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Media 
Bubbling OverA field guide to press coverage of the enormous run-up in real estate prices by William Powers ..... Are we in a real estate bubble? It's one of the big media questions of the hour. Thanks to the housing boom, real estate is the new national pastime. News outlets know this and have been working feverishly all summer to make sense of the real estate rush. Since mid-June, the phrases "real estate" and "bubble" have appeared together in hundreds of news articles and broadcasts, according to a search of the Lexis-Nexis database. Do the newsies see a bubble on Main Street? Depends on which newsy you ask. The reporting and commentary on the subject is all over the map. If there's no clear answer to the great bubble question, there is a way to understand and savor bubble journalism in all its fascinating varieties. Here's a field guide: 1. Bubble? What Bubble? Given the enormous run-up in residential real estate values over the last few years, and the fact that the rest of the economy is on the skids, you have to be a bold optimist to say this isn't a bubble. But such fearless souls exist. The August 12 issue of Fortune magazine has a feature story headlined: "Should You Invest Where You Sleep? With the stock market mighty ugly, pouring money into housing is looking pretty smart." Brian O'Keefe writes, "Despite what you may have read about bursting bubbles and hyperinflated housing prices, residential real estate is surprisingly drop-free." But for sheer anti-bubble bravado, it's hard to beat an article by Daniel Kadlec in the August 5 issue of Time, which flatly concluded: "There's no bubble." 2. Bubble, Bubble, Everywhere. There are a lot of pessimists, too, but they tend to be less emphatic than the optimists. This may be because the happy-talk crowd has history on its side: While regional markets have had bubbles over the years, there is no record of a huge real estate bubble popping all across the United States. Thus, the prophets of real estate doom often hedge their predictions. In the economic trends column of its August 12 issue, BusinessWeek wondered, "Are we inflating a residential real estate bubble? 'Yes' is the answer in about a third of the major metropolitan areas in the U.S." Citing a new study, the magazine listed 10 "bubble cities," including Boston, Miami, and New York, but forecast no nationwide bubble. On August 1, The Wall Street Journal ran a story headlined, "The Housing Bubble Loses Some Air." Grabby, but it identified only a handful of troubled markets, and it conceded that "prices of existing homes are still rising briskly overall." Still, there are those who are willing to call this a big fat bubble. "Next Bubble on the Horizon: Home Sweet Home," was the headline this week over a Newsday op-ed by syndicated columnist James Pinkerton, who opened provocatively, "You agree that your house is worth too much, don't you?" 3. Maybe Yes, Maybe No. In the absence of a loud popping sound, most media outlets are content to sit in the middle, airing both sides of the bubble argument without giving the nod to either. This is the Some Analysts Believe School of bubble journalism, a prime example of which appeared recently on the front page of The Washington Post: "Some analysts believe the large run-up in home values in many parts of the country—particularly areas where prices have risen faster than incomes such as Washington, New York, Boston, and Southern California—reflect a real estate bubble doomed to burst.... However, with personal incomes continuing to rise, the population growing, and everyone needing shelter, Federal Reserve Chairman Alan Greenspan and others discount worries of a housing bubble." 4. The Bubble Has a Name. And, if you read The Wall Street Journal editorial page, that name is Fannie Mae or, if you prefer, Freddie Mac. The Journal has been leading the charge against those two companies and the role they play in the U.S. housing market. A few weeks ago, in an appearance on CNBC by Journal editorial board members, Susan Lee was asked if there is a real estate bubble. Her answer: "There are kind of scary signs. Housing prices—straight up for the past decade. Mortgage debt—straight up. That's scary. But I think what scares all of us around the table even more is that all this housing risk is concentrated in two firms—two giant firms: Fannie Mae and Freddie Mac.... They're a government-sponsored enterprise. And what that means is taxpayer bailout. And we're talking trillions and trillions of dollars. That to me is very scary." 5. Japan, Here We Come. A new twist on bubble journalism, and a real growth area, is to compare the United States to Japan in 1992. "Is that what we're in for in the United States, 10 years of economic pain?" asked a recent Knight Ridder News Service story. The story didn't say yes, but it didn't say no. It pointed to certain "mini-bubbles in real estate" as possible sources of Japanese-style trouble. 6. Star Light, Star Bright. Surely the most innovative take on the bubble was CNBC's recent interview with Arch Crawford, a stock analyst who "uses not only stock market charts, but star and planetary alignments to make his market predictions." Asked about the real estate bubble, Crawford said that Jupiter, "the most expansive planet," has recently been traveling through Cancer, which rules homes. That's the good news. The bad news is that Jupiter left on August 1 and moved into Leo, which spells disaster for the housing market. Don't laugh. He could be right.
What do you think? Discuss this article in the Politics & Society conference of Post & Riposte. More from National Journal. More on politics and society in Atlantic Unbound and The Atlantic Monthly. William Powers is media columnist for National Journal. He recently spent three months in Japan as a Japan Society Fellow, studying the role of reading in Japanese life. This column appears every week in National Journal, a weekly magazine covering politics and government published in Washington, D.C. For information on National Journal Group publications, see NationalJournal.com. Copyright © 2002 by The Atlantic Monthly Group. All rights reserved. | [an error occurred while processing this directive] | ||
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