I’ve put your link on the sidebar under this memorable title: “Collateral Damage: Rate Resets, Housing Struggles to Put More Strain on U.S. Residential Mortgage-backed securities (RMBS) in 2007″. Thanks for the find.

I haven’t really tracked manufactured housing. I got curious, and found this little tidbit on manufactured housing from a Dec 8 Motley Fool article:

In 1998, the industry shipped about 370,000 manufactured housing units. For 2006, the industry will ship around 123,000 units, a decline of more than 60%. The last time the industry shipped this few units it was 1962, JFK was in the White House, and I would not be born for another 20 years.

http://www.fool.com/news/commentary/2006/commentary06120814.htm

I wonder how the doll house market is holding up?

But hey, manufactured housing should do well! Maybe that’s his source of optimism!

Lereah’s book, (c)2005
(Summary: Up! Up! Up! No end in sight! Buy! Buy! Buy!)
“Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade – And How to Profit From Them, by David Lereah.”

May 2005
(Summary: Up! Up! Up! No end in sight! Buy! Buy! Buy!)
“The fundamentals of a growing population, tight supply of homes available for sale and rising construction costs will support home prices moving forward.”

October 28th, 2005
(Summary: ’06 sales – existing: -3.5%, new: -4.5%)
Existing-home sales, which should increase 4.8 percent to 7.11 million this year, are projected to decline 3.5 percent in 2006 to 6.86 million. New-home sales, seen to grow by 8.0 percent to 1.30 million in 2005, are expected to fall 4.5 percent to 1.24 million next year.

December 12th, 2005
(Summary: ’06 sales – existing: -3.7%, new: -4.8%)
Existing-home sales, expected to rise 4.7 percent to 7.10 million this year, are likely to decline 3.7 percent in 2006 to 6.84 million. New-home sales, projected to increase 7.0 percent to 1.29 million this year, are forecast to drop 4.8 percent to 1.23 million in 2006 – also the second best on record.

January 10th, 2006
(Summary: ’06 sales – existing: -4.4%, new: -6.0%)
After setting a fifth consecutive annual record, projected to 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006.

February 7th, 2006
(Summary: ’06 sales – existing: -4.7%, new: -8.5%)
Existing-home sales are likely to decline 4.7 percent to 6.74 million this year, down from a record 7.07 million units in 2005, while new-home sales are expected to fall 8.5 percent to 1.17 million from a record 1.28 million in 2005.

March 13, 2006
(Summary: ’06 sales – existing: -5.7%, new: -7.7%)
Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005.

April 11th, 2006
(Summary: ’06 sales – existing: -6.0%, new: -10.9%)
Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year.

May 9th, 2006
(Summary: ’06 sales – existing: -6.4%, new: -11.6%)
Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year.s record of 1.28 million.

June 6th, 2006
(Summary: ’06 sales – existing: -6.8%, new: -13.4%)
Existing-home sales are projected to drop 6.8 percent to 6.60 million this year from the record 7.08 million in 2005. New-home sales are forecast to fall 13.4 percent to 1.11 million from a record 1.28 million in 2005.

Anyone seeing a pattern yet … ?

Thank you for the compliment- I’m probably just more impatient than anyone else. [and averse to "downstream" data!]

I think they are sticking with “almost a bottom” to give themselves wiggle room. As for credibility, I think of the line from the song, “If I Were a Rich Man” in Fiddler on the Roof – only you need to insert “economist” for “rich man.”

The most important men in town would come to fawn on me!
They would ask me to advise them,
Like a Solomon the Wise.
“If you please, Reb Tevye…”
“Pardon me, Reb Tevye…”
Posing problems that would cross a rabbi’s eyes!
And it won’t make one bit of difference if i answer right or wrong.
When you’re rich[or an economist, i.e. Lereah], they think you really know!

It would be kind of nice to have the power over the U.S. economy that is being ascribed to bubble bloggers. Think of the possibilities for John and me. We could call up GW and say, “We want a large subsidy for Doom, or we shave a couple of points off the GDP!”

It’s a pretty silly theory, but you do see it around.

What I find most humorous (but not “ha-ha” funny) is how often Lereah and the spin-meisters have already said, “This is the bottom. The market has stabilized.” How many times can they throw this head-fake until they lose any credibility they might have left? What will they be saying next year or in 2008 (provided they still have jobs in the REIC)?

Unrelated point: I find it odd how many supposedly intelligent people seem to buy into the following theory: “The housing market would be just fine if it wasn’t for all of the negative blogs out there scaring people out of the market and on to the sidelines.”

I’ve run into that mind-set in many stories on the Web and elsewhere, as I’m sure you have. Do these people really believe that what we post here is actually affecting the market? I think these sites are good at offering cautionary tales to potential buyers, sure, but the sales numbers are what they are. If people are sitting out the market, it’s because of their pocketbooks and common sense, not because some Web site told them to.

I keep pretty close tabs on what reports come out when. When this press release came out, I was asking myself why, when new home sales aren’t due out until 11/27, and existing on 11/28.

My guess is Lereah’s trying to do a preemptive strike here, admitting short term pain, but showing “light at the end of the tunnel.”

During the S&L crisis, median home prices dropped for four years, and did not return to former levels for another two. Calling a bottom at this point would be extremely difficult, as none of the indicators really are showing any moderation. Inventory is down a bit, but that tends to be a seasonal phenomenon. Lereah’s long on predictions, short on defining trends.

I’ll bet Bernanke’s laughing about the interest rate predictions as well. We’re all pretty much guessing the Fed will hold this week, but after that- I doubt the Fed knows for sure where rates will be next September, never mind Lereah.

http://money.cnn.com/2006/12/11/real_estate/home_sales.reut/index.htm?postversion=2006121113

I’m sure my numbers are off, and I certainly don’t have a crystal ball. My pessimism is really just focused rage. I’m angry.

Fiscal responsibility? HAR-HAR! To most, that means being able to afford the minimum payment on the credit card(s) bill every month. Keeping up with the Smith’s, as it were, is a disease worthy of major medical studies. At least in my opinion.

I was priced out of the market for a long time. Only recently was I able to secure a career with enough earning potential to even consider buying a house. Even now, I can “afford” a median priced home, but I would have to make some serious “entertainment/travel” sacrifices… which isn’t a deal breaker in and of itself.

This leads me to:

Why should I pay 2xx,000 dollars for a “Brand New” POS house 5 feet away from another house? I can’t imagine the Californians paying 4 times that for the same thing. It’s absolutely insane; these “new” homes are total garbage.

I have to make a long term commitment (say a 30 year mortgage) on a house that is considered to be, at best, a 20 year home (before major repair work is needed). Basically, as a buyer, I’m being asked to buy something that is almost guaranteed to break well before I’m done “owning” it. There is very little logic in that for me.

In the past, homes were built with brick a mortar. They had real roofs and proper foundations. In Tucson these homes are located around the University of Arizona. They were considered “50 year” homes at the time of construction. 5 years ago you could buy one for 50-100K. Now they are going for 275-500K, with significant repairs needed. INSANE!

Why?

The corporate mentality is, “Where can we cut costs?” Rather than, “Where can we inject value?”

The consumer mentality is; “Where can I get the best price for xxx? I don’t care what the opportunity cost is, I don’t care what the real value is, I WANT xxx!” Rather than; “Do we need xxx? If so, let’s save so we can afford the best. If not, let’s save for a rainy day.”

I’m in the medical field so pardon my simplistic algorithm; I view the economy similar to the basic view of the human body; Air moves “in and out”; blood goes “round ‘n’ round.” Anytime one of these things is not functioning correctly you have a major problem. We have a major problem:

The economy is on a heavy morphine drip (credit) suppressing the need to breathe (save).

I agree with most of what TusconDoomer wrote, especially regarding “Tappers”, but I have to question whether there is any basis for suggesting that one third, or even 20%, of US homeowners are in the “situation where their homes are not worth as much as they paid for them”. Even if the statement were recast to embrace “total mortgage debt”, and thus capture many of the recent “tappers”, the percentages appear unsupportable (or at least unsupported), especially given the large amount of housing stock remaining in the hands of purchasers from more than 3 years ago, many of whom have not been playing mortgage
ATM games and some who are at or near retirement and own the home outright.

Similarly, if we are too focused on the sub-prime mortgage situation we fail to realize that: 1. it is not a significant piece of either the overall outstanding borrowings or total outstanding securities, 2.it is the group everyone rational expected to default in far greater numbers during a downturn,and 3. a modern economy does not rely on the “lowest common denominator” as an overall predictive proxy. Sometimes our “doomer” opinions appear based on interesting, but small or aberrant pieces of the market, kind of like estimating world worker productivity change by sampling only Western Europe!! Gold bugs have been famous for this kind of rhetoric and “reasoning” for decades. To mix a metaphor, they are constantly grasping at straws they predict will break the camel’s back. Well guys, the camel has carried alot of your straw so far. I hope knowledable housing market observers like those on this site can avoid joining this largely economically irrelevant group of habitual naysayers, who always see the next bit of bad news as proof that gold’s (gun’s, mountain retreat’s, societal collapse’ etc.) day is coming.

On a final note, given the focus recently placed on those who “struggle to pay” their mortgage (toxic or not) and Tuscondoomers accurate picture of many “Tappers” spending home “equity” on silly toys, I hope those people most concerned about the “hardships” on US middle class homeowners noticed that the Latin immigrant community has somehow been able to increase what they mail home from $240 in 2004 to $300 per month in 2006…this from people earning $900 per month on average!(Az. Republic, 12/11/06) Perhaps, after selling the “boat/RV”, the tappers can then learn something of personal thrift, spending priorities and true hardship from these hardworking people.

The Housing Hangover: Take Two Aspirin and Call Me in 2008
http://www.elliottpollack.com/word_docs/ASU%20Speech%202006_final%20presented.pdf

I’m a fence sitter. I was berated by my coworkers for living in a very modest one bedroom apartment, while making enough money to afford the “median” priced home here in Tucson. It seems that a LOT of people drink the “it will get better, so you should buy now… or be priced out forever” Kool-aid.

I laugh (and point my finger) at these people. They are either in ignorant bliss or simply too retarded to grasp the gravity of our housing market situation.

This is what I tell them: If I bought a house today I would lose everything I put down and any equity in the home for at least 6 years. Home prices have dipped 3-6% in the last few months and there is nothing to stop them from tumbling further. If I wait… I’m much better off both short term and long term. At least I’m guaranteed a % if I put my down payment into a CD.

This is why:
For the sake of argument we will call at the equity tappers; “tappers”. Tappers started refi’ing and tapping equity to buy the “boat/RV” or “investment home” with non-trad loans about three years ago all the way up to the first quarter of 2006. The tappers hoped to refi to a fixed when the interest rates went up or begin to reset (sometime in the very near future).

Most of the tappers are now under water. They can’t get an appraisal to come in where they refi’ed for the large sum of money, the comps are not there. They are stuck with ballooning payments and a really nice “boat/RV” or non-performing “investment property”.

They are going to either sell the boat/RV at a loss to try and buy some time… just browse craigslist or boat trader for some good deals. Or they are going to sell the property at a value that another buyer is willing to pay. Both situations will be responsible for the price tumble.

1 in 3 to 1 in 5 is now in a situation where their homes are not worth as much as they paid for them. They could never really afford the home in the first place. They were told that most people only stay in a home for three to five years, and when the ARM on the McMansion resets they can sell for a tidy profit. They were told that the housing market is always a sure thing; a quick way to make some money or upgrade to a more desirable location with the power of equity. These people were not smart enough to realize markets go up and down, and if its down and you HAVE to sell you are SOL.

Absynthe, is it?