Tags: Whalen | Housing | homes | bottom

Chris Whalen: Talk of Housing Market Hitting Bottom is Misleading

Tuesday, 24 Apr 2012 11:58 AM

By Forrest Jones and John Bachman

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Talk of the housing sector hitting bottom is misleading in that experts and homeowners should be more concerned if the sector will ever recover to pre-crisis levels, says investment banker Christopher Whalen.

Building permits issued in March rose 4.5 percent, beating out many expectations although U.S. housing starts fell to levels not seen since October, dropping 5.8 percent.

Noted analysts say the sector is bottoming out but, there's a slew of reasons to keep the champagne on ice for now.

Story continues below video.


"We've lost probably 20 percent of the population of potential homeowners that we had in 2005. They're just out of the market — they can't qualify for a loan. The other issue of course is that maybe a third of all properties are underwater right now. So they're not financeable," Whalen tells Newsmax.TV in an exclusive interview.

That means short-selling will continue for those avoiding foreclosure.

"There's also still an enormous amount of inventory that has not moved, and I think to talk about bottoming is really not the issue," says Whalen, co-founder and vice chairman of Lord, Whalen LLC, parent of Institutional Risk Analytics, the Los Angeles-based provider of bank ratings, risk management tools and consulting services for auditors, regulators and financial professionals.

Turning to the overall economy, Whalen says he's not worried about political bickering and brinkmanship that almost threw the country into default during the 2011 debt ceiling debate.

The so-called Bush tax cuts are set to expire at the end of this year around the time of elections, and debate over renewing them will pick up.

"Brinkmanship is part of democracy. We are not supposed to have consensus," Whalen says.

"Americans are supposed to fight. Checks and balances is about debate, combat and decision. You vote, and you make up your mind," Whalen adds.

"We have to have that heat and argumentation if you want to make it work. I think that having the issues discussed on the floor of Congress as they are is a good thing."

Should the country have defaulted in 2011?

Yes, Whalen says, criticizing calls from the White House and Democrats in Congress that a default would have had major economic ramifications.

"We can make people wait. You know what? If we don't pay our debts on time, the world will not end. The world will wait. I don't want to see us go there but the president and the Democrats are completely irrational."

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