I get the MSNBC Daily Business News e-mailed to me every weekday morning. On the list of newsworthy items today, 40% have to do with real estate. I found this story as the TOP headline on MSNBC.com yesterday. It was also on my list this morning. This brings me to the question of the day (which, as you know by now, isn't a daily routine): How many different angles to foreclosures can the media cover? I'd say a ton.
Do they have a point that vacant homes can attract the undergarments of society? Yes. But, when we had a vacant house in a beautiful neighborhood that we were selling in 2005, there was a break in. It appeared, by the sheet that we found, that someone was getting some temporary free housing. Creepy? Yes. Indicative of foreclosures? Not always. In this development, we had the nosiest neighbor across the street. She lived at her window. She also noticed that the front door of our rental was left open one night. She thought it was a careless realtor, so she traipsed across the street to shut it for us. When she found out later that it was a break-in, she freaked out--running from neighbor to neighbor to inform them that she actually had some important news this time. It was in escrow, so we had to disclose the crime. Thankfully, the new owners understood.
The article states that the homeowners also have to take any renter that they can get. Again, this can be said of any investment property. There were times when our houses were vacant for months. We still didn't take any renter we could get because we knew we'd be sorry. In the fall and winter, having a vacant home was the kiss of death. On one hand, I hated to reduce the rent for the entire lease and then raise it on them in a year--only to have them move. Then try to find other renters during the same season. On the other hand, I'd rather lose $100-$200 per month for a year than have a $1,595/month rental vacant for three months. Still, I never took just anyone who came along. In California, the financial implications of doing that are tremendous.
I am so tired of the media taking a shred of truth and blowing it way out of proportion in regard to this real estate fiasco. But, then again, what's new? It's their modus operandi. It sells papers and advertising. I read all of the stories about this country crumbling because the real estate market is so bad. Others must be clicking on them, too, because they seem to be abundant this week. The process of choosing articles to include in the media uses the same theory as selling real estate or anything else--supply and demand.
And my most favorite part of the article is? "Historically the most affected areas were lower-income and were prone to subprime and predatory lending, irresponsible house flipping and mortgage fraud . . ." (emphasis added). Of course, we can't have an article about how neighborhoods with foreclosures are going down the toilet without a slap at investors. I, personally, don't know anyone who made a living of "flipping" houses in "lower-income" areas (maybe buying, fixing, and then selling to new homeowners--not flipping, as in buying just to turn around and post a sign again for a profit). But, if the media says it's true, then it must be so.
NEWSFLASH: Just in case you think I'm blowing the whole "investors are the root of all evil" theme out of proportion, I just found this quote in this story:
"Much of the risky lending that helped fuel the housing boom dried up this summer when investors lost their appetite for these loans, after tens of billions of dollars worth of mortgage-backed paper all but evaporated. The credit scare has thrown a chill on all mortgage lending, threatening to prolong the ongoing housing slump."
Who is the journalist kidding? You mean that the lending fiasco wasn't a result of homeowners getting into loans that they knew they couldn't afford and then walking away? And greedy lenders shoving the products down the public's throat? Oh, I'm so glad that this has all been clarified for me now.