Buffett: Signs of housing stabilization are visible
You have to like it when Warren Buffett has something good to say about your industry. And when the industry he’s referring to is the housing industry? Well, that’s really good news.
In a story in the Wall Street Journal last weekend, financial celebrity Buffett, the chairman of Berkshire Hathaway, said that he sees some signs that the struggling housing market is finally begin to stabilize.
Buffett pointed to Berkshire’s own real estate brokerage business — one of the largest in the United States — as evidence. He said that in hard-hit California, medium- and lower-priced homes, those with price tags under $750,00, have been selling with greater frequency.
Of course, Buffett wasn’t all cheer. He did say that he hasn’t yet seen housing prices rise. Until that happens, a strong housing recovery won’t take place.
It’d be nice if Buffett was right. But let’s not get ahead of ourselves. The housing market will recover, eventually. The real question, though, is whether the housing industry — including homebuilders, real estate agents, mortgage loan officers and, of course, consumers — has learned any lessons from this devastating housing crash.
Buffett, quoted by the Wall Street Journal, said that about 1.3 million households are created each year in the United States. The problem is, during the housing boom, builders built about 2 million new homes every year.
You can see how that math doesn’t add up.
But what happens when the housing slump is over and home prices begin climbing again? Will homebuilders hold off on overbuilding new residences? Or will they repeat their mistakes and flood the market with too many new homes?
I don’t know the answer to that question. But I sure hope we don’t see a housing rerun.
