PIMCO: Millions of Homeowners to Become Renters
When PIMCO talks, investors around the world listen. But a message from the Newport Beach-based money management giant should perk up the ears of local homeowners.
A lot more of you will soon become renters, predicts Scott Simon, Pacific Investment Management Co.'s mortgage-bond chief.
"You might be turning another 4 million homeowners into renters," Simon said of the outfall from tougher lending standards, in a Bloomberg television interview.
His insights were sought amid predictions that the U.S. homeowner rate may fall 2 percentage points to 64 percent. That rate was at an all-time high of 69.2 percent in 2004, thanks to loose credit and overinflated property values.
Ownership remains "incredibly cheap," but few can qualify for loans, Simon notes. He discounts home sales exceeding expectations because of the glut of residences--4 million--that were built during the boom.
Simon agrees with those calling for a government-backed lending program that will allow foreclosed homes to be converted into rentals. At least that would mean former owners would get out of having to paint the damn things.
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