When Dan and Ann Houck, a husband-and-wife Realtor team in Silver Spring, put out their monthly newsletter this summer, they blamed the declining housing market on too much unfavorable publicity.
"We believe that the constant barrage of negative articles in The Post has transformed a 'soft landing' into a much more severe slowdown," they wrote. "We've had week after week of badly researched gloom and doom in the paper, and it has affected people's confidence in real estate as an investment... . When it comes to real estate, The Post is making the news, not reporting it."
Similar complaints have echoed from Boston to Los Angeles as the news media have intensively covered the nation's economic slide. Some analysts blame the stories -- on rising oil prices, the federal budget deadlock, collapsing savings and loans, department store bankruptcies and the massive trade deficit -- for hastening the recession that oft-quoted experts have been predicting for so long.
"A Severe Recession May Be Developing, More Economists Say," the Wall Street Journal declared this month. "New York Real Estate Slide Hits Biggest Developers," the New York Times said. A New Republic story called "The Abyss" warned that "economic doomsday seems distressingly near." Newsweek's Oct. 1 cover announced "The Real Estate Bust," with an upside-down house shaped like an arrow pointing south. "High Anxiety," roared Time's Oct. 15 cover, with a Depression-era man dangling from a skyscraper clock.
Whether or not the media exacerbate bad news by reporting it is a chicken-and-egg argument that can never be fully resolved. Most editors and reporters say they are merely observers chronicling the gyrations of the marketplace.
"Frankly, it's hard to ignore what's going on when there are employee layoffs, builder bankruptcies and few people are buying houses," said Kenneth Bredemeier, The Washington Post's real estate editor. "We're here to reflect reality, and the reality of the moment happens to be that there's a downturn in the market... . People forget that two years ago, when there were five buyers for every house and people were offering more than the asking price, we wrote those stories, too."
The impact of some news reports is undeniable:
The stock price of Eli Lilly & Co. dropped four points overnight on news that prescriptions for its antidepressant drug Prozac -- which had been trumpeted months earlier in a Newsweek cover story had fallen sharply following reports that the drug may increase some patients' suicidal tendencies.
Apple sales plummeted last year after "60 Minutes" aired disputed allegations about a possible cancer risk from the pesticide Alar.
Hundreds of panicked depositors lined up to withdraw their money from a Virginia savings and loan last summer after a Washington Post story on the thrift's losses.
Oil prices plunged 16 percent last week after reports that Iraq President Saddam Hussein had a dream in which the Prophet Mohammed appeared to him, which traders viewed as a harbinger of peace in the Persian Gulf.
"Sure you can get into a psychology where the bad news feeds on itself," said Robert Kuttner, economics writer for the New Republic and author of "The Abyss" story. "But people don't need me to tell them there's a lot of uncertainty out there. People were pulling back, bankruptcies were increasing, capital-asset ratios were going into the toilet long before commentators started writing bearish stories.
"There's a reality here that has to do with on what terms banks make loans, how much money you have in your checking account, how strung out people are with their Visa loans and home equity loans," Kuttner said.
Others, including Timothy W. Stanley, president of the International Economic Studies Institute, said the media have painted a period of flat growth as the brink of a raging recession. "I don't have a conspiracy theory, but you do have kind of a pack instinct... . The news line in every magazine, every newspaper, every television program is that recession is upon us, the gloom-and-doom scenario," Stanley said. "I must have seen four or five stories in a row: John Smith was going to take a trip, he was going to buy a car, he was going to buy a house, and now he's not going to do that. It's an oversimplification."
The debate is particularly emotional in the Washington area, where housing prices have long been a staple of cocktail party conversation.
A number of developers and brokers have complained to Washington Post executives and editors about the paper's coverage. Thomas D. Eckert, president of Pulte Home Corp., said he has protested by withdrawing $300,000 to $400,000 in annual advertising from the newspaper.
"The Post seems to want to highlight the negative," Eckert said. "What The Post and other media do is further erode consumer confidence. I think it has a tremendous effect."
P. Wesley Foster, president of the Long & Foster realty firm, described the coverage as "a feeding frenzy," saying that for the media "there is nothing like a plane crash or a market crash. When there's a drumbeat of stories, people become afraid about buying a house. A lot of it is psychological."
Dan Houck, the Silver Spring broker, said that "you guys think in order to sell papers, you have to print bad news. People come in and they quote this stuff and say, 'This is why I'm not buying a house.' You've got them all scared to death."
Others say the media were too slow to recognize the downturn. "The stories should have been written a year ago," said housing consultant Michael Sumichrast, former chief economist of the National Association of Home Builders. "The fact of the matter is, housing is in a deep recession and there's no other way to say it.
"The problem is that Realtors don't want to talk about bad times. They're always upbeat. Their numbers are very questionable."
Peter Behr, The Post's assistant managing editor for financial news, said: "I can understand why people in an industry that is hurting are mad about the attention they're getting. But to then conclude that we have some kind of death wish for the community we also live in is really far-fetched."
In January 1989, The Post reported that area homeowners "should continue to see healthy increases in house values and a steady supply of buyers." The first real sign of trouble came in June 1989, when the paper said that "much of the local housing market is in the doldrums."
The coverage, like the industry's statistics, grew increasingly negative over the next year. On Sept. 15, The Post reported on "fears ... that the residential real estate market here may be deteriorating into a full-scale housing recession ... that could last another two years." An Oct. 8 story described "the most difficult housing market the Washington area has seen in almost a decade."
Part of the dispute centers on vastly different views of a newspaper's role. In the past, editor Bredemeier said, many real estate sections "were not much more than house organs for the builders.
"I still get calls from people who preface their remarks with, 'Well, I spent $250,000 advertising in The Post last year.' Clearly, they think they're entitled to something. I tell them we're an independent newspaper and that buying an ad does not get you a story."
Clarence Kettler, president of Kettler Bros., recently snapped at a Post real estate reporter, "Your job is to make money for The Post!" Kettler said he has pulled most of his $400,000 a year in advertising.
"Why should I advertise in a real estate section if on the front page of the section they're telling people not to buy?" he asked.
Last year, a Virginia builders' group submitted a list of stories it would like to see in the paper. Suggested headlines included "Low Interest Rates Plus High Housing Supply Equal the Right Time to Buy" and "Building Industry Contributing Millions to Community Improvement."
Asked how a newspaper should cover his industry, Foster said: "You should try to convey to people confidence to buy now and now is a wonderful time to buy and they will not lose their investment. Those are facts, and I haven't seen that anywhere."
Pulte's Eckert argued that many other real estate sections "take press releases" and "spend more time trying to work with and help the real estate industry."
But several other newspapers have become embroiled in disputes about their coverage with local builders and brokers. Daniel Shea, business editor of the Bergen Record in northern New Jersey, described the paper's relationship with real estate agents as one of "continual enmity."
"People have gotten scared and I suppose we've contributed to that in some way, but so have lots of other factors, like layoffs and the Persian Gulf situation," he said. "We think we're giving people a dose of realism."