Mortgage Totals And Fannie Mae
For new readers, a basic premise of this blog is that mortgage originations peaked in 2003, and the top in home prices and sales couldn't be far behind. The latest monthly summary from Fannie Mae is a good example.
Business Volume $ in Millions
2001....615,323
2002....848,901
2003..1,423,056
2004....725,189
2005....522,560 annualized
Portfolio Purchases $ in Millions
2001....270,584
2002....370,641
2003....572,852
2004....262,647
2005....126,988 annualized
Retained Commitments $ in Millions
2001....296,498
2002....388,059
2003....489,073
2004....256,144
2005.....57,932 annualized
This last set of numbers is especially important. As I understand it, and please correct me if I'm wrong, these figures represent the "spread" between the rate the firm pays and can charge on a given group of loans. They want this number high, and as you can see, Fannie is struggling. There must be quite a bit going on behind the scenes.
Fannie lending is down a trillion dollars from 2003 levels. How can prices rise with the cash drying up? The overall numbers are similar, except that now most of the loans are subprime, which wasn't the case in 2003.
The big players are aware of this, and they know the market is doomed to fall. While they arrange for the crash the public has been left to dig into a debt situation without precedent.
47 Comments:
Anyone have any predictions on how much prices will fall, on average, if the SoCal bubble does brust?
I heard that in the early 90's, the average decline was 20%.
Maybe it's a foolish prediction, but I see even bigger drops this time. 30-35% seems reasonable to me. Not becuase "if it was bad last time, it has to be worse this time"; I realize that the past generally has no impact whatever on the future.
It's that prices seem to be insanely out of whack. A starter home in a middle class community (and I mean really middle class, not what well-educated urban professionals consider "middle class") is 300-350k. No middle class family making 60-80/yr (and that's if they both work) can possibly come up with:
(a) a 20% downpayment of $60,000 (though a 5% of $15,000 may be possible if they are really frugal (not likely) or get help from family); or
(b) a monthly mortgage, property tax, and repair reserve expense of @$2750 - $3000.
Not just one, but BOTH of these goals are simply impossible for the middle-class family. Something has got to give.
For this reason, I think a price drop of 33% or more is not unrealistic. That $350k home should really be going for $230,000; that's something an average family making a combined income of $60k probably can afford if they are otherwise responsible.
Interesting comment by John Rutledge on Realmoney.com today. Rutledge is no bear. In fact, he's a partner of Larry "Bubbles" Kudlow and very well-connected in Washington.
Here's his comment:
"If you want to buy retail to sell the real estate, better dump it off fast to a REIT while the dumping light is still lit. With some exceptions, guys I know are lightening up today. Because the credit markets were closed til last May, the Fed had to jam all stimulus through the public markets, i.e, T-bills and mortgages. Made the repricing of the housing stock much more severe than it would have been if both cylinders had been firing. Makes the eventual cooling bigger than it need to be."
Translation: Rutledge is talking about the crazy runup in some retail stocks (Sears, Kmart, etc) due to the supposed value in their underlying real estate---not their business models. He believes (based on his contacts) that this tactic has reached its zenith.
What's interesting is that he points out that the credit markets were very bearish for commercial/business until about a year ago (i.e., businesses didn't want to borrow any more because they were looking to clean up their balance sheets after the 2002 debacle). SO all of the Greenspan stimulus ended up going to the consumer via low interest rates and EZ mortgages.
This caused what Rutledge calls a "repricing" of real estate---obviously way up. I call it a "mispricing". And reading between the lines, so does Rutledge. So he ends by saying that the "eventual cooling will be bigger than it needed to be."
This is a major point coming from a hardcore Repub insider. They KNOW that the hammer is about to fall on real estate. Why else do you think that the bankruptcy was rushed through?
The only caveat here is the word "eventual". This means that housing will crack and crack hard, but the question is when.
Anon, Deb:
I have owned a single family home in a coastal section of San Diego since 1986. From 1990 to 1993, I lost 33% in appraised value. I know this for a fact as I put a HELOC on the house in 1990 and then refinanced in 1993, so I have 2 legitimate appraisals. With that fact in mind, I think a reduction of 50% or even higher is not out of the question this time around with all the insanity going on in the home lending arena now.
More from Rutledge today on the Neiman-Marcus LBO (Needless Markup, they call it). Remember, this guy is an insider and Kudlow partner. He knows the score. When he says we're at the top, we're at the top:
The Neiman Marcus (NMG.A:NYSE) takeout announced today is a SOX-BUCKS story. Sarbanes-Oxley makes it painful to be a director of a public company (I know this from experience). Leverage lending market gone berserk is increasing the leverage and prices in private equity deals. When the LBO firms buy retailers we are near the top. According to a friend in the heart of the leveraged loan business, 80% of loans today are being bought by hedge funds; B credits are going at libor+200; loans that were once five-year term loans are now seven-year bullet loans with no amortization, including to rural telecom and satellite companies whose business will change with this year's telecom law rewrite; some underwriting committees have lost the power to turn down a credit if the sales force can show they have it sold.
Related point: Don't believe the fee-generated bank earnings numbers today. We have seen this movie before.
Deb
I saw the same thing. I bought a one bedroom in 1987 for $65,000 sold it in Jan 1990 for $140,000, the market tanked, I almost bought the same condo 1996 for $45,000, wish I had, they now sell for $350,000.
Ben, do you know what % of the loans originated in 2003 were ARMs? And were they 1 year, 2 year, 5 year or 10? I think that # is important for 2 main reasons. First, from a mortgage backed side, ARMs are more difficult to package because of duration risk. With ARMs originated at record lows, the likelyhood of these loans being prepaid is much higher than fixed loans. Which leads to the next point. I think most homeowners will attempt to re-fi before their rates adjust. This will provide a mini boomlet in refi activity and I suspect you will see a pick up in volume. More importantly, the fixed mortgages that will be underwritten will be far more attractive than whats out their now.
People please talk to soome people who are in their 60s right now.
They would have lived during the three busts and would tell you the stories
I talked to one yesterday. he is an engineer, used to work in defence industry for past 30 years.
He said he bought two houses during the first boom(70s?), at the top. that is with an hour of each other.
He said that he was naive, every one told him that it always goes up.
he foreclosed his residence, imean back did it after the bust. he kept the other home for some time as it was rented and had some cash flow. But prices kept going down and he could not take it any more and sold it at loss. Took about 50,000 net loss on this second home.
he became wiser. he bought the home luckily the same home (primary residence) after a year or so for 2/3rd the price. This he had to do it in his b-in-law name as he would have to come with all cash if he were to buy himself.
Even this home went down another 20% and he was worried. Luckily he had his job and was able to make payments.
he did not buy anything till 1997. he bought four properties and all covered by rent, net cash flow positive.
he sold all of them by 2002 and he had his memories still fresh. and is all cash right now.
"Fannie lending is down a trillion dollars from 2003 levels. How can prices rise with the cash drying up?"
I think it's fair to say that private mortgage financing has picked up much of the slack, with the likes of Countrywide, etc. Don't know if this is a good thing or a bad thing, though.
More amusing commentary from Bill Bonner of TheDailyReckoning.com. My favorite lines:
"There is smart money; there is dumb money; and there's money so moronic it practically cries out for extermination."
and
"That is the great drama of the financial markets. They put a fool together with his money just so they can get a good laugh by taking it away from him."
Here's the commentary:
The end of the housing bubble must be approaching.
"Flipping Real Estate Without Getting Burned," reads a headline from the weekend Seattle Times.
There's something endearing about these senseless metaphors. The Times could have said - "Flipping Houses Without Having Them Fall On Your Head," or "How Not to Get Burned in a Red-Hot Real Estate Market." But the hacks in Seattle didn't bother to think about it; who does? Everybody knows property is hot. And now, everyone is getting used to the this kind of story: About people who are quitting their jobs to get in on the house bubble before it goes sour (ha-ha, just wanted to see if you're paying attention), we mean, before it pops.
The Times' article referred to 30-something "investors" who have left gainful employment to "invest" in real estate. You know, dear reader, that what they are doing is not really investment. The houses they buy rarely yield any real, net income. They don't know it, but they are merely gambling on rising property prices. So far, the gamble has paid off.
We recall, at the end of the '90s young investors, were quitting their jobs in order to day trade stocks. As long as stocks were rising, they thought they were geniuses. When they went down, everyone else thought they were idiots.
"I lost a ton of my portfolio in 2001," The Times quotes a rising property mogul. So, the man fired his financial planner and put his money in a self-directed IRA that he can use for speculating in houses, practically day trading them. "By the end of the year we'll be doing two or three a month," says he.
Remember, also that at the end of the '90s, people joined investment clubs so they could yak about stocks with other people who didn't know anything either. Now, they're joining real estate clubs. Members get together to talk about various "techniques" and "strategies." Four of these methods are recorded for the benefit of future Donald Trumps...and perhaps history...in The Times article: 1) buy a house, hold it and sell it later, 2) buy a house, fix it up, and sell it, 3) flip the damn house before you actually have to pay for it, and 4) rent the house for more than it's worth, giving the tenant the right to buy it in the future.
We were tempted to add exclamation marks after each 'strategy.' But the items scream such imbecility already, that amplification seems unnecessary. They remind us of our dictum regarding stock market speculators of the late '90s: There is smart money; there is dumb money; and there's money so moronic it practically cries out for extermination.
Ah yes, dear reader. That is the great drama of the financial markets. They put a fool together with his money just so they can get a good laugh by taking it away from him. These poor schmucks think they are geniuses. They think their techniques and strategies are making them rich (they pay scouts $500 for bringing them leads, houses that might be for sale at reasonable prices). Of course, tech stock speculators thought they were getting rich too. Then, they lost a ton of their portfolios. It's amazing they have a ton left. But that is going soon, too, we imagine.
In the meantime, two things trouble us. First, while it is entertaining to watch fools being separated from their money, it is galling to watch them get together with it. The residential property bubble ought to pop; but we're getting tired of waiting...and reading about people who are making a fortune from rising prices. Second, when it finally does pop, we're worried that the explosion might not be all that amusing. When the NASDAQ crashed, people lost money - but it was mostly speculative money. When houses stop selling, many people will lose their homes. They may not do so with good grace.
Thanks deb - having some realtors' perspectives on this is one of the best parts of this blog.
It's perfectly appropriate to talk about a housing bubble. It is a macro-issue, not a whimsy. Just as retail spending drove the US economy, home refinancing drove retail spending. Folks cashed out equity based on higher home values, got an ARM, and spent (wisely or foolishly). Freddie Mac is holding the paper for all these overvalued homes. If the bubble bursts, and people walk away from mortgages, there is a hole in the middle of the US economy.
In my home town of San Diego housing is still hot.
Count me as one person hoping it does pop. Sure, my condo has doubled in price (still can't believe that), but I need to move in about two years into a real house--wife's getting uppity (don't they always?). A 3 bedroom in a good school district is going for $600k. Please, please, oh please burst.
Guys, please help out, I have a serious question.
I live in Boston, and I'm wondering whether what many have stated could ever come to be in a few years - namely that rents will equal mortgages plus expenses without any money down??
Seems incredible to me, since that would mean that I could scoop up many rental properties and make a killing once the mortgages are paid off?
Seems hard to beleive. Or after a crash, will one need to put 20% down to get a mortgage.
Ben,
I'm sorry, but I believe the Fannie statistics you posted are misleading because they appear to include refis. The stat that I think is more valuable is the purchase number for the whole market, which you posted in the later link. That number shows that purchase (i.e. excluding refi) lending is much stronger this year than in 2003, which jibes with what we see in the market. Now, if there were some way to get the purchase origination number in real time, that would be a great predictor of the market peak.
"People please talk to soome people who are in their 60s right now.
They would have lived during the three busts and would tell you the stories"
I've talked to my father-in-law about this (he's 64) and he says he's never seen a real estate crash during his home-buying lifetime (last 35-40 years.) Because he's from the Bay Area, the stats more or less bear out this perception. While housing went down a little during the SoCal bust, they only dropped 2-3% in most areas, and the dot-bomb had a similar effect on some cities around Silicon Valley. The small losses were more than ofset the following years when RE gained significantly more than it lost during the slow period.
I believe the Bay Area is headed for a tremendous RE bust, the likes of which they have never seen. It's impossible to tell this to someone that has lived in the Bay Area for a long time, though, because they have never seen a RE bust of any real significance.
I lived in the Bay Area, and I recall, at the very least, a flattening out of the market in the early 90s. Others contend that there was a significant decline of some sort. The prices did not start recovering until 1996. If you look at the OFHEO's numbers (not that they're great) for Silicon Valley, there does appear to have been a decline in prices in the early 90s. Whether that amounted to a bust, eh.... (There was also a stagnant/negative market after the dotcom bust for a short period.)
Hoping for a 50 basis point hike so we can bring some uncertainty back and kill this bubble.
Question for someone who has been following housing and rent trends over time:
If the housing market crashes, would that drag rents down as well? If so, wouldn't that cause a continuing downwardly spiralling effect on housing prices, if one assumes that the 'appropriate' market valuation of a house bears some relation to its rental value?
Just wondering how this works. Thanks.
Love this blog. I'm trying not to get burned in the housing market.
Greenspan is to blame.
Should have NOT lowered rates, and let the stock bubble fall way way down. That would have avoided this stupid real estate bubble.
Just hope all the flippers get burned!
We are all wrong on the bubble!!! There is NO RE bubble according to Donald Trump on CNBC. RE is the best and safest investment.
Tell that to the couple who paid $204K for their San Diego town home in the early nineties. It was only worth $160K when I bought it from them less than a year later.
Donald Trump wouldn't know a Bubble if he blew it in the bathtub.
Anon 12:47
That is a good question. I am renting for the first time in 30years and am interested in others comments.
I was ready to downsize, so I sold and have been renting for 1 1/2 years. The house I am renting is up for sale and I may be looking again in three months.
Anon 1247,
Rent follows fundamental housing demand rather efficiently. So it will probably not fall much even if RE crashes.
In Hong Kong, rent was largely unaffected after the 60% correction in the RE market.
As someone who lives in a housing bubble (S.F. Bay Area), I can attest to the decreased sales. For whatever reason, there is a very low inventory of homes on the market. Buyers are waiting like vultures for ones that do come up for sale and bid up the price since they don't want to miss an opportunity to get a home they want. Thus, in my neck of the woods, the decrease in sales means an ever-inflating prices.
OC has a fairly low unemployment rate, it remains desirable, and housing isn't going to be a bargain anytime soon, if ever."
Housing prices didn't decline on a national level, but regionally they DID decline! Especially in SoCal. Housing will NEVER be a bargain in SoCal, but it is still at least 25% inflated over where it should be.
I live in LA County. People who say there is not a bubble here because of short supply are just plain stupid. People are speculating housing prices will continue to rise here more than anywhere. It hit me the hardest when I learned my friends bought an 800 sf home for around $500K with an interest only loan a few months ago. It broke my heart because I knew my friends were going to be screwed if the bubble bursts. Sure the housing prices could continue go up, but the risk they are taking seems to be much greater than the possible reward. When the average joe is willing to put his financial future at risk like this it is scary.
Even if my friends home value was to stay the same as when they bought it they will eventually have to sell or refinance, but since they couldn't afford to pay for that house at todays rates I don't think they'll be able to afford it at next years rates or later.
I can't tell you how many times I've heard people say, "Prices may level off, but they'll never go down around here. There just isn't enough supply." The problem is they forget just a little over ten years ago we had a housing bust and they weren't building many houses at that time either.
It may take a year before prices really start to drop, but it is inevitable. The price increases in the housing market in areas like LA is unsustainable. Even if it only plateaus people
I live in LA County. People who say there is not a bubble here because of short supply are just plain stupid. People are speculating housing prices will continue to rise here more than anywhere. It hit me the hardest when I learned my friends bought an 800 sf home for around $500K with an interest only loan a few months ago. It broke my heart because I knew my friends were going to be screwed if the bubble bursts. Sure the housing prices could continue go up, but the risk they are taking seems to be much greater than the possible reward. When the average joe is willing to put his financial future at risk like this it is scary.
Even if my friends home value was to stay the same as when they bought it they will eventually have to sell or refinance, but since they couldn't afford to pay for that house at todays rates I don't think they'll be able to afford it at next years rates or later.
I can't tell you how many times I've heard people say, "Prices may level off, but they'll never go down around here. There just isn't enough supply." The problem is they forget just a little over ten years ago we had a housing bust and they weren't building many houses at that time either.
It may take a year before prices really start to drop, but it is inevitable. The price increases in the housing market in areas like LA is unsustainable. Even if it only plateaus people
In the Bay Area, there are already signs that the market is entering a stagnant phase. My friend's neighbor is not able to sell his beautiful house (~1.5M) for weeks despite price reduction.
I am seeing listings on MLS that lasts for a few weeks.
There are some new homes in SJ that stays in the market for weeks with lots of "interests" but no bids.
It seems that the hot spots in the Bay Area have shifted towards lower priced (400K - 500K) common interest homes from higher priced single family homes. I do get the impression that the better-informed buyers are starting to stay away.
I am also seeing year-over-year decrease in sales volume in the Bay Area on SJ Mercury News.
So I begin to think that the true market peak was set about 3 months ago and the Bay Area is well on its way to a major correction.
BTW, rising prices with decreased volume is a tell-tale sign of an coming market decline.
"Thus, in my neck of the woods, the decrease in sales means an ever-inflating prices."
A decrease in sales definitely does not mean ever-inflating prices, even in the Bay Area (I've been a resident there for 35 years.) What it really means is that sellers haven't come to the new reality of lower RE prices and therefore choose to take their house off the market (or never list) because they can't get the percieved "correct" albeit very high price.
This may lead to a very short-term effect of buyers bidding up what few houses are for sale but this won't last more than a month or two. Lower sales invariably lead to lower prices although there is sometimes a lag. Because the pervasive wisdom in the Bay Area is that prices NEVER go down, it may take several months for sellers to begin to accept the new paradigm of decreasing prices.
(I believe the Fannie statistics you posted are misleading because they appear to include refis. The stat that I think is more valuable is the purchase number for the whole market, which you posted in the later link. That number shows that purchase (i.e. excluding refi) lending is much stronger this year than in 2003, which jibes with what we see in the market.)
It depends on how you look at it. A re-fi is another loan, just to the same owner, essentially buying it again and taking out the cash. That cash extraction is just as important as a new sale because it fueled more RE buying, among other things. The reason you see high purchases now is the subprime, IO, payment option stuff that barely existed a few years ago and Fannie can't touch. Without the dodgey loans, this bubble would have burst long ago.
When I started this blog you could get a lot better info, but the industry doesn't release it anymore. Where do home equity loans fit in? How come Fannie quit discussing retained commitments a couple of years ago?
These are Fannies numbers. Since FNM doesn't put them together, I did. Sorry I couldn't respond sooner but I guess the servers got jammed for a couple of hours. Thanks for the comment.
Taking the listing off the market is a new tactic used by agent. I know of someone trying to sell their place. 6 weeks gone by without an offer, only lookers. He was about to ask the agent to lower the price. Instead, the agent recommended to wait another week, and take the listing off the market. I guess this provides a perception that there's not enough supply.
Acording to Mr. Campbell. ("Timing The Real Estate Market") higher end properties get burned first and possibly they get hit harder. Myself, being in real estate, based on this information, I decided to monitor Chicago market. I do it on monthly basis. And I think I can see some dent in pricing in high end. There is some increased selling activity in last month, but that is probably combination of spring activity and reaction to lower asking prices. I will know more after 2 more readings.
No negative signs in more resonably priced market areas. I keep you posted.
Mike C., Chicago
I was ready to downsize, so I sold and have been renting for 1 1/2 years. The house I am renting is up for sale and I may be looking again in three months.
This comment goes a long way in explaining why so many people are reluctant to rent. There is such a lack of security. Moving is a bitch and having to do it twice in two years is a miserable experience.
Ben wrote: "That cash extraction is just as important as a new sale because it fueled more RE buying, among other things."
Original anon here (I guess I need a name). What you wrote is true, but I suspect Fannie's refi numbers are not the cash out amount, but the gross refi amount. So if I paid off a loan of $100k and took a new loan of $120k, Fannie's refi number would be $120k, not $20k. If that's what the numbers mean, then the huge decrease in Fannie's numbers since 2003 may not mean much. They may reflect a decrease in the number of refis, rather than a decrease in cash out amounts.
Your point about the lack of availability of industry numbers is a good one, by the way. I'll try to find out if any recent mortgage origination statistics are available. I happen to think purchase originations is the best short-term leading indicator for the market, since it should move even before sales volume.
Bob R
It is a hassle to move, you have that right.
I am thinking of going with bamboo furniture.
IMHO ... when it comes to buying today in So-Cal's market, you better look at the area schools and their API scores. I believe that cities/communities with very high API school scores (above 800) will not feel the brunt IF a crash happens. Families with wealth and income will always keep a highly sought after school district's area home prices high. Even if prices dip down it won't be for long as demand for these areas will always be high.
Original Anon
I think "the original anon" would make a good name.
"Anyone have any predictions on how much prices will fall, on average, if the SoCal bubble does brust?"
I wouldn't be surprised to see at least 30 percent. LA is just crazy right now. My fiancee and I combine for over $100,000 income, have a good chunk of a down payment, and can barely afford 1 bedroom apartments Santa Monica, West Hollywood, etc. and 2 bedroom condos in Culver City, Torrance, etc.
With our incomes, we should easily be able to get into a single family house in a middle class neighborhood like Culver City- considering the median income in LA is around $80,000.
Just pop, already!
Venice Jim,
I feel your pain. My wife and I combine for $130K per year and have a bunch of "equity" in a townhome but just cant justify the heavy overhead and taxes associated with an "upgrade" purchase. When middle class professionals cannot afford a house payment for an average home...something is out of whack! 1500 Sq ft detached homes in our surrounding neighborhood start at $700K! That's nearly $9,000 just in annual taxes. It's an insane market right now. I watched my brother and best friend get killed in the early 90's during the last down cycle. You will have plenty of properties to choose from in a short time. Just keep your fiancee happy in the meantime. Jewerly and weekend vacations might keep her calm till the proper investment decision can be made.
""how much does Trump REALLY know about RE? he went bankrupt last time.""
the only thing the guy knows is HYPE, esp. about himself. was on h/stern basically drueling overhimself...when he goes bankrupt this time around that will be the BOTTOM.
Trump's casino operations are already in bankruptcy.
My wife and I combine for $130K per year and have a bunch of "equity" in a townhome but just cant justify the heavy overhead and taxes associated with an "upgrade" purchase. When middle class professionals cannot afford a house payment for an average home...something is out of whack!"
This shows that rapid appreciation in housing prices hurts many, many people. It only helps you if you're planning on selling and moving to a lower-cost area. Otherwise, it's just the speculators, the realtors, and the lenders who are profiting from this runaway inflation.
...And oh yeah, it helps your kids when you croak and leave the house to them.
bob r,
that's right... excellent points... also... that's why i always have a big laugh when the mainstream media tries to do a story on the housing bubble... they always interview realtors and lenders... it's idiotic...
When the gov. removed inflation indexing from the tax code you knew inflation was going up. Now the same gov. is removing bankruptcy protection so you can count on a bust.
We bought a house in SJ in 1997, sold in 2002, waited for the bubble to pop. We were a few years too early. The bubble just kept getting bigger. Knowing that, I couldn't buy a house at the insane prices. Meanwhile, our friends were buying, and buying, and buying, and all of them had houses. And my wife wanted a house too. This led to a lot of arguments. Rising housing prices is a curse to most people, just as inflation is a curse to savers. We finally compromised and moved to Texas, bought a house, and enjoy the good life. Austin turned out to be much better than we thought.
This comment goes a long way in explaining why so many people are reluctant to rent. There is such a lack of security. Moving is a bitch and having to do it twice in two years is a miserable experience.
The flip side of the lack of security in a rental would be the lack of mobility with a bought house. As bad as it is to have to move due to getting kicked out of a rental, it must be at least as bad to have to move out of a house you own/mortgage due to job loss/relocation and have to deal with selling a house on top of that.
Consumer tastes and values do change. People used to think "refurbished" consumer goods had the cooties or something, so you used to be able to get them for huge discounts off of new. Eventually people started figuring out that "refurbs" really were a good deal and now they only have to discount them a modest amount, sometimes only 10%.
Maybe attitude about rentals could change too, as people reassess the benefits. Maybe instead of most people willing to pay a premium to buy vs rent in exchange for a feeling of security, more people will prefer to pay a premium to rent vs buy, in exchange for a more maintenance-free, location-independent lifestyle. Even more so in an economy where the future of any particular job is so uncertain.
OK, not me, to be honest, I tried to buy last year, got priced out (unless I took one of them crazytown i/o-neg-am-ARM type mortgages) and am still a renter and I would still love nothing more than my own house. But for me it's mainly because I have a lot of pets and it would probably be hell trying to find a place to rent that would allow them. If it were just me and my human companion, I could see being content to rent for a long time, assuming it was cost effective compared to buying.
For those concerned about the insecure feeling of renting, maybe it is possible, in this soft rental market, to negotiate a lease that is particularly favorable to the tenant, such as a 1 year lease with a 1 year extension at the tenant's option, or if month-to-month, a guarantee of 90 days notice if they want you to quit, things like that.
After the oil bust in houston in the early 80's you could buy condos for $10-20K...the rent would have PAID OF THE CONDO IN FULL IN 2 YEARS..
That is what call a good old cleansing for the financial system.
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