Last week I noted the sly way that CREA reported their August sales stats and the way that our critically-thinking media was happy to regurgitate CREA’s sales report verbatim as ‘news’. It’s unfortunate, but it seems that there is often a glaring inadequacy in the reasoning ability of some reporters. Perhaps it’s just me, but I can’t help but notice that this reasoning deficit is particularly acute when it comes to reporting on residential real estate stats. I’m amazed at how willing our media seems to tow CREAs line.
Here are just some examples…
Or my local real estate board, which just last week touted the fact that prices had risen month-over-month in August. Our local media ran with the story. I have no problem with that. But where were they when in June and July our local house prices experienced consecutive and significant month-over-month declines? Why no mention of this? And where was the mention of fewer sales, or the fact that home prices were still below their May peaks?
It got me thinking about the role that real estate-related advertising revenues might play in shaping the tone of the real estate-related stories being carried.
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”
Next time you pick up a newspaper, be it local or national, look through it with a critical eye. Notice how much of the advertising space is taken up by real estate ads. Most newspapers also carry a weekly listing of open houses, often as a separate flyer. I can’t say for sure whether or not this advertising revenue would influence the tone of the reporting when it comes to the current real estate market, but it certainly should make you crank your BS detector up another notch.
At the end of the day, it doesn’t matter. The media can only spin the facts for so long. I’m curious to see how the big Toronto papers will spin the monthly real estate numbers for September. If the first two weeks are any indication, it should be ugly again. Mid-month sales numbered 2,623. This represents a 22% drop over the same time period last year.
“Oh crap….guess we better report these numbers in reference to their month over month change”.
Also not good. The first two weeks of July saw 2,732 sales. And for that matter, the first two weeks of September saw prices fall from the first two weeks of August.
“Guess we’ll be focusing on the year-over-year price change then”.
Sure you can. But give that another month!