Why the Dollar Matters in Real Estate Stories

Investors need to studiously avoid reports of firm Manhattan housing prices that ignore the dollar's role.
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If you think the business media writing about business is bad, make sure you double that dose of caution when you are reading the non-business media writing about business.

You got that, savvy investor? Business media = bad. All other media talking about business = way worse. Forget this and your portfolio is going to need reparative therapy.

It is without further ado, then, that I hand out this week's dreaded Business Press Maven "Back of the Hand" award to the Metro section of

The New York Times


Look: I've written tons of articles for that section, and I can tell you the reporters and editors know how to write and have lifelong interests in subjects such as politics. But basic instincts for business? Experience or long-held interest in finance or real estate? Not so much.

This week, these fine folk set out to solve a lingering mystery -- at least for anyone almost willfully blind to the effects of a weak dollar in an area that's attractive to foreign buyers. Here is the headline:

Apartment Prices in Manhattan Defy National Real Estate Slide.

The article led off in deep wonderment about the half-price sale that is the Manhattan real estate market for many foreign buyers, thanks to that weak dollar:

As the housing market across the country continued to stagnate in the fourth quarter of last year, the market in Manhattan set a record, according to reports to be released on Thursday by four of the city's major real estate brokerage firms.

There was a lot of fill-out given in terms of strengths here and there, but nowhere was the essential "why" touched upon. It was not even mentioned. They spoke about Wall Street bonuses as a contributor, which they said might not be as hot in 2008.

But journalism with a thin stab at a why has all the charm of unrequited passion. Actually, forget passion. It has all the charm of stepping on a claw hammer.

In this case, after all, the central why tells us the essential what. It tells us what will happen and when. And what will happen when? Well, as soon as the dollar strengthens a bit, we'll see headlines like: "Apartment Prices in Manhattan No Longer Defy National Real Estate Slide."

The wide-eyed article even managed to notice the comparative strength of Manhattan condos vs. co-ops, a direct symptom of foreign buying, without mentioning that with their far easier approval processes, condos are always much more attractive to foreign buyers, who tend to live in countries with higher taxes and thus show less on their returns. They also happen to be full-time residents of their apartments less frequently, something stickler co-op boards tend to frown on.

Again: no why. And that's why you should double up your caution when reading about business from the non-business media.

In not solving the mystery of still rising real estate prices in New York and several other major American cities by mentioning the positive effects of the weak dollar, the


leaves readers exposed to all sorts of "it won't happen here" conventions. And those are four words that put out the lights of investor net worth more than any. As if there is a magical electro-magnetic field of protection from subprime and other widespread woes.

I obviously don't write any of this to win friends -- in fact, I stand to lose one or two. And I don't want the Manhattan real estate market to become beholden to gravity. My house (a three-floor beauty) sits just outside it, and its value is hanging in there, just. The moment the dollar firms, though -- I'm living in and not driving my fastest depreciating asset.

But I am, in the end, the loyal manservant of you, the savvy investor. So screw everything else.

The larger point is for you to double up on caution when reading about business from the non-business media. If you think the business media can be mealy-mouthed or chillingly bereft of basic knowledge, you don't even want to know what goes on with the others. Now does anyone know how to get a claw hammer out of a foot?

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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