The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

‘All Caveats’

Posted on | April 6, 2010 | 26 Comments

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.”

Category: Economics

Comments

26 Responses to “‘All Caveats’”

  1. Red
    April 6th, 2010 @ 10:45 pm

    I hate it. Husband and I have been house hunting for really going on three years now. The prices in our area are starting to come back down to earth but still out of our orbit. These aren’t luxury homes I’m talking about; these are your average middle to low middle class income homes that should be selling for far less. We get aggravated because we are trying to lower our living expenses. Obviously the good Lord is wiser then we are as we are still without a mortgage. After all, what if we did land a home and then needed to move due to job issues? We’d have a dog of a time selling it and there is no way we can swing two mortgages. It has to be a blessing.

  2. Red
    April 6th, 2010 @ 5:45 pm

    I hate it. Husband and I have been house hunting for really going on three years now. The prices in our area are starting to come back down to earth but still out of our orbit. These aren’t luxury homes I’m talking about; these are your average middle to low middle class income homes that should be selling for far less. We get aggravated because we are trying to lower our living expenses. Obviously the good Lord is wiser then we are as we are still without a mortgage. After all, what if we did land a home and then needed to move due to job issues? We’d have a dog of a time selling it and there is no way we can swing two mortgages. It has to be a blessing.

  3. ck
    April 6th, 2010 @ 11:10 pm

    Why does everyone on the right love to quote Meg McArdle? She’s a Keynesian Obama voter. Every once in a while she says something remotely free market based, but she’s an ELITIST. A million dollar education and she’s dumb as a box of rocks.But she does work with the last “true conservative”, little Andi Sullivan.

  4. ck
    April 6th, 2010 @ 6:10 pm

    Why does everyone on the right love to quote Meg McArdle? She’s a Keynesian Obama voter. Every once in a while she says something remotely free market based, but she’s an ELITIST. A million dollar education and she’s dumb as a box of rocks.But she does work with the last “true conservative”, little Andi Sullivan.

  5. Lipton T. Bagg
    April 6th, 2010 @ 11:18 pm

    You know what the true “dirty little secret” is? If the free market had been allowed to correct, without government intervention, we’d be better off than we are today – even in consideration of the additional discomfort up front.

    And I suspect the same with banking, automotive, and on – ad nauseum…

  6. Lipton T. Bagg
    April 6th, 2010 @ 6:18 pm

    You know what the true “dirty little secret” is? If the free market had been allowed to correct, without government intervention, we’d be better off than we are today – even in consideration of the additional discomfort up front.

    And I suspect the same with banking, automotive, and on – ad nauseum…

  7. Robert Stacy McCain
    April 6th, 2010 @ 11:33 pm

    Why does everyone on the right love to quote Meg McArdle? . . . she’s an ELITIST.

    Well, (a) she is a nice person, and (b) she isn’t quite the Keynesian you seem to think she is, even though she isn’t the raging free-marketeer we might like her to be.

    But how elitist can she be, if she occasionally hangs out with me and my scummy friends in DC?

  8. Robert Stacy McCain
    April 6th, 2010 @ 6:33 pm

    Why does everyone on the right love to quote Meg McArdle? . . . she’s an ELITIST.

    Well, (a) she is a nice person, and (b) she isn’t quite the Keynesian you seem to think she is, even though she isn’t the raging free-marketeer we might like her to be.

    But how elitist can she be, if she occasionally hangs out with me and my scummy friends in DC?

  9. Lipton T. Bagg
    April 7th, 2010 @ 12:26 am

    I think Forrest had one too many Espressos today (or his prescription for psychotropic meds expired). And although I’m not sure about the need for Confederate History Month, I don’t believe that makes RSM a “f*cking douche”. At least not today.

  10. Lipton T. Bagg
    April 6th, 2010 @ 7:26 pm

    I think Forrest had one too many Espressos today (or his prescription for psychotropic meds expired). And although I’m not sure about the need for Confederate History Month, I don’t believe that makes RSM a “f*cking douche”. At least not today.

  11. Lipton T. Bagg
    April 7th, 2010 @ 12:32 am

    Now, while reading “ALL CAVEATS”, we need some Nirvana “All Apologies” as background music. This one in extra grungy, please!

  12. Lipton T. Bagg
    April 6th, 2010 @ 7:32 pm

    Now, while reading “ALL CAVEATS”, we need some Nirvana “All Apologies” as background music. This one in extra grungy, please!

  13. Robert Stacy McCain
    April 7th, 2010 @ 12:45 am

    Ignore “Forrest,” LTB: on one of my Searchlight posts, the same person commented as “Hugh Jass”:

    Sad. I’ll bet less than 2K people show up. No one rational gives a sh!t, McCain. No one.

    Right. And the most widely-quoted crowd estimate was 9,000-plus. The rest of that comment was so personal as to make me want to spend a minute seeing who owns that address.

    Deleted. Marked as spam. Troll-hammering is so much fun!

  14. Robert Stacy McCain
    April 6th, 2010 @ 7:45 pm

    Ignore “Forrest,” LTB: on one of my Searchlight posts, the same person commented as “Hugh Jass”:

    Sad. I’ll bet less than 2K people show up. No one rational gives a sh!t, McCain. No one.

    Right. And the most widely-quoted crowd estimate was 9,000-plus. The rest of that comment was so personal as to make me want to spend a minute seeing who owns that address.

    Deleted. Marked as spam. Troll-hammering is so much fun!

  15. Ellie Light
    April 7th, 2010 @ 4:16 am

    Anyone who believes they can predict the future with a mastermind like Obamao at the helm is just as sane as Pelosi.

    All the news we are likely to see is bad. The policies we can anticipate are disasterous, what we have seen are laughable.

    Selling now may be bad but buying?

    Did you mean gold?

  16. Ellie Light
    April 6th, 2010 @ 11:16 pm

    Anyone who believes they can predict the future with a mastermind like Obamao at the helm is just as sane as Pelosi.

    All the news we are likely to see is bad. The policies we can anticipate are disasterous, what we have seen are laughable.

    Selling now may be bad but buying?

    Did you mean gold?

  17. Lipton T. Bagg
    April 7th, 2010 @ 5:23 am

    Feel free to troll-hammer at will RSM! e will still be here for ya!

  18. Lipton T. Bagg
    April 7th, 2010 @ 12:23 am

    Feel free to troll-hammer at will RSM! e will still be here for ya!

  19. Estragon
    April 7th, 2010 @ 7:25 am

    Mr. Bagg nails it @ #3. As is usual, government “action” in a crisis makes things worse.

    One report doesn’t qualify as good news on housing, even in a limited-hangout sort of way. The facts remain that delinquency rates remain high, vacant units remain high, new construction remains low, and pricing remains low. Even when sales of existing housing pick up, they will only be reflecting people buying in because the prices have dropped more than they believed possible, equaling a vanished wealth.

    One month is meaningless, and even three months of positive movement in housing, starting now, wouldn’t mean much, because right about then the effects of the increased taxes and the costs of the spending over the last 18 months will be coming due. Some call it the “double dip,” as if we could be certain it will end with the second . . .

  20. Estragon
    April 7th, 2010 @ 2:25 am

    Mr. Bagg nails it @ #3. As is usual, government “action” in a crisis makes things worse.

    One report doesn’t qualify as good news on housing, even in a limited-hangout sort of way. The facts remain that delinquency rates remain high, vacant units remain high, new construction remains low, and pricing remains low. Even when sales of existing housing pick up, they will only be reflecting people buying in because the prices have dropped more than they believed possible, equaling a vanished wealth.

    One month is meaningless, and even three months of positive movement in housing, starting now, wouldn’t mean much, because right about then the effects of the increased taxes and the costs of the spending over the last 18 months will be coming due. Some call it the “double dip,” as if we could be certain it will end with the second . . .

  21. Virginia Right! News Hound for 4/7/2010 | Virginia Right!
    April 7th, 2010 @ 5:30 am

    […] ‘All Caveats’ […]

  22. Jeff
    April 7th, 2010 @ 2:03 pm

    just wait for the commercial real estate crash. Many of those owners are small business people who will also start to have trouble with their home mortgage.

    We are far from out of the woods, the market has not yet burned out the dead wood with the Government pouring water on everything in the form of dollars. It will eventually dry up and the fire will be that much worse.

  23. Jeff
    April 7th, 2010 @ 9:03 am

    just wait for the commercial real estate crash. Many of those owners are small business people who will also start to have trouble with their home mortgage.

    We are far from out of the woods, the market has not yet burned out the dead wood with the Government pouring water on everything in the form of dollars. It will eventually dry up and the fire will be that much worse.

  24. Bob Belvedere
    April 8th, 2010 @ 2:35 pm

    Quote from and Linked to at:
    Cleaning Out The Cache

    Sincerely,
    Blogwhore Bob

  25. Bob Belvedere
    April 8th, 2010 @ 9:35 am

    Quote from and Linked to at:
    Cleaning Out The Cache

    Sincerely,
    Blogwhore Bob

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    April 11th, 2010 @ 10:15 pm

    […] The Other McCain on the myriad of problems with the latest  unemployment statistics. […]