Realty Slump: The Media and the Market : Home sales: Some realtors and builders blame ‘bad news’ coverage for the current downturn.

WASHINGTON —  At the recent annual convention of the National Assn. of Realtors, several realtors suggested that the trade organization stop releasing its monthly report on home sales because of the unrelenting stream of bad news.

The reasons were straightforward: First, they felt the numbers were providing the media with ammunition to write more stories about the housing market’s difficulties; second, they said the national statistics conflicted with some strong local markets.

The suggestion sparked a heated debate and, in the end, NAR decided to continue the reports. But simply raising the issue of suppressing information says a great deal about the depth of anger--and fear--in the real estate industry.

Many realtors and home builders blame the media for the housing downturn, for plummeting sales, prices and consumer confidence. They argue that news stories are not balanced, that they lack perspective and context.

Listen to the people who make their living from real estate and you hear a familiar refrain:

“Bad news sells,” says William North, executive director of the NAR.

“You pick up your newspaper and all you see is the savings and loan crisis, the credit crunch, the Middle East,” complains Ira Norris, president of INCO Homes in Upland, Calif. “That’s all the media thinks will sell newspapers and magazines.”

Norris tried to attract media attention recently when buyers lined up 48 hours in advance of the opening of one of his new developments, which nearly sold out within weeks.

“I called all the networks and newspapers, but no one would come to cover the good-news story,” he said.

During nearly a decade of booming sales and soaring prices, realtors and builders grew accustomed to positive news stories. Now that times are tougher, journalists say their stories are simply reflecting the facts and they are fulfilling their duty to keep consumers informed.

“We get a lot of complaints about the stories we do, not only in the real estate section, but in other parts of the paper,” said Kenneth Bredemeier, real estate editor at the Washington Post. “Frankly, we’d be doing our readers a disservice if we were to write otherwise.

“What those in the real estate industry forget is that during the boom times we wrote stories about five or six buyers showing up at every house with a For Sale sign and outbidding each other. They had no complaints about our coverage then. We try to reflect the reality of the moment.”

But the industry counters that the reporting should take context into account.

For example, when the National Assn. of Home Builders released its most recent statistics, its executive vice president, Kent W. Colton, spent 10 minutes providing a reporter with the numbers and trying to put the continuing decline in perspective.

“I tried to point out that much of the decline was in multifamily housing and that single-family housing is relatively steady,” he said.

“Then I tried to point out that there are significant regional differences and that in fact some markets, like the Midwest, are holding their own. But none of that was printed.”

Colton had no quarrel with the accuracy of the story, which pointed out that housing starts registered the ninth straight monthly decline and multifamily construction had reached the lowest level since 1963.

It’s just that he wasn’t able to get across the regional and local nature of the real estate industry.

Obviously, there is a need for context. Housing markets are cyclical; they are regional. And there’s some good news, too--unlike the 1981-83 housing recession, today’s interest rates have remained low and buyers are in a fairly strong position.

Jim Link, executive vice president of the San Fernando Valley Board of Realtors, one of the largest in the nation, said, “We have gone from what was one of the strongest sellers’ markets in history to a slowdown akin to the average market of the last 10 years.

“The implied impact is that this is a major recession. The decline is from a high, and in fact, you’re in the range of an average market now.”

But the overriding story is that sales volume and prices are way off, and realtors and builders fear that every story adds to the weight dragging down their industry.

“There is an old saying that perception defines reality,” said Randall Lewis, president of Lewis Homes Group. “In terms of the real estate market, what people feel is more important than the facts and figures.”

In other words, the consumer psyche is fragile. And it doesn’t take the Federal Reserve Board to tell you that the current downturn has created plenty of fear in consumers, whether they are buying a car, a house or a Christmas gift.

So let’s make it a given that the media has some impact on that psyche. When a consumer reads about a long slide in the stock market, only the brave contrarian will be buying stocks. Similarly, when they read that housing prices are falling and the market is uncertain, people tend to hunker down and wait.

So, is it the fault of the media that the market is in a slump?

Not to Eric Elder, marketing director for Kaufman & Broad, the big residential developer.

“Each economic cycle is unique. This one is a confidence problem, based on a whole lot of future unknowns in both the economic and political world. And to some degree, at least in Southern California, it may be a reaction against the velocity and intensity with which real estate has risen in the last few years.”

But others in the industry feel their ox has been gored by the press, not the economy.

“The effect has been devastating,” said Norris of INCO. “And there is no doubt in my mind that the media has a direct relationship with sales prices. If someone in the media were to turn around tomorrow and say, ‘This is the bottom of the trough,’ I guarantee you that prices would rise once again.”

The response from the journalist’s side comes from Steve Kerch, a Chicago Tribune real estate reporter and president of the National Assn. of Real Estate Editors.

“I don’t care what the newspaper says, if you are the buyer you know what your pocketbook says, and it tells you what you are going to do and how you are going to spend your money,” Kerch said.

Added Dick Barnes, the real estate editor of The Times:

“We try to present the reality of the marketplace. Unfortunately, the reality now is a slowdown.”

More than six out of 10 Americans own real estate, so these are problems that make a great segment of the population nervous. The news had been good for a long time. Homeowners in many locations have grown accustomed to seeing the price of their house rising steadily and many plan their future around it.

“Since World War II, there hasn’t been much to write about the real estate industry but good stuff--high demand and long-term financing at low rates,” said Kenneth Lusht, director of the real estate department at Penn State University.

“There was tremendous expansion for 40 years, but it has come to an end for a number of reasons, at least temporarily. There have to be cycles, but we are all a little touchy about it right now.”