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Tuesday, October 17, 2006

Advertising the Bubble

As I was catching up on the comments, I was rather intrigued by the direction that you all took Monday's open thread. Here's a recap for those of you that do not closely follow the comments. When it comes to the blatant cheerleading nature of the real estate section of the newspapers, they probably feel that they have no choice, since a very large percentage of the papers' advertising budgets come from real estate interests. However, that gave Mikhail an idea...

It's not as if the bubble bloggers are going to pick up the slack with full page ads sticking their thumbs at the real-estate industry, and encouraging to general public to stop buying.
...
Hey, the quickest way for the bubble bloggers (like us) to influence the editorial policy of our local papers is to start taking out negative advertisements about our housing markets.

As soon as anti-bubble content becomes the biggest financial contributor to the paper, we will see a complete about face in article bias.

Maybe Tim should start holding out a tin cup for donations to place anti-bubble ads in the Times?
The conversation just took off from there:
Nolaguy: If we paid for it, I wonder if the Times or PI would run a full page add that was "anti real estate"?

Mikhail: ...for a 6 inch by 6 inch ad we would need to raise $17,438.4... Seriously, if we really could pull something like that off (i.e. getting enough people to donate to a Puget Sound housing boycott advertisement) that would likely generate a lot of publicity, beyond publishing the ad itself. And if the papers really were silly enough to decline the ad, we would have an early Christmas, and be able to take our story to the national media and get a LOT of coverage.

synthetik: $17K is a lot of scratch. I think it might be possible if a website was created around this endeavor and then posted on all the national blogs (HB, HP, etc). Might be fun to try... If they wouldn't run the ad we could donate the funds to charity.
However, not everyone has warm fuzzies about throwing around that kind of money. Plymster suggested some other possible activities:
$17K? You guys are saving waaaayyyy too much money renting.

I disagree with handing $17K to one of the key creators of the bubble. Why not just hand WaMu a giant novelty check for $1 trillion dollars to cover next year's ARM resets?

If you really want to raise awareness, build up a fund that donates money to debt education, and then send a press release to the appropriate news rags. Then you'd be doing some good and not contributing to the problem.

Or you could buy me a ladder so I can get off my high horse. ;-)
A few people suggested some cheaper methods of advertising:
msrelo: Maybe I don't have a full understanding of how the ad sales work but it seems like a single page insert is cost effective.

Wanderer: Alternative to the PI: I just called Seattle Weekly and got the following quotes: 1/2 page = $1471, 1/4 page = $732, 1/8 page = $389. Those rates are for a single week and there is ~10% drop for 4 weeks consecutive.
Wanderer takes it a step further and starts proposing fundraising methods and ad print subjects:
Wanderer: I personally would put in $200 toward a 1/4 page add the first week to get some attention and then follow it up with a 1/2 page add the next. I am relatively new to the scene, but I would trust synthetik and Tim to put together a well thought out and RATIONAL explanation of:
  • real estate fundamentals
  • where the current market stands relative to them
  • current trends locally
  • what the REI wants you to believe
  • Many, many, people will dismiss it as paranoid anyway, so it really needs to be conservative and not over the top.
    There are of course still questions of whether this would even be a valuable exercise:
    synthetik: If you were firmly plugged into the matrix like most people, wouldn't you simply dismiss the ad? Wouldn't people wonder what we all had to gain?

    Wanderer: It would be hard to convey motives in a 1/2 page article, so it probably isn't worth trying anyway. Anyone that is going to ask, "What do you have to gain from this?" probably can't answer the same question about the writers of the RE section. For me, there is value in just putting out good information where very little currently exists.
    Which brings me back to ad print and to Eleua's comment:
    If all of you are serious about this...

    It would probably be best to collect all the turbo-Bull quotes from late '05 early '06, and string them all together. Show just what REIC shills all these bulls have been.

    Then you ask if you would spend $500K on the wisdom of those Carnacks. If not, why not?

    Perhaps you can also include quotes from all the Wall Streeters back in the late 90s. Let the inquisitive reader draw his own conclusions.
    I think before anyone gets too serious bandying about large sums of money, we would need to come up with a simple way of getting people's attention. Printing a half-page essay about "fundamentals," "unprecedented run-ups," and "ARM resets" would be a waste of money. Very few people would read it, and of those that did, you would probably convince about 0.1%. I think Dilbert creator Scott Adams neatly sums up what is necessary in a situation like this:
    The challenge was that the bad ideas sounded terrific to the uninformed person. You couldn't kill these particular bad ideas with logic because the arguments against them would be too complicated. You had to go in through the back door.

    I suggested a few cleverly designed, hypnosis-inspired phrases that were the linguistic equivalent of Kung Fu. They were simple (that's my specialty), and once you heard these phrases, they made any competing ideas seem frankly stupid.
    I think that Shiller's home price graph is a good example of the kind of thing that Scott is talking about. So that's the challenge. Come up with a simple phrase, image, or series of phrases that make buying a home at the peak of the bubble "seem frankly stupid." If we can do that, then I think we can consider buying some ad-space.

    33 comments:

    synthetik said...

    Tim,

    You are the man! You must be an "old soul".

    The graph could be summed up with 3 simple letter - all in caps.

    WTF???

    christiangustafson said...

    Why do we need validation by having the Bubble idea carried by the MSM? I never understood why the Mozilla team spent money for that NYTimes ad.

    1. Save your money
    2. Research bank stocks
    3. Buy long puts as needed
    4. *POP*
    5. Profit! yay!

    Who cares about newspapers? I only read a newspaper when I'm at the barber.

    Mikhail said...

    I am all for working out some good content for an advertisement. Something that shows the absolute explosion in the use of exotic mortgages, and no-doc loans, would be interesting, as well as showing the rent/ownership ratios for our region.

    To me, these are the most compelling arguments for the real-estate bubble. If we aren't in a bubble then ownership/rent ratios wouldn't be out of whack, and people would be able to afford homes without exotic loans.

    However, putting the precise content of an advertisement aside for a second (although this is an important subject), I would like to point out that the mere act of actually placing such an ad could get a lot of publicity (if we do a good enough PR job).

    Having the bubble-sitters actually get together to accomplish some real-world task would cause a lot of media to take notice. It would show the depth of concern that is out there. I think this is precisely the type of story (i.e. a bunch of bloggers who pulled off a massive grass-roots ad campaign) that would resonate in a lot of media places.

    Does it show that I have done a lot of work with PR in a past life? :)

    Mikhail said...

    christiangustafson said, "Why do we need validation by having the Bubble idea carried by the MSM?"

    We certainly don't need to post an advertisement for "validation". However, coordinating our activities together to do something in the "real" world can cause a lot of people to realize that it's not just cranks out there who believe in the "bubble".

    Let's put it another way: do you think that Tim's or Ben's blogs are having any impact on the broader housing meltdown? Absolutely! There are people who discover these blogs every day who had no idea how messed up the real-estate market really is. The more people who get this message, the sooner the markets will correct.

    synthetik said...

    Here is a snipped from an email I rec'd recently from a reader of this blog:

    "I just wanted to say THANK YOU to you (and Tim and S Crow) for all of your time and effort at conveying some semblance of honesty and clarity about the current regional RE market. (I learned of the blog about 3 months ago when it was referenced in an article.) Your contribution on "renting" this morning is a wonderfully useful alert, for example."

    "Your (and the other Seattle Bubble guys) notes have been hugely, hugely helpful and comforting in reinforcing my instincts about the market conditions. I want to buy again in the region some day (in case it becomes "affordable"), but I want to be able to take my time in doing so. Rushing and making a snap decision is not in my comfort zone by a long shot. But it's hard to stay strong with so much "hype" surrounding the issue."

    So, I couldn't let another day go without letting you know how sincerely I appreciate your contributions to a civil dialogue of common interest."

    Dustin suggested we may be involved in mutual masturbation, however that is clearly not the case.

    christiangustafson said...

    OK, Mikhail, I just don't see an ad doing it.

    Better: grass-roots effort, make a few simple placards "BEWARE THE HOUSING BUBBLE", "ASK ME ABOUT THE HOUSING BUBBLE", "THE HOUSING BUBBLE IS REAL", etc.

    Print up a stack of tri-fold fliers, making the full detailed case for the Bubble, then finishing with hyperlinks to all the key bubble blogs. Kinkos! Cheap.

    Put on a crisp suit, and spend a few Saturdays handing these out at the Market and at Westlake Mall. Reach people before they sign up for that neg-am IO suicide loan.

    Richard said...

    Better: grass-roots effort, make a few simple placards "BEWARE THE HOUSING BUBBLE", "ASK ME ABOUT THE HOUSING BUBBLE", "THE HOUSING BUBBLE IS REAL", etc.

    Hmmm... how about standing on the street corner with a sandwich board, ringing a bell?

    Passing out little green bubble bibles?

    Shaving ones head, donning an orange robe and passing out bubble bath?

    christiangustafson said...

    I have one more point to make. Why do we want to do this?

    Is it to be right? Do you want to save a few people? Do you want to hasten the deflation of the Bubble and a return to normalcy? (so we can buy houses)

    What's done is done. The best analogy I've read is an old one from Housing Panic comparing the Bubble to an atomic bomb test. We've seen the flash, but haven't felt the shock waves -- yet. They are coming! No escape is possible now.

    I think as far as public advocacy goes, the most important thing we can do right now is to raise awareness against

    1. Federal bail-outs of the indebted
    2. Subsidies and other market distortions that put off the day of reckoning
    3. Inflate the USD$

    Basically, 3 ways of saying the same thing. We must take our medicine and ride this thing down.

    "What's my motivation?"

    Eleua said...
    This comment has been removed by a blog administrator.
    Wanderer said...

    First off, I am totally in agreement about graphs and 3 strong bullets making much more impact than a diatribe about the market. No one would read the latter... but the formaer can grab attention.
    Why pay for an add? For precisely the reason that no one would expect a bunch of bloggers to do something real. I agree with Mikhail that that can be very powerful. If 90% of the people out there see it and say, "what do they have to gain?" at least some fraction of them will be questioning the subject for the very first time.
    I work for a boat building company and we make real products that displace water and move people around really fast. At the end of the day, I can touch what my company does. There is something satisfying in that, and I wonder if I would get the same satisfaction from this.

    synthetik said...

    I just sent an e-mail to Keith of Housing Panic and Ben of www.thehousingbubbleblog.com to try to get some feedback and possible support for the idea.

    Let's see what they say.

    Lake Hills Renter said...

    I'm sorry but I don't see the benefit of running in advertisement in the cheerleader media, particularly at that cost. I think we're doing a much better service with blogs like this and Ben's blog. We just need to get the word out so people can find these places for themselves, and I don't see a newspaper ad in the RE section doing that.

    Mikhail said...

    Some people have suggested that a print advertisement won't make that much of an impact. Well, what other vehicles could we use?

    Buses? Billboards on freeways? Sky-signs at ball games?

    I like the idea of coming up with some sort of project that bubble blog lingerers can participate in. Something that would give tangible evidence to the groundswell of concerned citizens on this issue.

    A march on WaMu headquarters maybe? :)

    Or maybe we have rotating protests, targeting the worst bubble-blowers, with a few dozen people getting together with banners and signs outside a mortgage broker, or realtor, office each week-end?

    redmondjp said...

    Or maybe we have rotating protests, targeting the worst bubble-blowers, with a few dozen people getting together with banners and signs outside a mortgage broker, or realtor, office each week-end?

    Or better(worse) yet, actually have informational pickets outside of open houses at obviously overpriced properties--egads, this could get ugly fast! Wouldn't it be something if more bubble-bloggers showed up at an open house than actual potential buyers--that, in itself, would speak volumes about the current state of the market!

    You can bet that this would make the TV news and papers if it happened more than a few times around the Seattle area. Wouldn't cost a dime (but others could argue, with some merit, that picketers should 'get a life').

    Would dramatically increase the chance of getting run over by a realator's Lexus, however.

    Mikhail said...

    I love redmondjp's idea. We could have people submit possible targets (of egregiously priced homes, with scheduled open houses), and we can set a time for people to show up. Instead of looking like rag-tag protesters, we should dress up nicely and be non-confrontational.

    We could have signs that give the relevant stats for the property: how much they are asking over what they paid, how big the mortgage is, how long it's been listed (and re-listed) how many other homes the owner has, etc. Maybe we could even dig up info on the realtor.

    We could show how many other homes in the area are for sale, and what the price trends are for them.

    Our message could be, "it's ok to be a bubble victim if you want to, just make sure you're informed". Maybe we could just position ourselves as providing consumer eductation.

    redmondjp said...

    Oops, sorry, I meant to correctly spell 'realtor' in my previous post. Too bad one can't edit.

    EconExchange said...

    I would chip in $10 for an ad of some sort as was discussed earlier. Would be interesting to see how it turned out! As far as protests.....well that sounds a little crazy to me.

    Matthew said...

    whatever we decide to use for the add, we shouldn't definately have:

    WWW.SEATTLEBUBBLE.BLOGSPOT.COM

    Along the bottom of the ad

    Eleua said...

    Informational picketing...

    Very ballsy.

    If this was tried on a Sunday afternoon, I can see the headline on the Seattle Times:

    "Realtor Guns Down Six Protestors at Open House in Ballard"

    Now, THAT would be a way to get the MSM's attention. Do we draw straws for who gets picketing duty?

    Matthew said...

    sorry, my post above should say

    SHOULD DEF HAVE, not shouldn't. I need a vacation.

    Wanderer said...

    Well, that is certainly a way to get some attention. You show up in front of a few open houses with pickets and I guarantee the local media shows up the next week. Of course, I am not sure that SeattleBubble would come out smelling rosy. You may as well get a big manequin, fill it up with ketsup, label it as "The American Dream," and then bludgeon it on the guys lawn. Setting it on fire would be optional, but then you could go on camera and say "I wouldn't even p!$$ on the American Dream to put that fire out!" But it would be memorable.
    Kidding of course... but not by much. Let's just say that I don't think the public's lasting impression would be, "Well, they WERE dressed pretty nice."
    I guess I am either a complete wimp or a hypocrite since I support getting information out there but not targeting individuals. It probably has the same goal (inform people about overpricing and therefore reducing the number of sales) but getting personal seems over the top.

    Wanderer said...

    If there is picketing duty to be handed out and possible shots to be taken, wouldn't an iron mask come in extremely handy? Who could we find that has one of those?

    seattle long term owner said...

    how about getting some shirts printed up... sell them for 10 bucks each (at cost)...

    have your blog address in the front...

    and in the back something that has to do with the RE bubble...

    then have a meet and go around open houses looking at houses while wearing the shirt...

    I can see how people will actually get shot...

    synthetik said...

    www.seattlebubble.com works now!

    I like the t-shirt idea... FUN!

    We could have uniforms with our handle on the back and our avatar on the front. "Team Bubble Bloggers", "Sponsored by Our Own Self Aggrandizement"

    christiangustafson said...

    What is to be done? There is no need to carry the message any further to the public, or to make any public theater out of it.

    USA Today, the Today Show, Oprah, and the nightly news will have a constant trickle of stories about FBs and mass foreclosures. The real-life data will be too widespread and horrible to ignore. There is no need for any of us to witness to the public on this.

    That's why I mentioned that what matters at this point is that nothing stupid is done by the political and regulatory class to try to fix this mess. Especially the inflation option. As a naive holder of USD$, why should I lose out to this speculative madness? I haven't an ounce of sympathy for the FBs. None.

    I do like to think that when this is all over, maybe Austrian-school economics will be vindicated (again). During the coming economic nuclear winter, read some Human Action or anything by Hayek to pass the time. These were great men, giants of the 20th century.

    Richard said...

    Mikhail said...
    Some people have suggested that a print advertisement won't make that much of an impact. Well, what other vehicles could we use?

    Personally, I'd suggest Google Bombing, but I'm biased.

    Takes some research on keyword terms, but it's not that hard to get a high google ranking with appropriate search engine optimization.

    Dustin said...

    The Tim,

    Based on previous conversations, I've always been under the impression that you take pride in having a certain level of objectivity, (and recent analysis demonstrates your ability to be as objective as data allows) but wouldn't that change if you became an advertiser for the bubble?

    I probably would not have even brought up this question but I feel compelled to comment any time synthetik takes my writings out of context as he did earlier in this thread! ;)

    plymster said...

    Let me see if I understand Dustin correctly. to paraphrase: "If you advertise a point of view, even if you stand to gain nothing more from that advertisement than peace of mind, you are inherently biased and cannot claim to examine things objectively." Yet if you get your paycheck from an industry (as Dustin does), it is unlikely that you are biased.

    That logic does not follow.

    There seem to be some altruistic arguments here for the ad idea:
    * prevent people from getting burned and going bankrupt
    * help mitigate the economic fallout from this catastrophe
    * increase mainstream critical thought

    I applaud those of you who would do something to relieve the world of its ignorence and better your fellow man.

    My darker side says, "Screw the sheeple. They have access to all the info we do. If they aren't smart enough to spend a few hours researching and analysing a half-million dollar purchase, they deserve to go bankrupt."

    But that's not the point. Neither is it the point to perform the most noble, unflawed form of charity. Doing something positive is better than thinking about it and doing nothing. If you guys move forward with this, count me in.

    Nolaguy said...

    Count me in.

    Dustin said...

    plymster,

    Your paraphrasing did not capture my point at all, so of course you do not follow your own non-logical phrase.

    I think we should let The Tim answer since he obviously has a better sense of logic than you.

    Darren Meade said...

    Simple demographics won't let the housing industry stay down too long.

    Housing starts will rebound almost as sharply as they've been falling—a V-shaped pattern that won't be nearly as damaging to the economy as the prolonged slump of a U.

    Look for starts to slip from about 1.8 million this year to around 1.6 million next year. But in 2008, they'll bounce back to the 1.8-million mark, though it's likely to take a few more years to recover the 2 million a year crossed in 2006.

    One reason: Home buying starts at a younger age now than in past generations. A bigger percentage of Generation Xers—the 52 million people now aged in their mid-20s to about 40—are buying homes than baby boomers did at the same age. Similarly, the leading edge of the next generation in line—echo boomers—are more likely to buy a condo or starter home than Gen Xers were at such a tender age. Since there are far more echo boomers than Gen Xers, that trend delivers a double punch.

    In the meantime, baby-boomer demand will buoy turnover in coming years. A recent study by Hanley Wood LLC, a construction information company, suggests that as many as two-thirds of baby boomers—roughly 46 million of them—will opt to relocate as they retire. According to the study, two-thirds of affluent boomers say specifically that they intend to build or buy a home rather than stay where they are. And those wealthy boomers wield a disproportionately large influence in the market, helping to set styles and trends in housing.

    So what do boomers, especially well-heeled boomers, want as they settle into their golden years?

    About half say they'd consider living in an age-restricted community. The other half say no way.

    About one-fourth will opt for a condo or townhouse, rather than a detached, single-family home. Only about 10% live in this type of abode now.

    Most want one-floor living, either a single-story home or a bedroom, kitchen, bath and entertaining space all on one floor.

    Low maintenance and minimal yard upkeep are a must, so that eliminates big gardens or lawns.

    Also desired are spacious kitchens and baths inconspicuously adapted to suit less-flexible aging bodies: Grab bars in the shower. Storage that can be easily reached without requiring bending. Higher countertops. And space for grandchildren to come visit, but not enough space to encourage lengthy stays.

    Lake Hills Renter said...

    You're throwing out a lot of facts and trends there, darren. Where's your data supporting this? I'd like to read it.

    The Tim said...

    Dustin said:
    Based on previous conversations, I've always been under the impression that you take pride in having a certain level of objectivity, (and recent analysis demonstrates your ability to be as objective as data allows) but wouldn't that change if you became an advertiser for the bubble?

    First off, I don't believe that I have made a specific claim to objectivity in the past, certainly not in the "Welcome" post you linked to. That being said, you are correct in your determination that I feel that I am a fairly objective witness to the housing market in Seattle. Allow me to quote the definition of objective to use as a point of reference.

    3a. Uninfluenced by emotions or personal prejudices
    3b. Based on observable phenomena; presented factually

    You will notice that nowhere in the definition does it say "without opinion." Rather, the requirements for objectivity can essentially be boiled down to "fact-based & emotion-free." So, to address your question about whether it is possible to remain objective while advertising "for the bubble," I would say no, I don't think that it would tarnish my objectivity. I am not suggesting making an emotional plea to people, but rather pointing out the facts in a simple and elegant way that will "just click" with people. I believe that falls well within the definition of objective.

    I probably would not have even brought up this question but I feel compelled to comment any time synthetik takes my writings out of context as he did earlier in this thread! ;)

    I don't at all follow the logic here. Someone (not me) made a comment that you took umbrage at, so you respond by questioning my objectivity?