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.

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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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