The Seattle Times is running a pair of stories today under the headine "Flipping real estate ... without getting burned" -- a reference to the growing American practice of buying property with the intention of immediately reselling it for a profit.
The "without getting burned" part of the headline in the printed newspaper is in a much smaller type size than the first part of the headline. That difference in emphasis is a metaphor for the problems with this package of stories and current "journalism" on real estate in America.
The Seattle area is not quite as overheated a market as California. Still, it's plenty hot. People here and other such cities are flipping homes like crazy to take advantage of what they see as a route to quick and painless wealth.
It'll work for some. Yet this game is a classic bubble activity: depending on the greater fools who'll take the losses when the music stops.
The newspaper's stories have the usual caveats. But in my view they don't offer the level of strenuous warning that they should.
What we need are news articles about the people who lost money in previous bubbles resembling this one, such as in Japan in the 1990s, and Houston in the 1980s. What we're getting is, in effect, encouragement to join the crowd that's inflating a new bubble, more dangerous by far than even the stock bubble of the late '90s.
Why more dangerous? Because the buyers now are being inveigled by lenders who offer nothing-down and interest-only loans, to borrowers who would not have come close to qualifying for loans in a less frothy time.
The LA Times, meanwhile, has a story (reg req) today about Latinos in the booming southern California real estate market. In an anecdote about one family's successful "purchase" the paper writes: "After two months of shopping for a mortgage they could afford, they qualified for two loans that required no down payment. Their savings covered the closing costs and they moved into the house in September."
It's obviously a good thing for more people from more diverse backgrounds to be building equity via home ownership. But this kind of risk could put these people in the financial hole forever, if the bubble bursts now and they find themselves under water on a nothing-down loan.
This is going to get so ugly.