We’ve all been there. We’ve all read baiting news headlines and, subsequently, the full article. We may, in fact, be the only industry that actually reads every word of every article.
And we've all read those articles, quietly spiraling into an inner rage at just how much it misses the mark. It’s painfully clear — the media just doesn’tget housing.
Look, this fact is great for HousingWire. Our reporters get to occasionally dissect reports, lately those saying subprime is back. Subprime is back? Really? Well, no, it isn’t, but it makes for good print.
At a recent lunch with industry members in Washington, D.C., I cab-shared back to my hotel with two other members of the mortgage finance business. One espoused his love for our publication and our platform. He reads it every day, loves the emails and gets the magazine.
The other agreed that HousingWire was the “best” at covering the business. “But even you only get it right half the time.” Only half of the time? That comment stung and I hope it isn’t reflective of HousingWire coverage, but the sentiment remains: the media just doesn’t get housing.
Take the unbelievably crazy instance of Blackstone, a private equity firm, deciding to pay its chief executive officer $375 million in pay and cash dividends in 2013.
That’s an increase of 76% from 2012 for CEO Stephen Schwarzman, as the world’s biggest alternative-asset manager took advantage of rising equity markets to sell shares of companies to make a killing on the year.
IPO successes were given as the main reason for his increase: The firm’s heavy selling and IPO activity resulted in $3.5 billion in economic net income for the year, which is a combination of realized profits and paper profits reflected in fund holdings, a 76% increase from 2012, the article states.
Also worthy of note, though unmentioned in media reports but available in the company’s 10-K filed Friday after market close: The single family rental business Invitation Homes also increased in value by $912 million. And as the industry well knows, this was a massive undertaking for a market that needs an investment boost.
Blackstone spent years building this up, and years putting in an infrastructure that could handle it; creating jobs and boosting local businesses.
Both Bloomberg and The Wall Street Journal, which employ two of the best reporters in our space but who also didn’t write either of the Blackstone articles, referred to the annual compensation as a “payout.” This is reminiscent of a “bailout” scenario, equated to a situation where money is thrown at a financial emergency.
Clearly, these media outlets should’ve done their homework, because looking at the numbers Schwarzman appears to have earned it, especially when you throw in our industry.
Yes, $10 billion came from IPOs, but another $4 billion contribution came from real estate:
“$14.4 billion in our real estate segment driven by successful initial public offerings of Hilton ($5.5 billion), Extended Stay Hotels ($697.0 million) and Brixmor ($600.5 million), as well as valuation gains resulting from improving fundamentals of equity office Properties ($1.0 billion) and Invitation Homes ($911.7 million).”
Compared to:
“$10.5 billion in our Private Equity segment driven by successful initial public offerings in our BCP V fund totaling $3.7 billion (Hilton ($2.0 billion), Pinnacle Foods ($1.1 billion), SeaWorld Parks & Entertainment ($536.4 million)) and in our BCP IV fund of $1.0 billion (Merlin Entertainments); in total, public portfolio appreciation of 49.5% created $6.6 billion of value.”
I tend to think the media versus housing disproportion can be best explained using Occam’s Razor. This is the principle that states that all things being equal, when faced with competing hypotheses, the hypothesis with the fewest assumptions should be selected. So which is that?
Two things; journalists move in herds and of the hundreds of journalists I’ve worked with over the years, only a handful were homeowners.
Story ideas, more often than not, are buzzworthy and crowdsourced, indicative of a mass mentality and group behavior.
Think of the field day with robosigning. Once HousingWire broke the news of its existence, it was off to the races. And while it received heavy front-end coverage, no one wanted to cover the cure to this madness. Journalists are happy to spill blood, but not to stick around while it’s mopped up.
And why is that for housing? After all, when a new model of a car fixes a problem, like offering better mileage, that gets covered. When a new app calls a cab for us, well, that’s something worth writing about. But when underwriting improves dramatically…crickets.
You can’t blame the lack of interest when the journalists are so unfamiliar with the products, because it’s an industry of renters. Anyone who goes through the process of buying a home and becomes intimately familiar with the process is better suited to cover this industry.
At HousingWire we own our homes, and we also own coverage of this space. And, hopefully, that’s more than half of the time.
