Cover Local Aspects of the Housing Crisis

By Jonathan Higuera

The mortgage lending meltdown and housing crisis certainly amped up real estate coverage this summer whether you file for print or electronic media.

It's also prompted reporters to fan out and follow story leads from the ground up and at the macro level.

The first thing reporters should ask themselves when on the story trail is "how is this playing out in their local market,' advises Jonathan Lansner, a business columnist for The Orange County Register who also writes a popular real estate blog.

"Find out if any big subprime lenders are in your area," he said Wednesday during a conference call panel coordinated by the Society of American Business Editors and Writers. "Figure out who is most affected -- lenders, homeowners, consumers."

The depth and scope of the problem differs from city to city, he added. In some cases, the crisis is mainly concentrated in blue-collar neighborhoods where subprime loans and other creative financing products were heavily used. Folks at the top in some markets have been insulated.

In other markets, the pain is more broadly spread, particularly in previously white hot housing markets like Las Vegas, Stockton, Calif., Orlando and Phoenix where new housing subdivisions sprouted up seemingly overnight.

The story has taken on new dimensions with the national economy and stock market getting dragged into the crisis. Uneasy investors and shareholders are keenly watching their portfolios swing back and forth and testily following economic policy.

Unless you're the real estate or housing beat reporter at a national publication, your coverage is more likely to reflect local concerns. For example, The Denver Post examined foreclosure rates by zip code.

A tried and true gumshoe approach is finding and telling the stories of homeowners, prospective homeowners and neighborhoods left in the wake, says Ilyce Glink, a syndicated columnist who writes about real estate and personal finance.

"Look for people in trouble financially," she said.

She points to a variety of agencies that have supplied her with real people to infuse those real-life perspectives into her stories. Among those agencies that have been helpful in identifying sources:

• Consumer Credit Counseling Services of Atlanta
• Legal Aid
• Fannie Mae
• Freddie Mac
• HUD
• ACORN

She also relies heavily on real estate industry professionals, from realtors to title company professionals. They are on the front lines and are usually the first to know when a trend or new twist is developing.

One given is that at a time when more homeowners need help, scam artists will quickly follow, Glink said.

"They say "sign your house over to me and I'll handle it.' "

Another avenue reporters can explore is the credit agencies that rate many of the big lenders, says Daniel Wagner, who covers mortgage lenders and commercial real estate for Newsday. The major credit rating agencies such as Standard & Poor's, Moody's and Fitch are under increasing pressure to justify their grades of certain large lenders now accused of providing questionable loans, sometimes referred to as "liar loans."

"People figured because they had good credit scores they were getting good loans," he said. "But that wasn't always the case."

And of course the lenders themselves should receive copious amounts of scrutiny, he and others suggested. Many large lenders went on hiring binges during the housing market boom. They became major employers in those cities but have had to cut back on their workforce or even shutdown. Both events make for strong local copy.

While the macro level can be more difficult to follow, all reporters should be keeping an eye on indicators such as Treasury bills (where investors often retreat during uncertain times), stock market fluctuations, decisions by the Federal Reserve and other indicators of the national economy's performance, said Grep Ip, who covers the Federal Reserve, the economy and financial markets for The Wall Street Journal.

"This is a debt market crisis. Not a stock market crisis," he emphasized. "It's more opaque," making stories more complex to explain to readers.

Even at the local level, new car sales volume, retail spending and job creation rates can provide fodder for understanding the broader local economic impact, Lansner said.

Other experts cautioned it's important to distinguish between subprime loans that enabled thousands, perhaps millions of people, to become first-time homeowners, and predatory lending, which is sending many of those same people into foreclosure.

"We have to think about the solutions too," Lansner said. "Years ago, if you were not white and middle class, you didn't get a home loan. Do we go back to that? Will non-traditional buyers still be able to borrow and get a home loan in the future?"

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Copyright © 2008 Donald W. Reynolds National Center for Business Journalism