Cramer: Map to a Housing Bottom

Of course, I am saying that with the FDIC's plan, WFC's changes, the FHA getting involved and the continued decline in the rate of builds and the tax credit, all of these positives are going to cause that foreclosure rate to decline slightly faster than otherwise.

Here's the bottom line. The market is factoring in three wrong things:

1. that the problem will get worse forever, rather than recognizing the peak that has to occur;
2. that nothing is being done about the demand side -- not so, because prices are coming down fast, mortgage money will get cheaper after FNM and FRE go away and there is a tax credit of size that matters; and
3. that nothing is being done to keep people in their homes -- also really wrong, because of the FDIC's plan and the FHA money meant to stem these declines.

Right now, if you think housing is going down for the next year, you are making what I think is a sucker's bet. Six months? Yes. One year? No. We will have gone through too much of the bad lending.

Oh, and remember, I am predicting 100% defaults on all non-fixed-rate loans from 2005 to 2007. No one in America is using that negative a forecast. Do you ever hear anyone say 100% of those loans from that era are going to default?

I am.

And I still think housing will bottom at the beginning of the second half of 2009. Less than one year from now.

At the time of publication, Cramer had no positions in the stocks mentioned.