Journalistic Integrity?

In light of the much bandied about hullabaloo going on over at VancouverCondoInfo and to a more limited extent at CondoHype, I figured I'd weigh in, but more importantly direct traffic to this issue on the other blogs.

Does the MSM, and specifically in this case, the VanSun, owe its readership the debt of integrity-based journalism, or owe its advertisers the opportunity to market themselves virally under the guise of a story?

We likely all saw, and more likely didn't finish reading, this weekend's piece titled 15 Real Estate Myths and Realities. We didn't finish reading it, because as bears, it read like advertising, or as bulls it simply reinforced what you already know and are "profiting" from. I don't think anyone, except a minor few, read it as a well written source of advice backed up by unbiased experts at arms length from industry--be it RE or media.

I don't think I need to answer my rhetorical question from above. I think that CondoHype has done a more than adequate job of doing so in his post; and that perhaps, if one sentence stands out above all else, it's this: "When it comes to real estate, the assumption is that the reader is in the market and is looking to invest."

I think the assumption is fair, well researched, and true. The reality is, more people own their own homes in BC than don't. I'd even go so far as to suggest that perhaps right now, more so than ever before in the history of BC, home ownership is likely at an all time high. Goodness knows that we citizens of the best place on earth have been given more opportunity and reasons to buy now (or be priced out forever) than ever before. I'm also willing to go out on a limb and suggest that more homeowners than renters, again defined in terms of percentages, not only subscribe to, but actually read, the Sun.

I'm not suggesting that renters are a bunch of illiterate chumps, but I am suggesting that simply by analyzing why people choose to rent (forced to economically, move around too much, etc) will point to the obvious fact that homeowners are more likely to get a paper delivered. And subscription equals delivery. Furthermore, the number of subscriptions directly correlates to advertising income. Circulation definitely factors in here; but I believe, rightly or wrongly, that subscriptions likely hold more weight with advertisers concerned about the demographics of the readership due to the information gathering capacity of knowing who's account information is available.

To me the problem doesn't lie in and of itself in media funded by advertising. The collective "we" have become very savvy in recognizing, and resisting, marketing. As a result, the collective "them" (in this case advertisers) have become more sophisticated in their marketing efforts. Remember that companies like Google and Facebook get their major revenue streams from targeted advertising based on what they know about their users. And more and more, this advertising is going "underground" or viral; like the Pepsi can on the kitchen counter of a TV show about a group of kids living in Orange County. Am I the only one who remembers when the cans were just labeled generically "beer" or "soda" in TV shows about a group of kids living in a 90210 zip code?

The Sun story was, and likely was recognized as such by most readers, inundated with viral marketing from RE industry "experts." It was a story that reinforced the common myths and masked over the increasingly visible realities of RE as an investment. And that is the true problem: the vast majority of people who own their own homes are not RE investors. The word, in my mind, should never be mixed in with anyone who owns only one property. Nor should it be misused to describe someone who owns a property that does not pay for itself AND generate a return on investment not only today, but growing into the future. Everything else is speculation and very few people like to be labeled a speculator in Canada as it seems to offend our more "moderate" and "risk-adverse" financial "sensibilities."

If people truly crunched numbers on their 2nd and 3rd RE purchases, then took five minutes to look-up what those numbers meant in the land of investments, they'd quickly learn that they are exactly like they were during the dot-com era: over exposed to "investments" whose market values were not nearly supported by their underlying economic fundamentals. Imagine if your shares of Nortel had been bought with your line of credit at their peak?

For the record, the stocks that I purchased recently using a value investment strategy are also speculative buys and not stable investments. I am counting on capital gains to make them worth the risk. The difference is, their underlying price-to-earnings ratios are vastly better than any RE in BC and therefore, in my mind, far less risky in both the short and long terms.

When someone uses an extended amortization, low-down payment mortgage product to buy a second condo to rent out at roughly 50% of what it costs to carry it, they should never be called a real estate investor (and given recent data released by ScotiaBank "someone" is roughly 60% of all mortgage holders) . They should be called a fool. And you know what they say about a fool and his money. I wonder how "soon", soon will be?

UPDATE: seems like D.Penner felt some "pressure" to provide a more balanced follow-up story.

Also see J.Chevreau's piece in the post Saturday if you're thinking about an extended amortization mortgage product.

Also see the effect that bloggers are having on the big bad MSM. I've got to say this: when someone resorts to a character smear, by accusing their "attackers" of a smear, well, isn't that kind of like the pot and kettle thing? Maybe I'm just missing the point?

UPDATE: From time to time I get press releases in my email. I won't publish marketing, but some are public service announcements. I won't put them up unless the readers of this blog want me to. What say you?