The declining prices are undoubtedly devastating—both to the families who are seeing their investments diminish in value, and to the municipalities whose tax revenue will shrink.
Both on the national and local level, stories about lower home prices frequently focus on a swell of foreclosures affecting the prices of neighboring homes, or recession-related job losses that are forcing families to default on their mortgages.
This is how the Associated Press explained the falling prices:
As unemployment grows and fallout from the mortgage crisis continues, foreclosures and distressed sales are dominating the market – especially in California, Florida, Nevada and Arizona.
And the The Las Vegas Sun offered an equally poor explanation:
Foreclosures are the key factor driving prices. Sixty-six percent of the 3,626 existing-home closings in March were bank-owned homes with a median price of $127,500. The median price of the nonbank homes was $149,900.
Banks don’t have an emotional attachment to a property and have shown a willingness to drop prices to make a sale. Although the number of homes repossessed fell in March to its lowest level in one year with 1,846 homes foreclosed, a large number of foreclosures are expected in coming months.
Bloomberg also tags job losses as a contributing factor in the falling housing prices.
But by focusing too much on the present and recent past without tapping the newsroom’s collective memory to look for broader and more complex explanations, the doom-and-gloom reporting on housing is missing a vital component of the housing story. While the various surrounding circumstances are responsible for the fall in prices, there’s also some basic econ 101 happening here. It’s a market correction. The last decade’s soft-lending practices did help more families become homeowners. But they also contributed to a substantial housing bubble that drove prices higher than high. In late September, California saw a 41 percent drop in housing prices, with home values falling to 2003 levels, before lending got out of control. Now these prices are correcting into a normal range, and that’s a good thing for home buyers who may benefit from closer regulation of lending—which will, hopefully, prevent another insane housing bubble.
These stories also tend not to address the political component of the prices-are-falling story. Yes, we are in a recession and yes, myriad abstract and nebulous contributing factors are easy to invoke as explanations. But there is a much more concrete explanation for the hurting housing market: government oversight, or the lack thereof. What’s missing from so many of these stories is the connection between local zoning boards that blindly approved development after development, just assuming that demand would keep up.
This is the perspective that political reporters could bring to these pieces. In collaborating with the business desk, local and national government correspondents could help readers connect the dots between the tumbling price of their homes, and the politicians who enacted the policies that contributed to this tumble. Pointing fingers now may not help to fix the economy, but this kind of fusion reporting can empower readers to more closely scrutinize their local officials. Right now people are fearful of how the recession will affect them, but smarter reporting can offer citizens the tools to effect change in their communities, too.Katia Bachko is on staff at The New Yorker.