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Will Housing Drag Economy Back Into Recession?

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  • Description

    Chris Whalen of Tangent Capital Partners breaks down housing market worries.

  • Duration 4:00
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There is new evidence that the housing market is on the -- the Case Shiller Index showing home prices rising 3% in September from the year before but even with a string of upbeat stopped -- upbeat news -- for sale next guest is concerned about what's on the horizon he says.

The housing sector could drag the economy back into recession next year.

As -- just sent a rule -- -- sunshine Christopher fantastic capital partners senior managing direct who.

And Chris thank you for being here but home sales are up.

Mobile home building is up home prices -- up -- What should we be worried about all -- up off of very low base and obviously we've had a tough few years.

And the thing that I'm worried about a -- a credit if you look at the Dodd-Frank legislation -- that bill was supposed to be bad for the banks but it actually annihilated all of the third party.

Originators -- brokers everybody out there -- -- -- because they don't have to be regulated they -- -- of all sorts of qualifications.

In order to give -- into this market today.

You have to have much more capital.

-- total broker dealer you have to do all of these things that you didn't have to do in the penthouse of the amount of capacity.

That the economy has to make loans especially larger loan -- save half a million dollars this diminished.

To banks today are doing everything all the business they do is for government guarantee.

So once you get up to 600000 dollars thereabouts and in New York area that's that there's no credit available mode -- -- -- -- just -- -- house in Greenwich that supposedly worked two million dollars no it's not.

The prices gonna compress.

Stanley -- hearing that people cannot get loans.

And and that coupled with the fact that the foreclosure process in certain states is so my April Jersey in particular -- -- -- judicial state right to stand fantasize.

-- -- -- -- -- I got three years at least right -- well.

Yes that's correct simply -- New York especially if you hire a lawyer have the lawyer entered into the foreclosure litigation -- could be there for more than three years.

In Massachusetts you cannot foreclose right now.

The politicians under the rubric of consumer protection have put so many roadblocks in place that if you're -- -- You're not giving a government guarantee on the mortgage right to be out of your mind to write a Jumbo and investors that same thing in Washington DC.

You cannot foreclose on a home in Washington.

Because the populist government net jurisdiction.

Has changed the laws so.

It's a bottom line -- saying that -- we went so low that any improvement.

Is gonna look good on paper but in reality when you look at -- -- yeah if you were just.

Laid on your mortgage from last couple years.

Your credit score is so low below 700 you can't possibly get a government can't take effect they're rejecting seven point.

Like those scores but the FHA to -- -- at 740.

In -- and 8020 -- -- restored percent down 80% borrowed.

How many Americans can qualify for the so -- produce a total pool of people.

Who can qualify for credit.

New ball loose regulatory -- and the around the place leaked and -- we have Basel III which is gonna force the big banks out of the market entirely I have to hold more cash someone concept of credit now what's the future event besides really dismal.

Well I think that come we're gonna have three visible -- -- issues I think the regulators are gonna have to go back -- look if we do these things.

Forget about the fiscal -- I think we're gonna have a recession anyway -- -- simply because real state is so important.

All of the -- industries and serve that market.

And plus let's say you you live it up in northeast and you could get a job done on South Carolina -- can't sell your house right.

It stifles labour mobility which has been historically wanted to strengths of the US economy.

We have to fix this Bill White friends in the analyst community real -- we're never gonna have private mortgage backed securities again that don't have a government guarantee but we have to fix up market we have no choice we have to fix it.

Right we Catalan government for not fears that -- with a very.

Sobering.

Outlook on low housing and certainly the credit issue is massive there's no doubt about -- -- -- you haven't.

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