Paying down a home mortage vs alternate investments. Looking for advice

[ERICOPOLY]

In the event of an earthquakes, if you don't have earthquake insurance and your house is totalled there is a big chance IMO that FEMA will help pay for restoring your house.

 

Hahahahahahahahahahahahahah

 

 

Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito.

 

[CorpRaider]

Haha, they might give you a travel trailer to live in for a few years.

[ERICOPOLY]

Haha, they might give you a travel trailer to live in for a few years.

 

That wouldn't be allowed in Montecito. 

[bargainman]

after thinking about it for quite some time, I really have no idea why anybody especially anybody in United States, would ever want to fully pay off their mortgage, especially at the current rates that we have today. If you have a mortgage rate at 4 percent or less for 30 years, (remember that that is tax deductible as well) so you are in an insanely low borrowed rate! You have money that is liquid, generally a non-recourse load.. You can invest in other things like the stock market. Even if you don't find anything that is insanely cheap in the stock market, time and again it's been shown that over a 20 to 30 year periods, the stock market returns will be 6-7 percent after inflation is taken into account.  Real estate will not.  Plus over time the real value of the loan goes down with inflation..  Why would anyone ever want to pay off their mortgage?  It makes no logical/rational sense as far as I can tell..  As long as you're not over leveraged...

 

I agree with your logic but not where it is taking you.  There are several assumptions in your statement:

1) That the investment someone chooses will equal the stock returns.  They often dont.

2) That the person doesn't get spooked out of their investment at the wrong time.  They often do.

3) That they have a mortgage that cheap for 30 years.  Most don't and will face a readjustment at an inopportune time when interest rates are double digit.

4) That the person buys stocks throughout the cycle, not just at the top of the market. 

5) That the person buys a properly run ETF via dollar cost averaging and never gets spooked. 

The majority of people cannot adequately describe what a stock is, or what a stock market is, but they do understand their mortgage payments.

 

I am with Peter Lynch and others on this one.  Pay the mortgage first.  Unless you have the kind of investing ability of some of the board members here.  We just went through a period of huge numbers of people using their homes as cash machines and look where it ended up. 

 

I don't know where DCg stands in terms of tax rates, age, mortgage ability, or investing ability; the above likely does not apply to him.

 

Ok.  What I said was "why anybody", what I meant was "why anybody on this board, or "anybody with half a decent understanding of investing".  You points apply to the general population, but probably only to 10% of people on this board...  Especially with a 30 year fixed US non recourse mortgage still at almost record lows with the tax deduction kicker...

[CorpRaider]

Federal Supremacy?  I think they can trump a zoning ordinance or private restrictions, but it is FEMA, so who knows.  hah!

[SharperDingaan]

A few things being missed ….

 

You may be the greatest, & luckiest, stock picker in the world – but if you are not periodically taking cash off the table, you are just upping your ante; & eventually you will be wrong. Removing cash & putting it into a bond or blue-chip is also not really removing it; you simply moved to another table in the house with lower stakes.

 

For normal people; if that cash just pays off the mortgage &/or student loans – whatever happens, you cannot lose the roof over your head. Net worth did not change (portfolio + house + mortgage + student loans), you have truly removed risk, & you get a significant non-taxable benefit to boot.

 

SD

 

[SharperDingaan]

But what if the house is also an investment …. that $5M mansion in Palm Springs with 10% down.

 

Then treat it as an investment …

- Maximum optionality … non-recourse, minimum DP, revolving heloc loans.

- Cost minimization … real estate licence, move between houses; live in whatever you cannot rent.

- Revenue maximization … short term rentals, & many of them.

- Sell & move to equities when the sector over-values …. reverse, rinse & repeat.

- Multiple geographies …. domestic & global

 

Or use a proxy ….

- Fully paid of mansion in Palm Springs ….

- And margined investment in global developers/house builders or mortgage insurers.

 

Unless you are a real-estate agent, & your business is buying/selling listings … there is little reason to NOT have your mortgage paid off. And if you need proof … look at the millions around you (or your parents) who lost their houses because they speculated poorly.

 

Nothing wrong with greed; just make sure you use it intelligently.

 

SD

 

[Ham Hockers]

A few things being missed .

 

You may be the greatest, & luckiest, stock picker in the world but if you are not periodically taking cash off the table, you are just upping your ante; & eventually you will be wrong. Removing cash & putting it into a bond or blue-chip is also not really removing it; you simply moved to another table in the house with lower stakes.

 

For normal people; if that cash just pays off the mortgage &/or student loans whatever happens, you cannot lose the roof over your head. Net worth did not change (portfolio + house + mortgage + student loans), you have truly removed risk, & you get a significant non-taxable benefit to boot.

 

SD

 

 

Moving money out of the securities market and into your house isn't removing risk either. You just moved it into equity in your house!

 

There's really no option to be completely risk free with your money. Even if you leave it in cash you're taking the risk of losing purchasing power. Anything you do with your money has risk consequences.

[bizaro86]

I think the facts of the situation matter. I recently sold a couple of rental condos I bought out of foreclosure in 2009 in Canada. My IRR on them is in Packer/Ericopoly range, and I'm taking the money and putting it against my personal residence mortgage, where the before tax IRR will be <5%. Mortgage interest in Canada is not tax deductible on a personal residence, and my mortgage only has 2 years left until renewal, so those arguments don't apply here, but do in the US.

 

My wife will sleep better with less personal debt, and that's a good investment, imo. We also have undeployed cash in our brokerage accounts, so adding more to them without high conviction ideas doesn't seem likely to be a winning strategy. If it was still 2009 where I was buying bargains left right and center on margin my opinions would probably be different.

 

If you have tax deductible long term debt and high conviction ideas, I'd use the high conviction ideas. Otherwise, I'd pay down the debt.

[bizaro86]

 

Moving money out of the securities market and into your house isn't removing risk either. You just moved it into equity in your house!

 

There's really no option to be completely risk free with your money. Even if you leave it in cash you're taking the risk of losing purchasing power. Anything you do with your money has risk consequences.

 

It's more like adding a bond position. Assuming you have enough equity in your house that returning it to the bank isn't likely, or you have a recourse mortgage (in Canada) then any downside from owning the house you already have.

 

A house with a mortgage is more like owning real estate equity and owing debt. Since owing debt is equivalent to being short a bond, paying it off is equivalent to buying a bond.

 

 

[SharperDingaan]

As soon as you compared your house to an alternative investment, you made it an investment; your direct comparison is the Palm Springs real estate broker, you are doing it because your business is buying/selling listings, & if you aren't doing similar things to that real estate broker you aren't very good at it. Nothing wrong in that, but houses just happen to be the investment vehicle.

 

As soon as you see your house as a place to live, it is no longer an investment. You simply shrank your BS to permanently remove risk, you are not trying to buy/sell/rent, you enjoy the property for what it is (not as a bank account balance), & you earn your return in piece of mind.

 

You could also buy a new Porsche for piece of mind, but you probably paid more for it than you did for the house. And ... the guy who owns the house may well also get your Porsche as well - in a yard sale, after you blow up :D.

 

Compare apples to apples, & if the comparison is not flattering - fix it.

 

SD

 

 

 

 

[randomep]

In the event of an earthquakes, if you don't have earthquake insurance and your house is totalled there is a big chance IMO that FEMA will help pay for restoring your house.

 

Hahahahahahahahahahahahahah

 

 

Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito.

 

Well that was NOT a joke.

 

Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer.  That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer.

 

 

 

 

[ERICOPOLY]

In the event of an earthquakes, if you don't have earthquake insurance and your house is totalled there is a big chance IMO that FEMA will help pay for restoring your house.

 

Hahahahahahahahahahahahahah

 

 

Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito.

 

Well that was NOT a joke.

 

Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer.  That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer.

 

A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation.  No FEMA money.  It was the Loma Prieta earthquake.

[original mungerville]

I wouldn't count on a bailout for an earthquake and so I buy separate earthquake insurance on my house as well.

 

On the main question, I would say if its a 30 year fixed mortgage that is tax deductible, I would borrow the money and look to offset part of the interest with some very very low risk investment while I sit and wait for some really good opportunities to come along over time. They surely will to someone who is an active investor - the next 4 years in the stock market won't be anything like the last 4 years so there will be a big head wind to making progress - at least in real terms.

 

We Canadians can generally only get 5-year fixeds (which in my mind is basically a floating but more costly so people get them and tend to get screwed versus just getting a variable). We can now also get 10 year and 15s but they start getting quite expensive and the interest is not deductible unless its used for investing purposes - but even there there are a lot of caveats, tax rules federally and provincially on what you can deduct, etc ...So we don't have the benefit of a nice 30 year tax deductible opportunity, that you don't have to renegotiate for a long period, which is a pretty important opportunity.

 

[moody202]

after thinking about it for quite some time, I really have no idea why anybody especially anybody in United States, would ever want to fully pay off their mortgage, especially at the current rates that we have today. If you have a mortgage rate at 4 percent or less for 30 years, (remember that that is tax deductible as well) so you are in an insanely low borrowed rate! You have money that is liquid, generally a non-recourse load.. You can invest in other things like the stock market. Even if you don't find anything that is insanely cheap in the stock market, time and again it's been shown that over a 20 to 30 year periods, the stock market returns will be 6-7 percent after inflation is taken into account.  Real estate will not.  Plus over time the real value of the loan goes down with inflation..  Why would anyone ever want to pay off their mortgage?  It makes no logical/rational sense as far as I can tell..  As long as you're not over leveraged...

 

 

Wow..... You all are smart guys but talk about making a simple issue complicated. I am conceptually with bargainman. The way I look at it, money invested in my primary residence generates ( or saves ) about 4% ( lower if you consider tax deductions). I can take the same money and invest in private mortgages at 12% pre-tax or 7% + post tax. As long as risk is within limits, why will I not do this?

 

Someone mentioned tax liens at 18%. I have not used that but sounds a good option.

[randomep]

after thinking about it for quite some time, I really have no idea why anybody especially anybody in United States, would ever want to fully pay off their mortgage, especially at the current rates that we have today. If you have a mortgage rate at 4 percent or less for 30 years, (remember that that is tax deductible as well) so you are in an insanely low borrowed rate! You have money that is liquid, generally a non-recourse load.. You can invest in other things like the stock market. Even if you don't find anything that is insanely cheap in the stock market, time and again it's been shown that over a 20 to 30 year periods, the stock market returns will be 6-7 percent after inflation is taken into account.  Real estate will not.  Plus over time the real value of the loan goes down with inflation..  Why would anyone ever want to pay off their mortgage?  It makes no logical/rational sense as far as I can tell..  As long as you're not over leveraged...

 

 

Wow..... You all are smart guys but talk about making a simple issue complicated. I am conceptually with bargainman. The way I look at it, money invested in my primary residence generates ( or saves ) about 4% ( lower if you consider tax deductions). I can take the same money and invest in private mortgages at 12% pre-tax or 7% + post tax. As long as risk is within limits, why will I not do this?

 

Someone mentioned tax liens at 18%. I have not used that but sounds a good option.

 

You are talking about investing with returns of 12-18% pre tax? I think you have forgotten to mention a bit problem with that, called risk. The market giving 6-7% is not guaranteed. In fact, Shiller just recently said there is no proof that the next hundred years will return 6-7% .

 

If investing just boils down one number like that. Then it is simple, just be fully investing 100% of the time, In fact, lever it up to the hilt. There is no mathematical formula to describe investing. Like many have learned in the last recession that they must have some cash on hand. Same for mortgage and real estate and investment. Graham kept talking about a ratio of stocks to bonds, there is no mathematical proof for it.

 

I think you are oversimplifying.

 

 

 

 

[ERICOPOLY]

In fact, Shiller just recently said there is no proof that the next hundred years will return 6-7% .

 

We don't need Shiller to tell us that.  Of course there is no "proof" it will happen.

 

There is no proof that Shiller will live another week.  Or me.  Or you.

 

There is just, "life expectancy".

[randomep]

In fact, Shiller just recently said there is no proof that the next hundred years will return 6-7% .

 

We don't need Shiller to tell us that.  Of course there is no "proof" it will happen.

 

There is no proof that Shiller will live another week.  Or me.  Or you.

 

There is just, "life expectancy".

 

Are we playing with semantics? Ok there is no proof that the expected return over the next 100yrs is 6-7%? happy?

 

Now I do recall doing many derivations or proofs in class regard the expectation of random variable.

 

Ok did I confuse by misquoting him?: I looked at the video and now I hear him say, there is no THEORY that says the market will return as it did the last two hundred years, that is something thought provoking to me. And I am just point out this comment made by shiller.

 

http://www.cnbc.com/id/101353571

 

 

[randomep]

In the event of an earthquakes, if you don't have earthquake insurance and your house is totalled there is a big chance IMO that FEMA will help pay for restoring your house.

 

Hahahahahahahahahahahahahah

 

 

Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito.

 

Well that was NOT a joke.

 

Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer.  That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer.

 

A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation.  No FEMA money.  It was the Loma Prieta earthquake.

 

Well, we are going back and forth on this, I stated that $5B was spent by the taxpayer to repair the damage from the Loma Prieta quake (I NOW live where the quake hit so this is not just a intellectual exercise). So let's invert the statement, are you saying none of that $5B was used to repair a home, or just none was used to repair a $3Mil home?

 

 

[moody202]

 

You are talking about investing with returns of 12-18% pre tax? I think you have forgotten to mention a bit problem with that, called risk. The market giving 6-7% is not guaranteed. In fact, Shiller just recently said there is no proof that the next hundred years will return 6-7% .

 

If investing just boils down one number like that. Then it is simple, just be fully investing 100% of the time, In fact, lever it up to the hilt. There is no mathematical formula to describe investing. Like many have learned in the last recession that they must have some cash on hand. Same for mortgage and real estate and investment. Graham kept talking about a ratio of stocks to bonds, there is no mathematical proof for it.

 

I think you are oversimplifying.

 

You are right, risk has to be factored in. However, you may be making the assumption that risk is high, which may not be the case. Risk is an individual think that depends on number of personal factors so what may be low risk to you could be dangerously high risk to me. Obviously the least risky solution maybe to stuff it under the mattress, yet we all go and do things that carry higher risk. As some on this thread have pointed out, even putting money in your own house has risks to capital like earthquake ......

 

Here's another example. What if I take the money and invest in rental property that produces 9% pre-tax and potential upside? Will that be a risk worth taking?

[ERICOPOLY]

In the event of an earthquakes, if you don't have earthquake insurance and your house is totalled there is a big chance IMO that FEMA will help pay for restoring your house.

 

Hahahahahahahahahahahahahah

 

 

Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito.

 

Well that was NOT a joke.

 

Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer.  That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer.

 

A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation.  No FEMA money.  It was the Loma Prieta earthquake.

 

Well, we are going back and forth on this, I stated that $5B was spent by the taxpayer to repair the damage from the Loma Prieta quake (I NOW live where the quake hit so this is not just a intellectual exercise). So let's invert the statement, are you saying none of that $5B was used to repair a home, or just none was used to repair a $3Mil home?

 

Here are some facts regarding the financial assistance from the state/federal government with regards to the 1989 Loma Prieta earthquake:

 

http://nisee.berkeley.edu/loma_prieta/comerio.html

 

Repair of Single-Family Houses

Individual homeowners with repairable damage found a variety of resources in federal and state housing recovery programs. The majority of the single-family housing reconstruction funding came through the SBA loan program. Other programs include:a $5,000 minimum home repair (MHR) grant from FEMA for limited repairs to primary dwellings, and Individual Family Grants (IFGP) combining FEMA and state funds (maximum $21,500) for real and personal property replacement. Mortgage assistance and Additional Living Expenses (ALE) were also available if needed through a FEMA program. Finally, if a homeowner’s needs were not met through these programs, they could apply for a loan from the California Disaster Assistance Program (CALDAP), administered by the state office of Housing and Community Development (HCD). The CALDAP program was initially set up on two tracks:CALDAP-O for owner occupiers, and CALDAP-R for rental housing owners, and initially funded with $23 million in each track for loans and grants. Four years after the event, CALDAP-O has provided $43 million in loans to homeowners, but there are still some loans applications pending.

 

[Mikenhe]

Could you use the money and remortgage for less? then use your monthly savings to put into tax deferred savings such as a 401k - that way you can get the additional savings from the tax advantage there.

 

 

[Uccmal]

I don't know where DCg stands in terms of tax rates, age, mortgage ability, or investing ability; the above likely does not apply to him.

 

 

I'm 37 years old, have a 30-year-fixed mortage, & I think we're (my wife & I) taxed at either 25% or 28%. As far as investing ability, I've done well over the last 6 or so years (although I started with a relatively small amount of investable cash), but it's been a great run for the market. I'm not naive enough to think that I can guarantee I can continue to produce great returns every year going forward.

 

I think you sort of answered your original question.  As the market matures re-investing becomes more difficult. 

 

I have watched my stock portfolio drop by around 70% in Feb/March 2009.  Even since then I have taken hits of greater than 20% (the peril of options).  Each time I have kicked myself for not paying down real debt when things were up.  I guess it goes back to know thyself.  Since I know I will be upset for not paying off the debt the next time the market tanks, that is probably what I should do.

 

On the other hand there is alot of merit to keeping a tax deductible loan as cheap as that.  Our situations are somewhat different.  I am leaving the day job, and want to reduce regular outlays as low as possible.  Our mortgages can only be locked in for 5 years, and are not tax deductible, whereas a HELOC is tax deductible. 

[randomep]

 

You are talking about investing with returns of 12-18% pre tax? I think you have forgotten to mention a bit problem with that, called risk. The market giving 6-7% is not guaranteed. In fact, Shiller just recently said there is no proof that the next hundred years will return 6-7% .

 

If investing just boils down one number like that. Then it is simple, just be fully investing 100% of the time, In fact, lever it up to the hilt. There is no mathematical formula to describe investing. Like many have learned in the last recession that they must have some cash on hand. Same for mortgage and real estate and investment. Graham kept talking about a ratio of stocks to bonds, there is no mathematical proof for it.

 

I think you are oversimplifying.

 

You are right, risk has to be factored in. However, you may be making the assumption that risk is high, which may not be the case. Risk is an individual think that depends on number of personal factors so what may be low risk to you could be dangerously high risk to me. Obviously the least risky solution maybe to stuff it under the mattress, yet we all go and do things that carry higher risk. As some on this thread have pointed out, even putting money in your own house has risks to capital like earthquake ......

 

Here's another example. What if I take the money and invest in rental property that produces 9% pre-tax and potential upside? Will that be a risk worth taking?

 

 

Well, my only point is that when you talk about investment returns, that is an orthogonal issue to the problem of whether you pay down the mortgage. And returns a whole can of worms. In fact this whole forum is devoted to that. So using this thread to answer that isn't possible.

 

But if you talk about rental income and housing. I will tell you what I plan to do with my house(s) and why. I do not plan to ever rent for profit because:

 

1. income is taxable

2. I don't believe it can be 9% after factoring all costs

3. I believe as Shiller says, housing has traditionally grown at inflation rate, so my expected return on my house is inflation (despite the fact that my house has gone up 15% last year)

4. frictional cost of house sale is 6% fees

5. the work and stress makes renting different from being a true passive investor whose only tool is the computer

6. the single family home rental market is distorted by lots of unknowledgable people acting as landlords, so overall it is probably not a profitable industry

 

If I have more than one house, which is likely to happen in the future, I will only rent it out for a nominal fee to friends or relatives, so that it covers their utilities usage and minor upkeep.

 

Maybe you are right it is truly 9% return. But I know of people who have taken a year to evict someone. If you factor that in it is still expected to be 9%? ok.

 

I own a house as if it is gold, no returns, just keep up with inflation. The plus side to gold is that it is not as volatile, and the downside is the 6% transaction fee.

 

Also have you factored in the labour cost of yourself going there to fix the water heater or broken toilets?

 

cheers

[randomep]

In the event of an earthquakes, if you don't have earthquake insurance and your house is totalled there is a big chance IMO that FEMA will help pay for restoring your house.

 

Hahahahahahahahahahahahahah

 

 

Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito.

 

Well that was NOT a joke.

 

Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer.  That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer.

 

A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation.  No FEMA money.  It was the Loma Prieta earthquake.

 

Well, we are going back and forth on this, I stated that $5B was spent by the taxpayer to repair the damage from the Loma Prieta quake (I NOW live where the quake hit so this is not just a intellectual exercise). So let's invert the statement, are you saying none of that $5B was used to repair a home, or just none was used to repair a $3Mil home?

 

Here are some facts regarding the financial assistance from the state/federal government with regards to the 1989 Loma Prieta earthquake:

 

http://nisee.berkeley.edu/loma_prieta/comerio.html

 

Repair of Single-Family Houses

Individual homeowners with repairable damage found a variety of resources in federal and state housing recovery programs. The majority of the single-family housing reconstruction funding came through the SBA loan program. Other programs include:a $5,000 minimum home repair (MHR) grant from FEMA for limited repairs to primary dwellings, and Individual Family Grants (IFGP) combining FEMA and state funds (maximum $21,500) for real and personal property replacement. Mortgage assistance and Additional Living Expenses (ALE) were also available if needed through a FEMA program. Finally, if a homeowner’s needs were not met through these programs, they could apply for a loan from the California Disaster Assistance Program (CALDAP), administered by the state office of Housing and Community Development (HCD). The CALDAP program was initially set up on two tracks:CALDAP-O for owner occupiers, and CALDAP-R for rental housing owners, and initially funded with $23 million in each track for loans and grants. Four years after the event, CALDAP-O has provided $43 million in loans to homeowners, but there are still some loans applications pending.

 

 

Ericopoly: I don't know what is your point in quoting the article because the article says nothing about how much gov't money was paid out for home repairs. I don't know whether you agree with my statement that gov't dollars went to repair homes. But I do see one fact from the article: about 43000 owned homes were damaged of which 1/4 was destroyed. So if that is 1/2 the damage of the earthquake that would work out to $5B / 2 / 43000 = 58k per house. So the cost of repair is about 58k which sounds reasonable. And the government paid $5B so it would make sense that the government could pay $58k on average for every damaged house. I mean my numbers are very rough guessemite but my point now sounds reasonable.