FP: Mortgage debt putting our national economy at risk.

Interesting article in the Financial Post yesterday. Titled Stephen Harper told mounting mortgage debt is putting ‘our national economy at risk’, the news article details how the Federation of Canadian Municipalities, made up of member cities representing 90% of the nation’s population, have told the Prime Minister that the high cost of housing was the most “urgent” financial issue facing Canadians today.

We have been warned before, and often. The federal government and the Bank of Canada, in particular, have lectured us about the evils of sky-high consumer debt and still-creeping house prices — and the mounting threat to the economy — as rock-bottom interest rates inevitably begin to rise...

Canada Housing and Mortgage Corp., the Crown agency responsible for insuring mortgages to approved buyers, uses a 30% threshold of total household income going to housing. Anything above that, and consumers could end up over their heads.

Dallas Alderson, director of policy and program at the Canadian Housing and Renewal Association, said one-quarter of Canadian are over that limit.

What do they want the Prime Minister to do?

“We believe that as the government sets its priorities for the next two years, it should address the high-cost of housing in Canada, the most urgent bread-and-butter issue facing Canadians today."

Of course when these groups ask the Federal Government to intervene, it usually means more subsidies, which is the type of meddling in the past which has created the mess in the first place.  Remember, greatly increasing CMHC's balance sheet was all about making housing 'affordable'. Notes the FP article...

Finn Poschmann, vice-president of research at the think-tank C.D. Howe Institute, said Ottawa has “little jurisdiction and almost no practical capacity to deliver housing.”

“Past attempts to do so, through CMHC for example, have produced financial disasters for the people who participated and put CMHC in grave financial situation.” he said.

“We wouldn’t want to see that again, nor the federal mortgage agency deeply underwater and as similar U.S. agencies have been, through the course of much more recent financial disasters.”

Curiously no one suggests removing the punch bowl which created the sky-high housing values to begin with.

Yanking that punch bowl away will trigger a very painful process.  But it's the long term solution that is required.

Speaking about the punch bowl of ultra low interest rates, the Globe and Mail notes that GM Canada chief frets over credit-driven car sales.

The president of General Motors of Canada Ltd. is worried that ultra-cheap auto loans could be causing Canadian vehicle sales to spike just as home sales did during the U.S. housing bubble.

Canadians are on pace to drive more than 1.73 million new vehicles off dealers’ lots this year, breaking the record of 1.703 million, but that’s a higher level than economic indicators suggest sales should be, Kevin Williams told The Globe and Mail’s editorial board Monday.

Part of the reason, he noted, includes eight-year, interest-free loans being offered by some auto companies. His comments highlight again the hot-button issue of consumer debt, singled out by Finance Minister Jim Flaherty and the Bank of Canada as a critical concern before the inevitable rise in interest rates.

Mr. Flaherty has focused on mortgage debt, but auto loan debt has been rising in the fierce fight among auto makers for market share and their battles with each other and Canada’s Big Six banks in the auto lending market.

Auto loan debt rose 8.6 per cent in the second quarter from year-earlier levels, outpacing the increase of 6.1 per cent in total debt, according to numbers compiled by Equifax Canada.

Consulting firm J.D. Power and Associates said last month that 64 per cent of Canadians who finance vehicle purchases are taking on terms of six years or longer.

The longer terms are designed to make monthly payments as low as possible, Mr. Williams said, but they mean in some cases buyers will return to dealers for a new vehicle still owing money on the vehicle they’re trading in.

The unwinding of all of this is going to be very, very painful.

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Another case of 'Newsvertising', this time in the National Post

On the weekend we shared with you the cover of the Financial Post Magazine (pictured above).

It appeared on September 3rd, 2013 in the National Post newspaper and had a stunning headline: "THE SKY IS NOT FALLING - Why real estate doomsayers continue to be wrong"

Pretty powerful message. Forwarded as friendly 'chiding', it represents the quintessential example of media manipulation in real estate today. To the average person, this article appears to be a 'news story'. 

But as one of our faithful readers noticed in the comments section of yesterdays blog post, it's not a news article - it's an adverting feature; an advertisement dressed up to look like a news story.

Online, the article is contained in the "Special Sections' of the National Post (click on all images to enlarge):

For those who follow this blog regularly, when you see 'Special Sections', the spidey senses start to tingle. Google the article headline and you discover EXACTLY what this article is:

That's right. Google makes it very clear it's not a news article, its a newspaper ad, the content written by a real estate shill who paid to have it inserted in the paper.

Faithful readers will recall we covered a similar misleading article in the Vancouver Province back on March 26, 2013 and discussed it again here.

Desperate for advertising dollars, the mainstream media is increasingly willing to take paid advertisements and present them as actual news stories with little or no indication that what you are reading isn't real news.

Naturally the real estate industry will pay handsomely for the chance to mold public opinion under the guise of legitimate news. Who wouldn't when you dealing with an industry where Billions of dollars are spent based on 'consumer confidence'?

But when the print media sells it's journalistic integrity like this, is it all that surprising that they have become an unsustainable proposition?

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A Minsky Moment precursor?

The Financial Post front page says: "THE SKY IS NOT FALLING: why the real estate doomsayers continue to be wrong."

Full story here.

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Turning off the taps

There seems to be growing enthusiasm that since the housing market hasn't crashed hard yet, that it's simply a matter of waiting out the downturns for it to take off again.

But there was an interesting article about the Canada Mortgage and Housing Corporation (CMHC) in today's Financial Post.

As we all know too well, CMHC has been the great enabler of our housing bubble. A condition which haunts policy makers and keeps them awake at night.

As the Post notes:

The federal government and policy makers are scrambling to engineer a soft landing for the country’s overheated housing market. As the largest provider of mortgage insurance in the country with about 75% of the mortgage default insurance market, CMHC plays a critical role in Canada’s housing market. In fact, the agency has been at the forefront of changes that made it easier to get a loan, much to the chagrin of the Finance minister, who has expressed concerns about the role CMHC has developed from its historical mandate to advance housing in Canada.

This is the most important consideration when taking stock of real estate in the Village on the Edge of the Rainforest... that "the federal government and policy makers are scrambling to engineer a soft landing for the country’s overheated housing market."

The correction hasn't even really started here but with policy makers determined to engineer it, why do people still believe it's not coming?

To bring about that "soft landing", the Post notes the Federal Government:

has attempted to curb CMHC’s growth and reduce taxpayers’ exposure by making it prohibitively difficult to obtain an insured mortgage backed by the federal government. For one, amortization terms were trimmed from a high of 40 years to a 25-year maximum. Furthermore, Ottawa capped the amount it is willing to backstop at $600-billion in an attempt to curb the amount of bulk insurance in CMHC’s portfolio. It is noteworthy that, according to CMHC’s annual report released Monday, it reported that it is insuring less mortgages in dollar terms, roughly $566-billion, in 2012, than it has in recent years.

Having reined in its lending activities, Ottawa also moved to tighten control and oversight of CMHC “to ensure its commercial activities are managed in a manner that promotes the stability of the financial system.” Mr. Flaherty criticized the extent to which CMHC’s commercial functions had commandeered its lending capacity and core functions, most notably CMHC’s willingness to provide default insurance on conventional mortgage loans with more than a 20% down payment, which is not required by law because they are considered low-ratio mortgages.

But while CMHC is insuring less mortgages, in dollar terms, than it has in recent years it is important to note that CMHC is reaching it's limit for insurance mortgage coverage.

In the hustle and bustle of everyday life, whispers are being heard of Canada’s mortgage cap reaching an all-time high with concerns about Canada’s economy hanging in the balance.

With mortgage rates at an all-time low, such as Dominion Lending Center reflecting 2.84 per cent on a five year term, homeowners have taken on substantial household debt.

Finance Minister Jim Flaherty was said to be concerned about lenders loosening their mortgage standards, resulting in “emerging risk” to Canada’s economy.

As well, the Canada Mortgage and Housing Corporation is nearing its limit for insured mortgages.

CMHC controls about 75 per cent of the market and is 100 per cent backed by the federal government.

The numbers say it all—CMHC’s number was about $541 billion in insured mortgages and the agency’s limit is $600 billion.

That leaving only $59 billion for future mortgages.

This has resulted in federal government is again cracking down on Canada Mortgage and Housing Corp. and the mortgage insurance sector.

Ben Rabidoux, analyst and strategist with U.S.-based Hanson Advisors, sums it up:

“Looking back over the last decade, I see an unbelievable mandate creep where CMHC was doing things that would infuriate taxpayers and running a massive, potentially public liability in the process. If there’s ever been a time to be cautious with giving out mortgage debt, now would be that time. What they are doing at CMHC is finally forcing it to act in the best interest of the general public.”

The taps are being turned off and with it goes the liquidity that permitted the bubble to inflate in the first place.

Without it the bubble simply cannot grow higher.

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Mon Post #1: The head of INVIS Team RRP speaks out about Financial Post article

Meet Ron Regan-Pollock.

He's the head of INVIS Team RRP, the mortgage brokerage company which was the subject of the latest real estate media scandal we brought to you March 28th.

From Regan-Pollock's website profile:

Rob has been a trusted media commentator on mortgage issues since 2000, regularly providing his insights to print, radio and television journalists. He has served the mortgage industry as a board member on a national and a provincial level since 2006.

That reputation for trust took a bit of hit when this article from the Financial Post came out:

As you may recall the article, a recent retirement piece in the Financial Post focusing on how high home values factor into retirement planning, introduced us to Allen Hoegg and wife Karin. After giving us the Hoegg's background (with requisite problem/issue), the FP profiled INVIS Team RRP along with solutions to the dilemma faced by the Hoegg's.

Sharp eyed blogosphere sleuths noticed that Hoegg wasn't just a retiree facing retirement planning concerns. He happened to work for the very company profiled in the article (INVIS Team RRP), a fact that wasn't originally revealed to readers.

The glaring omission gave the article the appearance of a glorified advertising piece for Team RRP.

The scandal intensified when it was discovered that the freelance author of the Financial Post article happens to appear as an employee on two communications company websites (since deleted since this story broke). One of those communications companies outwardly boasts of their successes in obtaining media coverage for their clients, coverage which appears to come from placing those companies in what look like benign news stories.

Sort of like bringing the practice of product placement to the newspaper industry.

The whole matter raises disturbing questions about the concurrent relationship of the article's author to the Financial Post while associated to those PR firms.

Meanwhile the entire issue is anything but good PR for Team RRP.

For what does it say if a business misrepresents an employee in a news article? If they would allow a simple white lie like that, would you want them to provide investment advice for you?

Correcting this perception may be what lead several members of the INVIS team to contact this blog last week.

First it was Gary Siegle, VP of INVIS Prairies.

I did some further investigating since RRP and team are well known to me and [this] scandal does not fit in the least with the profile and reputation of Rob and his team.

This article was initiated by the communications company not RRP as is suggested.

RRP made full disclosure to the journalist as to who Allan Hoeg (sic) was and his relationship to the RRP team.

Through the editorial process, some comments were taken out of context.

Next we heard from Rob Regan-Pollock.

Mr. Siegle advised me of this incident as part of our company's governance. Happy to share facts with you and your readers.

Postmedia contacted our Marketing Dept requesting a western broker to interview for a retirement piece focusing on how high home values factor into retirement planning.

I was introduced to Denise Deveau... and was interviewed. She asked if I knew of any retirement aged individuals who met the profile and introduced my employee Mr. Hoegg with full disclosure.

Regan-Pollock wasn't just concerned about the omission of Allen Hoegg as an employee. There were other errors in the article, errors with some of the actual investment advice itself. In a subsequent  email Regan-Pollock said:

[I] did provide my employee’s contact details with full disclosure. Yes I expected disclosure in the article. When I did read it, I was concerned about the non-disclosure and [a] truncated quote to borrow from your line of credit if you can’t make ends meet.

What I had said was, “that when RRSP’s or investments are below book value, rather than crystallize the loss and face the double whammy of having to pay income tax, a homeowner line of credit can act as a good buffer if one can’t make ends meet."

This was truncated to "borrow from your home equity if you can’t make ends meet", which we do not support. Rather we recommend having tools consumers can use, especially in these volatile times.

Once the article was published, did Mr. Regan-Pollock try to contact anyone to correct the errors?

[I] did not have a chance as Denise called to advise of some issues she was facing as a result of her non-disclosure of Allan as my employee. [She] called to ask if he was full or part time. Allan is Part Time. Given her challenges I didn’t push for a correction on my quote.

So if Team RRP didn't initiate the article, was Ms. Deveau working on behalf of a PR communications firm for the parent INVIS company? Regan-Pollock says he doesn't think so:

When Denise Deveau contacted Marketing, she mentioned she was contacting us on behalf of Post Media for an article she was writing. Invis as a National firm is often contacted by media... Denise contacted our VP of Marketing Kelly Neuber for an article Denise was writing for Post Media, requesting preference for a Western Broker where home values are higher for a retirement piece.

We were advised Post Media could run the article in a number of their publications. No specific publication was mentioned so we did not know this was going to run in the FP. I will confirm my belief that Invis is not a client of Blue Sky on Monday. We were simply the advisors who could assist Ms, Deveau who was writing for PostMedia.

Appreciate the ability to clarify as our reputation is all we have.

So there you have it.

Rob Regan-Pollock clearly indicates that his firm did not initiate this article. When contacted, he was very clear and upfront about fact that Allan Hoegg was a part-time employee of his. Furthermore a key part of his advice was 'truncated,' conveying a practice his firm clearly does not support.

There are still many unanswered questions in this affair.

We'll update you if we learn any more.

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Down the rabbit hole of Canadian Journalism: the curious case of Denise Deveau, BlueSky Communications and the Financial Post

What started off as a criticism of yet another somewhat misleading real estate article in the newspaper may well have become a trip down the rabbit hole of Canadian journalism.

Last Thursday we began asking if Denise Deveau, a freelance reporter, was actually working on behalf of a communications company when she submitted what amounted to a glorified advertisement for a Vancouver mortgage brokerage company to the Financial Post.

The formula pulp piece appeared March 27th and was titled "Home is where the retirement money is"

A subject is introduced, background given (with requisite problem/issue) and then a company was profiled.  This particular article caught our eye because sharp eyed blogosphere sleuths noticed the subject happened to work for the company profiled in the article.

This fact wasn't originally revealed to readers, a simple white lie that rankles given the litany of media manipulation we've seen from the real estate industry recently.

Was the article 'news' or was it 'newsvertising'? 

As we dug a little deeper, some disturbing facts surfaced. 

The freelance reporter, it turns out, is listed as an employee with not one, but two communications companies.

On the website of one these companies, the public is told clients can obtain "continuous media coverage" from the PR firm:

Whether we are securing regular media coverage for you, making you the topic of online discussions or developing impactful marketing pieces, our integrated, big-picture approach is intrinsically linked to where you want to bring your business... Our outstanding results speak for themselves. We are particularly talented in getting continuous media coverage for our clients that communicates directly to the target market. And after engaging us for a period of time, you will see the impressive impact media coverage has on your business.

In another section of the website we discover Denise Deveau, the freelance reporter with the Financial Post, works for the firm.  From the profiles of BlueSky Communications employees:

Denise has over 20 years of journalism and corporate communications experience. She handles a wide variety of writing and research assignments in the high tech, financial services, retail, government, education, oil and gas, and consumer sectors Whether it’s a thought provoking article, or compelling marketing collateral, Denise is able to deliver an effective piece that will meet your business objectives.

Awfully convenient having one of the Financial Post's regular freelance contributors on staff to potentially bring these website claims to life, isn't it?

If this is actually what is happening, we asked if there wasn't an inherent conflict of interest (or at least the appearance of a conflict of interest) when a member of a communications company (who specialize in gaining access to media for their clients) writes for the Financial Post?

Shortly after asking this, the online profiles of Denise Deveau began disappearing from the websites of both communications companies (see here and here).

Naturally this raised eyebrows and we felt compelled to take a closer look at what is going on here.

BlueSky Communications has an interesting website page where they talk about their clients appearances in the news, a sort of self-congratulatory promotional page for their past success stories.

(At least the webpage exists as of last night, we'll see if it stays there much longer).

For kicks and giggles we took a look through to see which clients BlueSky has in its stable. Next we poked around the internet to see if Deveau may have had any articles published in the media profiling those same clients.

BlueSky seems particularly proud of the work they have done for the G. Raymond Chang School of Continuing Education at Ryerson University, so we started there (click on images to enlarge):

Sure enough it didn't take long to find an article from Deveau.

On January 19th, 2013, Deveau contributed this article to the Financial Post (which was picked up by the Edmonton Journal).

It follows the same formula as the article for the Vancouver mortgage broker company.  Someone is profiled, background given (with requisite problem/issue stated) and then a company was profiled. This time it is the G. Raymond Chang School of Continuing Education at Ryerson University. Here is the initial shout-out to them:

Coincidence?

If it was just one article, perhaps. Let's face it, BlueSky promises to obtain "continuous media coverage" for its clients so one article is hardly a smoking gun.

But a little more digging and we come across this February 4th, 2013 article which appeared on Canada.com. 

Same formula again. In the body of the article is this shout-out to the G. Raymond Chang School of Continuing Education at Ryerson University:

Another coincidence?

What about this one? On November 17, 2012, there was this article for post media news (again picked up by the Edmonton Journal). Same formula and in the body of the article is this shout-out to the G. Raymond Chang School of Continuing Education at Ryerson University:

Google actually reveals quite a few articles that Deveau has written which happen to mention the G. Raymond Chang School of Continuing Education at Ryerson University:

On a case study page for various clients, BlueSky offers this testimonial from the G. Raymond Chang School of Continuing Education at Ryerson University:

"Working with BlueSky Communications has been instrumental in generating awareness of our programs while raising the profile of our instructors as experts in their fields - contributing to increased enrollment and positioning us as leaders in continuing education."

- Marilou Cruz, Marketing Manager, The G. Raymond Chang School of Continuing Education, Ryerson University

BlueSky Communications seems to have quite the track record of successfully placing their clients front and centre in media stories. BlueSky's case studies page boasts of their numerous achievements.

For Bread and Butter Skincare, BlueSky secured 45 media stories (averaging 13.5 articles a month) from october 2009 - April 2010:

LifeSpeak Inc., a company that designs customized workshops for corporations, hired BlueSky for its national launch. BlueSky's efforts resulted in

front-page media coverage in the National Post and profiles in the Globe and Mail, the Toronto Star, CBC Radio and Canadian Living. BlueSky’s ability to generate pre-launch buzz and build anticipation proved successful in attracting new business calls for LifeSpeak. Ongoing profile in the media has not only helped LifeSpeak continue to attract new clients nation-wide, it’s also helped the company attract new speakers for its roster.

Clearly BlueSky Communications is very effective at their job. 

But as we asked at the start, is there not an inherent conflict of interest (or at least the appearance of a conflict of interest) when a member of a communications company (who specializes in gaining access to media for their clients) writes for a given media outlet?

These 'news' articles appear to be nothing more than advertising features for the companies that are profiled.

Don't the rules of disclosure demand the public is told this fact up front? Exactly how widespread is this practice anyway? Does government have to mandate that "ADVERTISING FEATURE" be stamped across these newspaper articles so that our press is transparent to us?

More importantly, is there any real journalism being done by our nation's written press anymore?

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A Vancouver Sun Editor responds to one controversy, the Financial Post remains silent on another.

Integrity.

The local real estate blogosphere has good reason to question the existence of it in our media the past year or so.

• We've seen stories local real estate agents of Asian descent taken on helicopter rides and portrayed as  eager Chinese buyers,
• we've seen a real estate agent pose as a customer while promoting a groupon-style real estate scheme,
• we've had real estate marketing company employees pose as Asian buyers to create the impression of a buying frenzy for Chinese New Year, and
• we've seen fake pictures of a mansion from a real estate agent's website generate worldwide interest for a house that doesn't exist.

All of these examples did not require a great amount of sleuthing to conclude they were not as they appeared. It has many questioning the integrity of the news media and whether the media has been playing a passive role in some of these manipulations.

This sentiment was recently compounded when a highly misleading "newsvertising" article - which required a certain amount of legwork to determine that it was actually a paid advertising feature rather than real news - came out.

Because of this skeptics now find themselves questioning EVERYTHING presented in the media regarding real estate.

Last week it was the validity of Vancouver Sun photo galleries that profile real estate topics.

If the Sun/Province conglomerate can sell adverting through it's 'focus' section and construct that advertising so that it's dressed up like regular news, is it such a stretch to imagine they are selling access to their photo gallery feature as a promotional tool?

The web editor of the Vancouver Sun is Bethany Lindsay.  Here is her LinkedIn profile:

Last night Ms. Lindsay responded directly to this concern. Here is what she had to say:

I'm the Vancouver Sun web editor responsible for that Pricey Pads gallery, so I thought I should probably chime in here. This was absolutely *not* paid content. Real estate galleries do very well for us online -- people got nuts for them for whatever reason -- and Pricey Pads is an easy source to find outrageous listings. On the day in question, I arrived at work at 5 p.m., caught myself up on the news of the day, then clicked on priceypads.com, where I saw this real estate comparison. It was easy click bait and I couldn't resist doing a gallery. Hope that clears things up a bit.

We thank Ms. Lindsay for addressing the issue.

When advertising is presented in a way that it is easily passed as actual news, it brings the integrity of the media into question.  When example after example becomes commonplace, no one is sure what to believe. In the case of Pricey Pads, they became a victim of that doubt.

That's why addressing any concerns (or rigorously following up on them once identified) is so important.

When those local real estate agents of Asian descent were taken on helicopter rides and portrayed as buyers from China, the farce was revealed here by VREAA and here by Garth Turner. But the public was not told the truth behind what happened at the time.

When a realtor posed as a customer while promoting a groupon-style real estate scheme, the story was covered here and here and on other blogs... but no clarification was forthcoming in the press.

When MAC Marketing was caught lying about the identity of their employees in a TV news story, President Cameron MacNeill promised the press he would investigate what happened and take action.  We're still waiting for the media to detail exactly what he found out.

Those shortcomings in the coverage of these incidents harm the credibility of our media.

Currently we have the case of the recent Financial Post news story titled "Home is where the retirement money is". Has there been a serious breach of journalistic ethics committed here?

For those who are not aware, on March 28th and March 29th we posted that sharp-eyed blogosphere sleuths had noticed that the Financial Post article failed to mention that the couple profiled in the story worked for the very mortgage broker company discussed so prominently in the piece.

With that knowledge, the article appears to be little more than a glorified ad for the mortgage broker.

Further examination revealed that the author of the story, Denise Deveau, is a freelance reporter who apparently works for two communications companies who specialize in obtaining media attention for their clients; BlueSky (BS) Communications and Echo Communications. Up until this week, Deveau appeared on the websites of those two firms as an employee.

Is there not an inherent conflict of interest (or at least the appearance of a conflict of interest) when a member of two communications companies (who specialize in gaining access to media for their clients) writes for the Financial Post?

The Financial Post amended their original article to reflect the employment connection between the profiled couple and the mortgage broker. It's a great first step. But it looks like any link to an apparent 'conflict of interest' is being covered up it gains widespread attention.

Yesterday we told you how BS Communications moved to delete any on-line reference to their working relationship with Deveau. Now it appears the other communications firm, Echo Communications, is doing the same thing.

Here is the Echo Communications "Team" page two days ago as seen in the google cache. Denise Deveau is the second name down:

 Here is Deveau's profile that used to be on that site:

These two references have been deleted from that website.  Now the Echo Communications "Team" page looks like this:

Doesn't it strike you as odd that all online references to Denise Deveau by either of these communications companies has been erased this week from the internet?

Rather then step forward, provide an explanation, and account for what occurred here; all we appear to be getting is an attempt to cover up tracks. Why?

This issue needs to be addressed by the Financial Post.

It is crucial to the integrity of the print media, given the recent examples of real estate industry press manipulation, that this story be addressed and the swirling questions answered.

Was Deveau, a freelance reporter, working on behalf of these communications companies (and by extension, the Vancouver mortgage brokerage company) when she submitted what amounts to a glorified advertisement for Ivis Team RRP to the Financial Post?

If she was working for anyone in a communications PR capacity - and she used her freelance position as a writer with the Financial Post as a lever to obtain media coverage for them - was the Financial Post aware of what she was doing before the article was published?

The 'cleansing' currently taking place to remove any reference of Deveau from these company websites merely strengthens the appearance of a conflict of interest and in the modern world of the internet and social media, ignoring the story only compounds the negative speculation.

If CBC-TV and CTV-TV can respond to questions raised in the MAC Marketing fiasco, if Vancouver Province on-line web editor Erik Rolfsen can respond to the fake mansion story, and if Vancouver Sun on-line web editor Bethany Lindsay can respond to questions about the Sun's photo gallery... then surely the Financial Post can respond when legitimate concerns are raised about an apparent conflict of interest by one of their reporters?

It's important the public know what happened here. We need to know that the 'news' printed in our newspapers isn't simply a conduit for real estate industry advertising.

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BlueSky Communications deletes association with Financial Post author from website

A quick break from our Vacation to bring you an update on the Financial Post story we profiled last week.

As you will recall, the Financial Post ran a story titled "Home is where the retirement money is". The author of the column was Denise Deveau.

On March 28th and March 29th we posted that sharp-eyed blogosphere sleuths had noticed that the article had failed to mention that the couple in the story happened to work for the very mortgage broker company that was so prominently profiled. With that knowledge, the article appears to be little more than a glorified ad for the mortgage broker. More disturbingly, the author  was a freelance reporter who appeared to work for two communications companies who specialize in gaining media attention for their clients.

We questioned whether or not this created a conflict of interest or the appearance of a conflict of interest for the Financial Post.

This week the Financial Post corrected their website version of the article to note the connection between the couple and the company:

Meanwhile it appears the author's connections with one of those communications company's has now been erased.

BlueSky Communications promotes itself by telling clients that:

Whether we are securing regular media coverage for you, making you the topic of online discussions or developing impactful marketing pieces, our integrated, big-picture approach is intrinsically linked to where you want to bring your business... Our outstanding results speak for themselves. We are particularly talented in getting continuous media coverage for our clients that communicates directly to the target market. And after engaging us for a period of time, you will see the impressive impact media coverage has on your business.

One of BlueSky's employee's is/was Denise Deveau - the author of the Financial Post article and a freelance writer. Here is what BlueSky used to say Deveau could do for their clients:

Denise has over 20 years of journalism and corporate communications experience. She handles a wide variety of writing and research assignments in the high tech, financial services, retail, government, education, oil and gas, and consumer sectors Whether it’s a thought provoking article, or compelling marketing collateral, Denise is able to deliver an effective piece that will meet your business objectives.

We say "used to" because Deveau has been deleted from the BlueSky Communications website. Here are screenshots of the eight members of the BlueSky team from their website last week:

Deveau is in the second row, second person. When you clicked on the link to her name you were taken to this page which described Deveau's talents. Here is what it used to say:

Well... that's all gone now.

If you go to the BlueSky "team" page, any mention of Deveau has disappeared. Eight staff members have been reduced to seven:

And the BlueSky page that used to contain Deveau's profile now says 'Not Found':

Like from waves on the sandy beach, the tracks are slowly made to disappear. But the questions remain.

Was there an attempt to leverage benefit from the reporter's access to the media via her associations with various communications companies?

BlueSky Communications advertises that they "secure regular media coverage" for their clients and that Deveau was a member of their team who (up until this week) "is able to deliver an effective piece that will meet your business objectives."

This certainly appears to be exactly what the article in the Financial Post did for Invis - Team Rob Regan-Pollack.

Why has Deveau suddenly been deleted from the BlueSky Communications website?

And doesn't the Financial Post owe it's readers an explanation for exactly what happened here?

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Thursday Post #2: Another media scandal from the real estate industry? News article appears to be contrived shill piece from PR company.

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Update: Information has surfaced connecting the reporter in this story to another communications company as well. See our follow up post here.

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Meet Invis Team Rob Regan-Pollock, mortgage brokers in Vancouver. From their website:

Rob Regan-Pollock and his team of Accredited Mortgage Professionals (AMPs) arrange residential mortgages and small cap commercial financing. Based in Vancouver, we finance purchases, re-finances, new construction, equity take-outs, renewals, and debt consolidation. We are certified Tax Deductible Mortgage Plan (TDMP) consultants and members of MBABC and CAAMP.

You'll notice one member of the team is hilighted in the picture above with a yellow arrow.  That's Allan Hoegg. The website profile tells us "Allan joined Team RRP in 2003. He retired for about 10 minutes in 2007, returning part time later that year. He has enjoyed a career in Financial Services and is originally from Calgary."

We'll get back to him in a moment.

It appears Team RRP has been yearning for a little media exposure. To that end they seem to have turned to BlueSky Communications Company. BlueSky promotes itself by telling clients that:

Whether we are securing regular media coverage for you, making you the topic of online discussions or developing impactful marketing pieces, our integrated, big-picture approach is intrinsically linked to where you want to bring your business. And at better value than what you get from those big-budgeted agencies.

Media Relations: Our outstanding results speak for themselves. We are particularly talented in getting continuous media coverage for our clients that communicates directly to the target market. And after engaging us for a period of time, you will see the impressive impact media coverage has on your business.

One of BlueSky's employee's is Denise Deveau. Here is what BlueSky says Deveau can do for her clients:

Denise has over 20 years of journalism and corporate communications experience. She handles a wide variety of writing and research assignments in the high tech, financial services, retail, government, education, oil and gas, and consumer sectors.

Whether it’s a thought provoking article, or compelling marketing collateral, Denise is able to deliver an effective piece that will meet your business objectives.

Remember last month when we told you about the MAC Marketing scandal?  In that farce, MAC had two of their employees play the role of young Asian condo buyers for a TV interview. When it was discovered they were actually MAC employees, the episode was rationalized as an innocent error in judgement; the MAC employees were simply standing in for 'real' Asian buyers who had bailed on the presser at the last opportunity.

The implication?  Where is the harm? The employees are simply 'playing' the role of actual customers who are out there.

Of course if CBC-TV and CTV-TV knew they were actually talking to two MAC employees, do you think they would have run the feature?

Not a chance, because the deception cuts to the heart of journalistic integrity.

Back to BlueSky employee Deveau and Team RRP.

A curious article appeared this week in the Financial Post titled "Home is where the retirement money is".

With a byline attributed to Denise Deveau, the FP article invites Team RRP's boss (Rob Regan-Pollock) to outline strategies to help aging Boomer's unlock the power of their bubble inflated house to aid in their retirement plans - a service Team RRP specializes in.

To set the stage, readers are introduced to a Boomer couple nearing retirement. Here's their picture from the article:

Recognize the man?

Yep... that's the same Allan Hoegg who works for Team RRP.

So what does the article tell us?  Do they say Hoegg is an employee of Team RRP?

In 1995, Allan and Karin Hoegg were mortgage-free. But no more: today their Vancouver home is a valuable source of income as they plan for full retirement.

Sean Morphy and his wife got a very competitive mortgage rate when they made the jump to home ownership a little over a year ago but it took a long-term relationship with a mortgage professional to get them there.

Allan Hoegg says when their son and daughter-in-law wanted to buy a house, they took out a variable-rate mortgage so they could help them out. “We wanted to take advantage of the stability of the current rates.” To cover the mortgage payments, they rent out a suite in the home to students.

The couple also established a home line of credit that allows them to free up cash for investment purposes when they need it. “It gives you maximum flexibility and you can pay it any time you want without penalty,” he says. “It’s dead easy.”

Like many people planning their retirement, there’s a sentimental side to keeping their home, he says. But there are just as many practical reasons. In the Hoeggs’ case, selling to downsize would mean substantial commissions and moving costs. “Besides, real estate is a very good investment in Vancouver,” he says. “The longer we can stay here, the greater the possibility of no-tax capital gains.”

It's a great, informative article and fabulous advertising for Team RRP. But nowhere is Hoegg's affiliation to Team RRP mentioned.

Doesn't the Financial Post have an obligation to tell us Hoegg is actually an employee of the company featured in this story?

More significantly, doesn't the Financial Post have an obligation to tell us that the story isn't being written by one of their own journalists? That the writer is, in fact, a communication specialist who shills for clients and whose sole job it is to place this type of promotional piece in newspapers for her client?

Could it be that the the Financial Post didn't do any fact checking (and simply accepted this article from a communications company) because it was submitted as a paid feature dressed up to look like a "news" story... something similar to what we saw in the Vancouver Province?

Someone out there has to step up and protect the public interest. Prominent disclaimers should be mandatory if this practice is be allowed.

When did our print and television media become an endless source of contrived "news" to promote the real estate industry?

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Email: village_whisperer@live.ca
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The media discusses the August 2012 real estate numbers... lipstick anyone?

It seems there's no way to put lipstick on the horrid real estate statistics for the month of August.

If you didn't catch it, the lead story on CTV Vancouver news tonight is the slumping Vancouver real estate market. Unfortunately I can't embed the clip here but you can click on the link to see – CTV profiles how experts are beginning to wonder if Vancouver’s real estate bubble is going to burst"

Meanwhile the Financial Post headlines Vancouver home sales plunge, posting second-worst August since 1998.

How bad are the numbers?

As VanPro over on the blog Real Estate Talks notes the overall Months of Inventory (MOI) is approaching 11 months.

• August 2012 has now posted the second lowest sales totals in the last 15 years.
• When it comes to sales of Single Family Houses (SFH), there were only 75 sales on the West side of Vancouver in August 2012 (there were 995 available for sale). That's down a shocking 42.3% year-over-year!
• On the east side of Vancouver there were only 79 sales, down an even more shocking 46.6% year-over-year!!

As we said at the start of summer, the numbers from July and August were going to be fascinating to watch... and they were.

Normally listings drop of dramatically and sales slow. What we got was only a slight pull back in listings and sales plummeted. 

Prices in areas like Richmond, with homes that are actually selling, have begun dropping below assessed value. We are seeing sales activity pick up a bit as the price point has been reached for a few that are hovering (one of the signposts we look for as the market begins it's collapse).

A larger number of high end sales were completed last month (another of those signposts). But even here prices are dropping. A few days ago we provided you with stats of the high end sales in August up to August 22nd - one of them for just over $12 million. As the month came to a close, we now know there was a second $12 million sale. But these two properties started off with asking prices of $16 million and $14 million.

They say on the way down, prices are very, very sticky. But they are starting to move.

Normally listings really start to pick up in September and sales remain constant through September. With the current steady diet of bearish real estate news, the September surge in listings will be met with more dismal sales as the negative feedback loop picks up momentum.

We are currently sitting on an all time record streak of 16 consecutive days with daily sales totalling less than 100 per day - despite the fact that we just passed a three day weekend (when normally we see a bump in sales from the longer non-reporting weekend sales.

But the streak remains unbroken.

The real estate propaganda machine has been forced to finally declare our's a 'buyer's market'.

Problem is... no one wants to buy.

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Canadian price declines called the "Vancouver Manouevre" - Royal Bank declares Vancouver market in a correction

Well it certainly appears the concern about what is going to happen in the Real Estate market this Autumn is ramping up.

After an abysmal summer and all the negative press, the fall market usually see a resurgence in listings... but will there be buyers?

Judging by the comments of Bank Economists, it appears everyone is bracing for dismal times.

The Financial Post tells us that Canadian home prices are falling steadily.

Much of the decline in the national Canadian average is being blamed on Vancouver.

An economist at BMO Financial Group called it the “Vancouver Manouevre”. Our city's price drops have brought down the national average despite 19 of 26 cities experiencing year-over-year increases.

As we have mentioned here before, Vancouver's average sale price dropped more than 12% year over year and 20% since May 2012.

RBC economist Robert Hogue said:

"We still believe that Vancouver is probably the most stressed market right now because of extremely poor affordability. Plot the resale figures over the last year or so and you see a fairly significant decline in resales, so I think that this does the fit the definition of correction.”

Of course it does. When you have prices collapsing 20%, what other conclusion could you come to?

Naturally the British Columbia Real Estate Association (BCREA) disagrees.

(Surprise!)

BCREA chief economist Cameron Muir says:

“Typically to see a price correction you need to see a macroeconomic shock — recession, very high unemployment, for example — or you need to see interest rates go up very dramatically in a short period of time. Both of those we don’t see on the horizon.”

Cameron claims one-third of our market is first-time buyers and he insists there is no shortage of those 'first time buyers' to keep greasing the wheels of the property ladder:

“As long as we have first-time buyers that can get into the market to buy the homes from the people who are moving up, moving over, moving down, then the market should remain healthy.”

But if tighter mortgage regulations are making more difficult for potential first time buyers - and buyers are watching the market prices fall - when enter the market right now?

Watch for an unprecedented full out media campaign this fall promoting young first time buyers to do the 'smart' thing and get into the market.

In the absence of 'Hot Asian Money', what else will keep the ponzi going?

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Email: village_whisperer@live.ca
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Please read disclaimer at bottom of blog.