Journalism

Long, long ago in another time, in a distant galaxy, a bearded wonk emerged from the smoke with a tablet prophesying the end of the Great Property Boom. He stared down at the people from the rock upon which he and his trusty goat, F, were perched, raised a wizened finger, wagged it slowly and said in a strange tongue, ‘You are so screwed.’

That was the Spring of 2008. Five months later the financial crisis hit, real estate sales and prices plunged, and we all started talking about the next depression. But not before the Toronto Star real estate editor wrote a full page review of my book, ‘Greater Fool‘ in which numerous academics and industry people were trotted out to trash me.

However, the review also raised the spectre I might just be right. So it had some balance. Enough balance, in fact, that the editor ended up fixing punctuation on the night shift, and was replaced by a bouncy lady who writes about throw cushions.

Thus is the nature of real estate journalism in Canada – which is kinda like ‘jumbo shrimp’, ‘military intelligence’ or ‘progressive conservative.’ The modern real estate reporter has been turned into an employee of the advertising sales department, and is tasked with filling up the ugly white spaces between ads for sexy condos and houses in rolling meadows. Ditto for TV. I mean, how many real estate-pumping stories have you seen on Global or CityTV over the past year, with the interviewed ‘experts’ being people who immediately benefit from the coverage?

Given the kinds of trashy quasi-journalism news organizations have allowed since the crash of 08-09, is it any wonder so many young couples bought houses without any money, or so many speculators are about to close on condos that will ruin them? Given that real estate is now absurdly costly, likely at the pinnacle of its cycle and the biggest purchase in most lives, why was analysis of costs and mention of the obvious dangers left to dark, subversive blogs like this and guys with goats?

Good questions. They’re asking them in Ireland, too.

That country had a mama of a housing gasbag after it joined the Eurozone, and which crashed in 2008. Unlike here, cheap mortgage rates didn’t turn out to be the crack cocaine of the middle class, and real estate’s continued to crumble. But memories have not. Investors who poured billions of euros into new developments which were pumped and inflated by the Irish media’s property reporters are now mulling legal action against the ink-stained wretches.

The question: did these writers mislead investors? Was it intentional? Did real estate interests exert enough pressure on cash-starved media outlets to demand only ‘good’ news? Does the media try to trick people by running ad-support copy as hard news? And, if so, are they now liable for a breach of trust lawsuit? Or at least having their private parts nibbled on by a horny ruminant?

“Journalists fear they may be made legally liable for misleading readers who followed their advice and bought properties abroad, suffering major losses,” one property journalist is quoted as saying in a news story this week. “There’s a lot of anger among investors.”

You bet. And just wait for a few months until more people who bought homes in Vancouver or Toronto or Calgary – on the widely-spread news that real estate was a no-risk investment – start sliding into negative equity. Or closing on downtown condos they planned on flipping. Or trying to back out of towers that will never be built when promised.

The media for the past 18 months has carried a never-ending string of stories about the country’s booming real estate market, culminating in the maple syrup-drenched economic jingoism epitomized during the Vancouver Olympics. Then we knew for sure why the US middle class had been wiped out and their home equity turned into food stamps – because they deserved it. They were not Canadians.

Well, here we are. And it continues.

Two days ago the Vancouver Sun ran a story titled: “There are two million reasons for high prices in Vancouver – City’s housing affordability problem boils down to too many people on too little land.” It quoted more experts as drawing comparisons with Hong Kong and San Francisco, and a guy who said, “If you want Winnipeg-level house prices here, all you have to do is tear down the mountains and fill in the ocean.”

The conclusion by journalist Don Cayo was clear. It’s different here. Suck it up and buy a condo.

Of course, Vancouver’s now the least affordable city in the western world based on the price of real estate and the average income of its citizens. It is ground zero for a housing correction which is unmistakably forming and could last for some time. It means those who bought based on the bubbly media-fed statements of experts speaking in their own naked self-interest were likely misled and certainly betrayed. Not by the experts. We expect that. But by the media, where we do not. I may have more to say about this soon.

Recently Newsweek magazine sold for a dollar. CHEK-TV in Victoria was bought by employees for two dollars. CHCH-TV in southern Ontario changed hands for six bucks.

Nobody was surprised.