants only live in apartments (attached housing) and home owners live in detached housing in the suburbs? What about in-town condo owners? What about single family detached home tenants in the suburbs? Why does she make a convenient leap to "owning = commuting?" How easily she made owning one's residence include a car payment, insurance payment and poisoning the planet.

The article continues with more truths, half-truths and un-truths, but unlike this blogger, the author most likely was paid by the word :). You can read the article in full at the USA Today Housing site.

Points To Consider When Choosing A Home

  • Whether you decide to buy a home or rent a home, you are making a decision on the quality of life that you want. Both options have merits and this is not to say that one choice offers more quality of life than another. It is about understanding your own goals and desires.
  • Financial ramifications should be considered. Depending on the market where you live (read that as saying study housing supply and demand), most likely 5 years should be your magic number if long-term wealth is your most important criteria. This magic number refers to the amount of time you plan on spending in the home. If less than 5 years, then most likely your closing costs will be greater than appreciation, whereas if greater than 5 years, than market appreciation most likely will reduce the cost of ownership.
  • Unlike the article referenced here today, I must mention that whether you buy a home or rent one, there is a cost of living associated with your housing solution. Choosing one form over the other does not suddenly provide you with money to invest in "other asset classes," thus the use of comparable investment opportunities is misleading and uninformed.

Real estate values in Tallahassee have dropped roughly 30% since the top of the market. If somebody purchased a home in the last five years, they most likely will need to live in the home ten more years to offset this devaluation. People who purchased 10 years ago still have more value in their home than they paid. It is during market extremes like these that the short-sighted masses come forward to cry "this time is different." I don't think so, we are just in an extreme market correction that was needed to counter an extreme market expansion. The real estate market will return in full force, the question that stands is will you be living in the home you own, or renting one from somebody else.


*Joe Manausa Real Estate is a brokerage company headquartered in Tallahassee, Florida. Its unique business model provides specialists to both home sellers and home buyers, and the results speak for themselves. JMRE has significantly more 5-star reviews on google than any other local competitor. Joe Manausa Real Estate is a leader in internet marketing and utilizes search engine optimization, email marketing, social media and data analytics to get their clients’ home sold faster and for more money than any other Tallahassee brokerage firm. For more information, visit www.manausa.com or call us at (850) 366-8917.

Discussion

#1 By mark west at 7/11/2017 3:46 AM

Joe,

I was reading this update when I came across the line where you wrote that you're not just a sing-song realtor as the authors of the CNBC.com and USAtoday. As someone who consults widely and observes closely, we actually had a conversation one-on one about our personal situation and buying a home up in Killearn Lakes area. Prior to speaking with you we had been opined by every realtor in Tallahassee what a great deal we had going with such a low rate. We had $195,000 on the table. After you and another widely respected real estate author suggested we reanalyze, my wife and I now look back just a short time later to say thank you so much for being who you are, dignified and admirable person of character.

My wife and I will be forever thankful. The others were just more worried about their own interests. Your work here can not be commended enough. I would consider your professionalism to be a model for me in my business and for anyone else for that matter. All the best of success to you!

#2 By Joe Manausa, MBA at 7/11/2017 3:46 AM

Wow Mark, those are some very kind things to say. I'm glad your situation worked out and I was happy to help.

#3 By Joe Manausa, MBA at 7/11/2017 3:46 AM

Annett, that's a great way to put it ... "it's only who you pay"

#4 By Marc Milgrom at 7/11/2017 3:46 AM

"Joe great article and I agree with you, if you rent or buy either way you have to pay." That's grossly misleading in the rent vs. buy debate. Because buying requires a downpayment, which in this market is typically going to be 20% at least of purchase price, an 11 or 13% return on that deposit in the market vs. a 6% return on it buying a house is HUGE. Over a 10 year time horizon, 11-13% return compounded annually is over 184-240% vs. 80%. And for most people in major metropolitan areas, the decision to buy vs. rent is often a decision to live farther away. Not always and certainly not as much as the market has cooled the last few years, but the relentless outward migration of exurbs the last decade illustrates the lengths (literally) to which people went to own a home.

#5 By Joe Manausa, MBA at 7/11/2017 3:46 AM

Thanks Marc. And in Tallahassee, most of our properties fall inside the FHA loan guidelines, so the downpayment is closer to 6% (with closing costs).

#6 By dzgz at 7/11/2017 3:46 AM

I think you are failing to understand how many homeless families there are and how much the cost of rent compared to the widening gap of income is....you sound like an upperclass citizen who's biggest worries is where to invest....not where to sleep or eat. This is an increasing issue that you are completely ignorant of. There are people who have lost their jobs, who had paid child support and taxes and credit card debt and house payments for years and then lost it all in less than a year after savings ran out because they were unable to find work that would pay their mortgage. So you seem truly ignorant of the real housing problems in America and truly uncaring about anything other than ensuring that housing is maintained as a market that only the top half can afford.

#7 By dzgz at 7/11/2017 3:46 AM

"Homelessness and poverty are inextricably linked. Poor people are frequently unable to pay for housing, food, childcare, health care, and education. Difficult choices must be made when limited resources cover only some of these necessities. Often it is housing, which absorbs a high proportion of income that must be dropped. If you are poor, you are essentially an illness, an accident, or a paycheck away from living on the streets. "

#8 By Joe Manausa, MBA at 7/11/2017 3:46 AM

I understand we have many problems in America dzgz, but my job is home selling. This helps families who need to move and real estate is a large part of the economy and many real estate charities (funded by these home sales) exist to help the needy. We all have to do our part, in our own way. Thanks for commenting.

Post a Comment

Blog Navigation

Posts By Category

All Categories Advice: Real Estate (489) Blogging Real Estate (189) Distressed Property (31) Foreclosures (4) Glossary of Real Estate Terms (31) Government and Real Estate (30) Homes For Sale (131) Housing Market Conditions (1241) Housing Report (54) Lis Pendens (4) Main (1025) Mortgage / Finance (72) New Construction (1) Off Topic (85) Our Listings (3) Our Sales (7) Real Estate Market Snapshot (26) Real Estate Opinion (3) REALTOR News (11) Tallahassee (90) Tallahassee Neighborhoods (507) Uncategorized (50)

Posts By Month

Blog Roll

Luxury Homes For Sale New Construction Homes For Sale Homes For Sale With Swimming Pools Homes For Sale On Acreage Homes For Sale In Killearn Lakes Plantation Homes For Sale In Killearn Estates Homes For Sale In Southwood Homes For Sale In Killearn Acres Homes For Sale In Summerbrooke Homes For Sale In Golden Eagle Plantation Homes For Sale In Piney Z Homes For Sale In Bull Run Homes For Sale In Betton Homes For Sale In The Ox Bottom Area

Tag Cloud

Grab Our RSS Feed

Tallahassee Home Searches

Contact Us

Joe Manausa Real Estate
2066 Thomasville Rd
Tallahassee, FL 32308
(850) 366-8917