{"id":370321,"date":"2010-02-27T09:08:00","date_gmt":"2010-02-27T14:08:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-5062992472820367970"},"modified":"2010-02-27T09:36:13","modified_gmt":"2010-02-27T14:36:13","slug":"forbes-buffett-on-the-housing-market","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/370321","title":{"rendered":"FORBES: Buffett On The Housing Market"},"content":{"rendered":"
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Paul Maidment <\/span><\/p>\n

Paul Maidment is Editor, Forbes Media<\/span> <\/span><\/div>\n

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In his annual letter to shareholders issued today<\/a>, Berkshire Hathaway chairman Warren Buffet gave this optimistic assessment of the U.S. housing market:<\/p>\n<\/p>\n

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The industry is in shambles for two reasons, the first of which must be lived with if the U.S. economy is to recover. This reason concerns U.S. housing starts (including apartment units). In 2009, starts were 554,000, by far the lowest number in the 50 years for which we have data. Paradoxically, this is good news.<\/p>\n

People thought it was good news a few years back when housing starts \u2013 the supply side of the picture \u2013 were running about two million annually. But household formations \u2013 the demand side \u2013 only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses.<\/p>\n

There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the \u201ccash-for-clunkers\u201d program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations.<\/p>\n

Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below \u201cbubble\u201d levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn\u2019t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.<\/p>\n<\/blockquote>\n

Buffett’s full letter is available here<\/a> (.pdf format).<\/p>\n

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