Currently in the Media, there has been a lot of information coming at me, as well as everyone else, about "evil subprime loans", mortgage fraud, foreclosures, and depreciating home values all causing a housing crisis that will destroy all life as we know it. With all this negative information we are left wondering: Is it really that bad? Has the impending bubble finally burst? Who will save us?
I'd like to reassure as many people as I can that it is not as bad as it sounds and I'll show you why. Having said this, I do recognize the economy and housing market have slumped from where we were a couple years ago and that some people and families are being hurt by these changes in a very serious way. I understand this personally, being involved in many aspects of real estate. My family and I have felt these hardships and have had to reevaluate our own needs vs. wants. But, the outlook is NOT grim. Real Estate is still and always will be one of the best ways to build long term wealth.
Let me illustrate by pointing out some misrepresentations that I have seen. A local newspaper states "Utah foreclosures up 52%" as its title. Well that sounds bad and not an uncommon thing to see and hear about many different areas of the country. The same article also mentions Utah had one household in 1288 being the subject of a notice of default or a foreclosure. That's right, only 1 out of 1288 houses. That is the same as 0.078% of all the houses in Utah and not all of those were foreclosed on because that number even includes those that only received a notice. Now if that number is increased 52% that would put the total "foreclosed or notice of foreclosure" houses in Utah at 0.12%. Imagine if the same headline read "Utah foreclosures up to 0.12%." Due to the small and seemingly insignificant number I don't think many people would care to read the article.
This same newspaper published another article only 35 days later that predicts Utah will have 1 in 25 houses in foreclosure. This is an insane prediction that is based on nothing and even if it were true that is still only 4% of the homes in Utah. Now, let's take a closer look at the information coming from the two articles published by this newspaper. To go from .12% to 4% would require the rate of foreclosures to increase by more the 3000%. I think if they published an article that was titled "We predict Utah will see a 3000% increase in the number of foreclosures" people would dismiss them as crazy. This article states its source of information is from "The Pew Charitable Trusts." After digging into the "Pew" I found they got their information from "The Center for Responsible Lending." Their website is filled with many exaggerated calamities, simplistic answers as to who we can point a finger at and equally simplistic solutions for what the government should do to fix everything.
Now let's look at some information published from a reliable source. The Utah Department of Real Estate published in their March 2008 newsletter "...in Utah the number of foreclosures actually decreased." (I sent a complete copy of this article out to many of you earlier. If you'd like another copy of it let me know). This article is filled with a lot of accurate and positive information about Utah's economy and housing market and it actually reports there are great things on the horizon.
If the information is not accurate why does the media report it? Reporters would want you to believe that they are most concerned about keeping you, the public, informed. Some of them have even disillusioned themselves into thinking that they really are that benevolent, but it is not true. The truth is that if their headlines do not sell they are out of a job and they are motivated, like the rest of us, to stay employed and make a living. So when they are trying to get the front page spot light they will write in such away that sensationalizes the truth or even worse, get their information from whoever has the most eye catching data rather than go to a reliable source. I don't blame the media as a whole. It is a competitive industry and "you have to play ball to stay in the game". So, it is important that we realize what the media is motivated by when we listen to, read and see what they have to tell us.
With all the recent news about real estate I've come to realize how much the media is wrong. I'm involved in many aspects of the real estate industry and I understand how a lot of it works. I'm constantly amazed how little research actually goes into some of the information that is put in front of us in the form of "news". It seams like certain headlines start to sell and the rest of the media jump on board as they dash to find any "data" that can support the headline that they want.
I believe the best thing you can do to protect yourself from misinformation is to understand the motivation behind the voice. Do a little research yourself and talk to a professional involved in the industry being reported on. People in the industry will know more about the subject than the person that knows how to sell the headlines.
Remember; millionaires are made from down turns in the market. When markets are down it is the best time to get involved. In the real estate industry interest rates are still at historical lows, sellers are motivated, renters are plentiful, and rents are up. You need accurate information from a Real Estate Professional. I can help you take advantage of this unique time to get involved in real estate.
Give me a call and we can discuss your personal situation. www.stonebridgerealestate.net
Sources: Deseret News "Utah Foreclosures up 52%" 3/13/2008; Deseret News "Foreclosure future grim for Utahns" 04/17/2008; www.pewtrusts.org; www.responsiblelending.org; "Utah Division of Real Estate News" March 2008.