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Putting a Happy Face on the Housing crash

Reported by Chrish - December 7, 2007 -

Leave it to the cheery trio at FOX and Friends to find the silver lining in the current housing downturn this morning 12/7/07. They had to misrepresent a few facts but the message was clear: hang in there, it'll all blow over soon.
With Video.

In her introduction Gretchen Carlson noted that "until 2009, it may not be the best time in the housing market" but "however, there is a silver lining - for certain groups of people." Brian Kilmeade took over and gave a garbled summary, without any apparent punctuation to indicate what he actually meant:

"Sales should improve around 2010 it should bottom out and they think this whole thing is a correction. The new forecast according to this new study at Moody's, Moody's Economy.com they wrote this story called 'Aftershock Housing in the Wake of the Mortgage Meltdown."

Using The Google and searching for "housing+correction" brings up a bunch of articles from 2006. According to CNBC, yesterday,

'The housing market is unravelling. The current housing recession will ultimately be severe enough to be characterised as a housing crash,' said Mark Zandi Moody's Economy.com chief economist.

But crash is such a negative, even frightening, word, and FOX only wants us to be afraid of 'terrists' and Democrats.

Steve Doocy assured viewers that the bottom of the market is predicted to be early 2008, only a few months away, so hold on until then and prices will start to go back up. He was only half-right. The study indicates that sales should start to go back up next year but home prices aren't expected to rise from their nadir until sometime in 2009, which is reasonable: sales will increase as prices continue to fall, for a while.

The study summary notes

"The housing market’s most fundamental problem is it is awash in unsold inventory. According to the Census Bureau, as of the third quarter of 2007 there was close to 2.1 million vacant unsold homes that were for sale, equal to 2.6% of the stock of owner-occupied homes. Even a well-functioning housing market has a substantial amount of inventory. But in the quarter-century between the early 1980s and mid-2000s, the vacancy rate was an unwavering near 1.7%. The difference between the current over 2.6% vacancy rate and the 1.7% rate that consistently prevailed prior to the recent boom provides a good estimate of the amount of excess inventory in the market—it currently totals nearly 750,000 homes (see Chart 1-4). This is far and away the highest level of excess inventory in the post-World War II period. "

Doocy referred to stats (found in this Washington Post article) that homes in Punta Gorda, FL, and Stockton, CA, the hardest hit markets, will lose up to 35% of their value, while homes in the Northeast will have more moderate drops, prompting Carlson to observe "that's good news..." at least for the three of them.

Doocy failed to mention the next observation in the WaPo article: "'This is the most severe housing recession since the post-World War II period,' Zandi told Reuters." It didn't quite fit with the silver-lining good-news theme of the propaganda report.

He repeated that it's "kind of" a correction, a leveling out, and ended on the up-note that it's a great time for buyers - young people buying their first home or retirees adding a second home. No wonder he's called Mr. Happy.