The median level is 6.0% for the last 35 years.

So it seems that in a serious downturn 4.5% is an attainable goal. Or given the that we hit a record 9.5%, maybe it's possible that we'll break a record on the way down - which seems to be around 3.75% on this graph.

If the housing market maintains some sort of symmetry, sales could see a 60% haircut.

There's probably some reason that can't happen though.

Technical analysis tells me to re-enter the housing market when David Lereah meets a similar fate to Jack Grubman...

Isn't this graph just another indirect method to measure speculative purchases?
If so, I would expect a big drop below 6% as ac notes.

ac, sales volume was cut in half during the early '80s housing bust, from a high of 3.99 million units to 1.99 million in '82. I'd be very surprised if sales fell that far this time

See what gets me is it seems like we peaked at a higher rate of sales per household (though I haven't done the calculation) so it seems that the potential peak-to-trough decline could be greater.

Of course 1982 saw high unemployment and high interest rates, so maybe that's a worst case scenario (ironically, the house I sold last year was purchased in 1982), but there are aggravating circumstances in this case too, I would argue - notably the possibility of great damage to the lending industry as well as buyer disgust due to price declines and foreclosures.

I saw this first hand in Houston where people just hated anything associated with real estate well into the late 80s.

"60% haircut. It's in the bag."

so this graph shows that housing is still booming?

tj & the bear writes, "homeownership is 5% above historical average".

More precisely, it's five percentage points above the historical average of approx. 64%, which equates to 7.8% above the historical average.

In previous busts, it's fallen below 64%, so it's potentially a long way down.

Both stats and anecdote tell us that a large part of the rise in the ownership rate to 69% was buying by the under-30 set -- and even the under-25 set. Since so many of these people can move back in with mom and dad, and or double up with roommates, it will be quite easy for the ownership rate to revert to the mean.

Is there any systematic risk associated with this much available credit leaving the market in such a short period of time? Or are the end buyers of MBS the same and could care less who provides them with the mortgages?

Crispy, that's just the kind of naive question I'd expect from someone who reads the horror stories on Broker Universe. I, who spent hours of yesterday that I will never get back reading NDE's 8-K, have a much more sophisticated take on this problem. Sure, we're both cowering under the bed, but I got here the professional way.

Anyway, this is the story one can pick out of the footnotes to the credit reserve numbers: NDE decided a while back that this subprime game was getting a bit hot, so they started selling somewhat more reputable paper to parties like the GSEs. They learned something about how humorless the GSEs can, actually, be, when they had to buy a boatload of it back. So they re-wrote their credit guidelines to more closely approximate "sanity." They then reported EPS to the market. The market, which could give a pfft about credit quality, proceeded to pfft in NDE's general direction over the profit numbers. Meanwhile, NDE also reports in the footnotes that while their loss reserves could look a little anemic, from a certain point of view, we should bear in mind that a bunch of those nonperforming assets in the held for sale pipeline (not the investment portfolio, gentlemen, the HFS, the stuff you by definition aren't supposed to own long enough to have those problems) are covered by repurchase agreements. If NDE can put this crap back fast enough, while there are still repurchasers to repurchase, their loss reserve bet will look really smart. If all the repurchasers take NDE's philosophical POV to buybacks and re-write their lending standards, lesson learned, we all get older and wiser together. If, however . . .

Nah, you're right, let's go back to the broker boards. The stories are funnier.

Before the Bell headline on Marketwatch this morning: "Data to Set the Trading Tone."

That sucks.

Maybe they'll use restraint and confine themselves to lagging indicators.