Bill Morris: Warren Buffet says ...

Warren Buffet says ...

Obviously, the current housing downturn is still unpredictable, and subject to many influences in the larger national and world economies, but Warren Buffet has made a lot of money by being right in his forecasts more often than he has been wrong.  Bloomberg News reported yesterday on his recent report to Berkshire Hathaway shareholders:

Buffett Says U.S. Housing Will Recover by Next Year

"Within a year or so, residential housing problems should largely be behind us," Buffett wrote Feb. 27 in his annual letter to shareholders of his Berkshire Hathaway Inc. "Prices will remain far below ‘bubble' levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits."

"High-value houses and those in certain localities where overbuilding was particularly egregious" will take longer to recover, he wrote.

As I have written separately, we may see a second wave of foreclosure activity in 2010 as interest rates reset for Alt-A and Option ARM mortgage products.  If housing demand weakens with the end of the current tax incentive programs, and if interest rates for new mortgage loans begin to edge upward this Spring and Summer, the supply of homes in many markets will continue to exceed demand.  By next year, though, the true market correction should be able to take hold.

Bill F. Morris, ABR, CRS, CDPE, e-PRO, MBA
RE/MAX Capital City
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Comment balloon 9 commentsBill Morris • March 02 2010 04:27PM

Comments

I hope Warren Buffet is once again correct. We all need to hear some good news.

Posted by Margo Currie (Exit 1 Stop Realty) over 9 years ago

Here at EWM Realtors on Las Olas (Fort Lauderdale)--Buffet rules!

Posted by Amanda Wilson, Real Estate Advisor (EWM International Realtors, Inc.) over 9 years ago

I hope Warren is correct too! Out housing inventory is down about 25% from last year, so it would be a good time for a seller to put there home on the market!

Posted by Monique Combs, Royal Shell Real Estate - Monique Combs (Royal Shell Real Estate ) over 9 years ago

I've bookmarked this so I can check next year.

I don't believe his is right this time.

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 9 years ago

I see that you're from Austin, Texas, Bill.

Don't worry.  This is not a slam on people from the Lone Star State.

I live in the Detroit Area.  So I am speaking from an outsider's perspective.

I've heard from more than one source that Austin is one of the emerging markets.  I don't know whether Mr. Buffett will be right about the entire housing market recovering.  However, I've heard from more than one source that your market is already beginning to recover.

The Detroit Area, on the other hand, I suspect might take years to recover.  I don't know whether it will ever rebound entirely, unless a lot of jobs replace the auto industry ones that are disappearing like radioactivity.

I think you are a lucky person to be able to take advantage of your area's opportunity.  From everything I understand, you are in position to make some serious cash--Buffett-style!

Posted by Chris Wechner (CW Health Inc) over 9 years ago

Mr. Buffet got back "in" a little early in late 2008 but his investment window is 10 years or longer so he should be fine.  As far as the recovery goes, he also said it might take a lot longer if the overall government spending doesn't stop NOW, enact across the board tax cuts, and reduce our debt with China.

Investors and businesses are sitting on the sideline, not spending. With so much uncertainty about the deficit, government regulation, taxes, and unemployment - and how it's affecting the business climate - they won't spend or invest.

No spending means no jobs.  No jobs means no real estate sales.

Contact every government representative you can find (local, state, national) and tell them to cut the budget, quit spending, and pay down the debt - or we won't see a housing recovery for a long time. 

Mr. Buffet will be right if we do our part!

Posted by R. Michael Brown, Communication that increases sales! (R. Michael Brown LLC Digital Marketing & Public Relations) over 9 years ago

I sure hope he is right. He usually is correct. As we all know BH has a very big dog in the fight with their Real Estate companies.

Posted by Tom Bailey (Margaret Rudd & Associates Inc.) over 9 years ago

Good morning Bill,

I'm book marking this post also as I want to see if his prediction is right next year at this time. Thanks for sharing this info!

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United RealtorsĀ® ~ 512.750.6899) over 9 years ago

"May you live in interesting times."

Dorie, it is always interesting to check back on market forecasts, especially in the coming months. This downturn feels more like 1990-91 than any "normal" market cycle, but time will tell.

Mike, you're right that a long holding period is a huge help.  In almost any market in the last 50 years or so, real estate gained value over any ten-year period.

Chris, the Detroit area fell farther and will take longer to recover than Central Texas.  The Austin area is actually gaining jobs (slowly) on a monthly basis, and we have had several announcements of companies choosing Austin for relocations in the coming months.  Some analysts think we may have been the first metro market to begin recovery.  In addition to the mortgage/housing crisis, Detroit obviously has a serious industrial transition to get through.  I hope to see your market moving again sooner rather than later.

Posted by Bill Morris, ABR, CRS, CDPE, ePRO, MBA (RE/MAX Capital City) over 9 years ago

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