Let’s start this post by highlighting a few articles from the past couple weeks that have appeared in major daily newspapers around the country. Note the author and/or main source:
Who Says You Can’t Afford a New Home?
Author: Stephen Dupuis- president and CEO of the Building Industry and Land Development Association (BILD)
Note: Article removed from Toronto Sun website. Retrieved via google cache. Click to enlarge.
Author: Stephen Dupuis- president and CEO of the Building Industry and Land Development Association (BILD)
Average Canadian Home Prices To Rise 3 Percent in 2011
Author: Canadian Press. Main source: Re/Max Canada
Hat tip to Alberta Real Estate Watch for this one. This one is particularly blatant in its attempt to mislead.
Author: Erica Lepan- Mortgage Professional with The Mortgage Group
See the pattern? All ‘authors’ or sources benefit directly from real estate transactions and increased real estate prices. So what’s the deal with the shoddy journalism?
We’ve examined this before, but it’s worth revisiting.
Newspaper advertising is a $1.2 billion industry in Canada. It generates 34% of the total operating revenues of all newspapers in Canada. In a fascinating piece carried in the McMaster Journal of Communication, the inherent biases of a profit-oriented media are explored. I’d encourage you to at least read pages 9 to 10 of this article, as this section deals with the advertising conflict of interest I mentioned above.
Here are a few snippets to consider:
“Building relationships with advertisers limits what news a medium will include. Anything that can be viewed as contrary to business priorities or will interrupt the “buying mood” of consumers often dissuades the advertisers that fund newspapers.”
“It would not be financially reasonable for newspaper owners to publish editorials that offend their advertisers or deter consumption. This results in the censorship of news content, whereby journalists are less likely to pursue (certain) stories”
“Since publishers like CanWest Global are more dependent on advertising revenues than they are on subscription payments, selling advertising space becomes the top priority of the company”
In other words, keep the BS detector cranked up. As sales continue to weaken and prices inevitably follow, there will no doubt be more pressure on the media to continue to present the real estate market in a favourable light.
-Ben
Financial Insights 
The old adage holds true: follow the money. Even some of the “alternative” papers are filled with real estate advertizing and their articles are decidedly blase when it comes to tackling astronomical house price-income ratios. So much for affordable housing being a left wing issue.
The blogosphere is a completely different matter altogether.
Great catch on these articles Ben. However, not matter how much you warn people these days, they listen to “Real Estate only goes up” – will it has right in the long term correct? – I don’t have a graph showing otherwise. “You will be priced out of the market” – most recent history is just bidding wars, can’t fight that. I have been warning people about leverage since 2003, and losing the battle since. I still don’t have the “a ha ” graph or moment to show them “not to buy”
I’ve come to the conclusion that the blogger is taking these articles out of context. The blogger implies that Stephen Dupuis doesn’t identify himself as President and CEO of BILD, and the blogger even shows the article as evidence. One would assume that Mr Dupuis is trying to pull a fast one on us, where, in fact, it is the blogger who has cut off the bottom of the article where Mr Dupuis has a short biography telling us exactly who he is! The blogger instructs us to ‘click to enlarge’. I clicked to enlarge, and only after it seemed some of the article was missing did I click the original link.
As for his comment ‘All ‘authors’ or sources benefit directly from real estate transactions and increased real estate prices’, just how exactly does the Canadian Press benefit directly from a 3% housing rise? (I personally think that particular article was meant more for REMAX franchisees than for the general public. After all, you’ve got to keep your sales force optimistic!)
And, all things being equal, the Edmonton Sun Homes Extra is exactly that – an advertising pullout that’s chock full of real estate for sale and biased opinions by real estate professionals. The one article quoted from the Edmonton Sun is even shown to be ‘Special to QMI’, which means it’s an unsolicited article and not an editorial by newspaper staff.
Taken in context, it is not ‘shoddy journalism’, with the exception of the Canadian Press article, it’s not journalism at all! I think the newspapers are being very fair in the treatment of their reader. The advice to keep the BS detector cranked up has been well taken, however.
“One would assume that Mr Dupuis is trying to pull a fast one on us, where, in fact, it is the blogger who has cut off the bottom of the article where Mr Dupuis has a short biography telling us exactly who he is!”
The pictures are screen shots. Guess what….you can’t always fit the entire article onto one shot. Hence the link to the original article. I didn’t imply at all the the authors didn’t identify their position. It doesn’t really matter, does it? The point is simply that I question the journalistic integrity involved with using ‘sources’ whose livelihoods depend on the continued bull market in real estate. Let’s at least agree that this is a blatant conflict of interest.
“As for his comment ‘All ‘authors’ or sources benefit directly from real estate transactions and increased real estate prices’, just how exactly does the Canadian Press benefit directly from a 3% housing rise?”
Are you serious? It was a REMAX press release passed on as a news story. It might as well have read, “Coca Cola releases new study confirming that Coca Cola is a delicious, refreshing drink.” Do I honestly have to explain this?
Allowing that there is a link to the original article, any conflict of interest is rendered null by the authors being identified as professionals in the real estate/building industry. Simply put, the authors are saying exactly what you’d expect them to say.
I stand by my original comments.
Christopher asks: “just how exactly does the Canadian Press benefit directly from a 3% housing rise?”
http://www.truliablog.com/2009/03/27/where-are-all-the-newspaper-advertising-dollars-going/
Please note when the ad dollars started to drop off.
Well Ben looks like the Bank of China backed down after that higher than expected inflation numbers. Instead on raising rates, they raised the bank reserve requirements by 50 basis points- which is meaningless since it is widely held that Chinese banks can manipulate their numbers to match whatever edict the government sends out.
Guess the Bank of China has no more cajones than the Fed or Bank of Canada.
The reserve requirements should have a similar effect, especially in the shadow lending industry. Even if the government restricts all real estate lending it won’t eliminate the problem. I think this is a case of inflation having to run its course and eventual acquiescence on the USD peg.
Well that s why the news paper an tv media are loosing ground every day and the internet is the giant winner, soon the news paper will be a thing of the pass.
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