Back in the early ’80s when I was doing rock ‘n’ roll, you’d hand somebody a demo tape and automatically include apologies for the crappy quality — the tape hiss, the fact you didn’t have time to get the vocals just the way you wanted them, etc. A buddy of mine would interrupt this obligatory spiel with a simple phrase, “All caveats,” which is to say, he understood that it was just a rough demo recording and didn’t need to hear all the disclaimers.
So today Fannie Mae issued a new housing report, and Megan McArdle calls it “the first real good news I’ve seen in the housing market,” but then begins to offer caveats, e.g., “a long period of stagnant prices” and “vacancies remain very high” and “so many distorting price signals.”
Collectively, McArdle’s caveats add up to saying that (a) this report may not be such “real good news” after all, and (b) government has muddled up the market with so many screwball incentives that we’ve got no clue whether real estate has actually bottomed out yet. And Felix Salmon of Reuters is far from optimistic.
Furthermore, this Fannie Mae report is really just an opinion survey and, when it comes to economics, what people tell pollsters is a lot less important than what they actually do.
What people who can get credit are actually doing right now is bargain-hunting.
If you bought a house between 2002 and 2006 and are now trying to sell, God help you. The offers you’re getting are seriously low-balling, probably offering less than you owe on your mortgage if, like most people, you borrowed more than 80 percent of the assessed value at the time of purchase. And if you’re in a position to buy, you’re low-balling, too, because in the back of your mind you’re thinking about the chance that the home the real-estate agent is showing you today will be auctioned for back taxes six months from now.
In simple market terms, housing supply still exceeds demand, and the only reason prices aren’t still falling is because the feds have come up with several different ways to help prevent foreclosure on mortgage defaults. But that in turn adds an element of uncertainty to the market, since no one knows what direction future policy will take, or whether there will be another wave of defaults that will push prices even lower still, so there is a wait-and-see attitude and . . .
Well, “all caveats.”
