Investment mogul Warren Buffett issued a biennial letter to investors and offered a prediction on when the housing market will see a recovery. He predicts recovery will begin within a year. He explained that this recovery is dependent upon common sense underwriting related to what mortgage borrowers can really afford to buy.
“But a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender—often protected by a government guarantee—facilitates his fantasy,” warned Buffett. “Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”
Buffett has many real estate related interests under his Berkshire Hathaway umbrella, including numerous real estate companies he has purchased around the country, a manufactured home producer and a mortgage company.
As the housing market gradually moves toward a recovery, Buffett believes home ownership still makes sense for a large number of Americans, especially with the current lower prices and interest rates. He says any future housing policy should be molded from the many lessons learned during this economic downturn.