You can take almost any piece of information and make it sound good or bad. And no one is better at spin than the financial press when it wants to get behind a story like the housing slump.
The Associated Press couldn't wait to quote housing bear Robert Shiller when he said during a speech two days ago, that "there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s."
If that doesn't make you want to jump off a ledge, here's more. Home prices nationwide have already dropped 15 percent since peaking in 2006, so we could only be halfway there, according to Shiller's chillers.
The reason Shiller gets this kind of press for his proclamations, is that he's got strong credentials. He's a Yale economist and co-founder of the Case-Shiller Index and Macromarkets LLC. And he correctly predicted the stock market bubble bursting in 2001 in his book Irrational Exuberance.
But there's another side to the story that few reporters are telling. Shiller's index is used to help securities investors buy hedge funds against housing prices. The more people are afraid, the more money Shiller makes.
Certainly some areas are still hurting badly -- such as California, Florida, Nevada, Arizona and Michigan, but despite the slowdown in these states, other states, particularly in the Midwest, are doing quite well, well enough to keep most of the real estate industry at their desks.
According to the National Association of Realtors, the housing slump of 1.2 percent for 2007 still represents the fifth best sales record in history. Sales reported for March continue to be down over last year, but 73 of 150 markets reported gains and home sales are still holding their own with recent record-breaking years.
While Shiller is correct that housing markets take time to turn around, the NAR expects an upturn in sales and home prices by 2009.
For that reason, real estate agents haven't abandoned the industry, despite the fear-mongering of some pundits. Business is more challenging for many agents, but most understand that it's a cyclical business, says the NAR. After four years of record-setting sales, a decline from the unsustainable levels reached in 2005 is understandable and not a reason for panic.
In fact, the NAR says its membership has gone down to 1,235,598 members in March , down from a record high of 1,370,758 in October 2006. That number is equal to the record set for new members in August 2005.
Many agents are in fields related to sales such as property management (rentals), commercial brokerage, appraisal, consulting, and insurance, says the NAR, so they have diversified income. In addtiion, most agents build their business through repeat business and referrals, so the longer they're in the business the higher their income.
Because seasoned agents are better prepared to weather a cyclical downturn, most of the attrition is likely from newcomers who weren't able to sufficiently built their business, suggests the NAR.
The real estate industry still believes in real estate, even during the "biggest finanical crisis since the Great Depression," says Shiller.