Media Hype Not all It’s Cracked Up To Be

Cracked_up_tobe_education_media_mentoring_Calgary_investingI am sure that everyone has heard over the last few years that real estate crash in the US was caused mostly by sub-prime lenders, and to a large extent this was not the case according to a very interesting interview that I hard on satellite radio (this has not been sourced and verified) now when I hear an opinion of these world changing events I most certainly take them with a grain of salt- and I think you should to.  However being a natural skeptic I did think that this researcher had some interesting perspectives and I wanted to share that with the Canadian community.

The first item of significant note was that the break down of the lending landscape looked far different during the years leading up to the crash than most would think- the sub prime lenders only made up less than 20% of the total amount of mortgages in the US at that time with around 60% of the total loans being issued by traditional or large institutional lenders.  This is rather shocking to think that well over half of the “bad loans” that were issued were from the big banks and they were taking risks that were out of line with good lending practices.

It is always easy to look back and blame the lenders for complex issues, but as we know there are a multitude of factors that lead up to a correction of that magnitude.  What happened to the other 20% some might ask – the remainder was made up of regional and community banks and during the boom times they made bad decisions just like the big boys…the sub prime lending issue definitely played a role in the crash but the recession appeared to be on its way for a while based on the fundamentals of what was happening in the US at that time.

The take-away here is that the sub prime lenders were demonized in the media as being the sole culprit and the big banks that needed to be bailed out (and others that didn’t) seem to have played a larger role than many may have realized.

This phenomenon and others really drive home the point that what the media is reporting about and what unfortunately becomes the common consensus is not necessarily a reflection of what is really going on – so don’t believe everything that you hear especially when it comes from the media!


Respect the hustle

Tim Reid

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About Tim Reid

About Tim Reid

Tim is a sophisticated real estate Investor and Telecommunications Engineer. He has completed projects in Calgary and the US, and has partnered with experts in all areas of real estate.

Tim is also a real estate educator/Mentor who is always willing to help new investors accelerate their business to the next level. Through holistic and custom courses Tim helps investors of all backgrounds reach their business goals faster.