Berkshire’s Holdings House Real Estate Recovery Clues
Investment and economic questions follow Warren Buffett wherever he goes. Appearing at a promotional event for his son and grandson’s book at the New York Public Library, the investor discussed the U.S. housing market. Bloomberg covered his remarks. “It’s coming back,” Buffett said, “Pricing is better in almost all markets by a reasonable percentage from a few years ago. Housing starts are up somewhat. They still are not where I would regard as an equilibrium point, where they match household formation.”
The housing market was slammed twice during the Great Recession. First, subprime loans and mortgage backed securities kicked off the declining economy. Then, even though the recession ended in 2009, bleak economic drove down the number of people establishing a home, meaning headship rates remained low.
The Millennial generation, young adults around 18 to 34, contributed to the lower rate of new households. Facing fewer job opportunities, a high percentage of them moved back in with their parents, delaying homeownership. Pew Research estimates that this number reached a record high in 2012, 21.6 million according to Pew’s data.