Warren Buffett Betting on Housing

Warren Buffett is buying into real estate companies. While his comments stop short of saying when a recovery will occur he is fully confident it will.

The slump is “a necessary correction, but it is not a correction that’s over in a day or a week or a month,” Buffett said at Fortune magazine’s Most Powerful Women conference in Laguna Niguel, California. “It will be over, there’s no question about it.” Full article.

One of the Oracle of Omaha’s best know quote on his investing style.

“Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

To use another Buffett phrase there is definitely blood in the real estate streets right now. That’s when buying opportunities present themselves.

Thinking of buying a home?

To maximise your opportunities try to imagine what home buyers will want in the future.

Sometimes it may be better pick a house that needs development and that is priced into the sale price rather than buy a home that’s been fully renovated 5 or so years ago. Those 5 year old renovations are contributing to the purchase price but may be starting to drift out of fashion. In 10 years they may be considered very dated.

Gas prices keep rising? Short commutes may become more and more desirable.

Energy efficiency. McMansions out of favor?

Pick great neighborhoods that are established with good schools, and a vibrant community. This might be better than taking a flyer on an up and coming area, that may never fully come into prominence.