Housing Slowdown Sector Impact

Yesterday, we picked up Dan Gross’ challenge as to what other sectors the Housing slowdown was making its impact felt.

Our experiment in “Crowd-Sourcing” worked out well – you contributed scores of suggestions based on observed data, both public and private.

Here’s a list of your observed sector impacts as they relate to the Housing slowdown:

RV Sales: a lot of the people who were buying $100,000 RV’s were taking the money out of their house to do it. No longer

Thoroughbred horse auctions: have seen their gross and median prices decline in California, Maryland, Florida and Kentucky.

Convention Centers: As RV and Boat sales slow, the RE industry, the construction suppliers, and boating mfrs will have less need for the big convention spaces.

Lawnmower mfrs:  Toro said its Q1 sales
rose 29%, while Briggs & Stratton said the drop in sales was mainly
due to lower sales volumes of lawn and garden equipment and portable
generators, and lower unit shipments of engines. One explanation: As
homeowners get hit with ARM resets, they are dropping that lawn service
and doing it them selves.

Outdoor Power Equipment and the small-engine manufacturers: They are paradoxically doing fine, but probably for the same reasons.

Contractors: tradesman are much more available now, as they have experienced a slowdown in both construction AND remodeling projects.

Condo/Homeowners’ Associations:  Many condo owners could face special assessments, as some owners to walk away from loans they can’t afford. That presents a problem for deferred maintenance issues and unfunded reserves.

Furniture companies: all hurting. STLY, HOFT, FBN, ETH. They are getting the double whammy…lower sales and they can’t compete with overseas companies. (ETH did just say yesterday that they see signs of the consumer making a comeback)

State property and sales tax receipts: They are reported down in many states even as government stats say sales are strong. (I’m sure many states are now looking at the decrease in remittances to Mexico and Central America and adding up the taxes they SHOULD have collected from homebuilding labor).  Property taxes keep rising nearly everywhere, even as house prices are falling  Despite the housing downturn, the market value of millions of homes still exceeds their assessed value. According to the USA Today, all but five states limit how quickly property taxes can rise.

Building Materials: Lumber Wood Production, Bldg Materials Wholesale, Home Improvement Stores, Select metals (copper, aluminum)

Airlines: Over the past week, Southwest Air, JetBlue, Continental and UAL all said domestic bookings were weak. Expect this to eventually work its way to Travel related industries, like Cruise liners, rental cars, regional and domestic focused airlines, etc.

Auto Suppliers: Watch companies like Graco (GGG) – they missed expectations, but, more importantly, the composition of earnings gave a clear indication how weak the housing-led decline is domestically and, by contrast, how strong the international end markets are. Graco’s manufactures equipment to apply paint and other coatings on automobiles, appliances, furniture, etc. The company recorded its first profit decline in six years. North American volumes dropped by 9%, while international sales grew by 23%.

Construction Equipment: Komatsu and Kubota’s N. American equipment businesses are doing poorly thanks to lower housing construction.

Truckers: like RRs, are having a rough YoY time in volume terms: www.truckline.com Railroad volume is anemic YoY (see: www.aar.org) for container boxes shipped from Asia (15% of which is furniture) as well as for materials (wood for housing, etc)

Autos:  Camry sales ex-hybrid Camry are actually down. SUV sales are flat to down except for the redesigned Rav4, and that is due to a redesign. Tundra sales were good. In short, the equivalent of same-store sales for Toyota was flat to down. Also, AutoNation’s CEO Sees Soft Car Market Ahead  Considering how many car loans were refinanced into homes and paucity of customers paying for cars with cash, it is ridiculous to assert that the LTV of individual consumers has no impact on car sales. When I was selling, I saw it all the time. There are only so many times you can rollover an upside down person before it becomes impossible. (This would explain Harley’s (HOG) poor earnings  inventory build).


Thanks to everyone who participated in this crowd sourcing experiment!

(All yours, Dan)

Category: Economy, Employment, Markets, Real Estate, Retail

Which is Wrong: Data on Growth or Employment?

Category: Data Analysis, Earnings, Economy, Investing, Markets

Go FICO Yourself: Selling Your Credit Score

Category: Credit, Economy, Real Estate

Housing Impact by Sector

Category: Earnings, Economy, Markets, Real Estate

Just one of those oddities

Category: Data Analysis

Chart of the Day: Strong China Growth, Inflation

Category: Economy, Inflation

More on Mortgage Equity Withdrawals and Consumer Spending

Category: Consumer Spending, Economy, Employment, Psychology, Real Estate

Media Appearance: Kudlow & Company (4/23/07)

Category: Media

Index Gains Distribution

Category: Index/ETFs, Investing, Markets, Technical Analysis

Round Numbers?

Category: Investing, Markets, Psychology, Technical Analysis