Warren ‘The Optimist’ Buffett makes Time Magazine’s cover with a bullish interview on the housing market and has an especially bright outlook on real estate investing but has he lost it?
In a recent CNBC interview Buffett also said “…if I had a way of buying a couple hundred thousand single-family homes and had a way of managing…I would load up on them and I would take mortgages out at very, very low rates”. Warren has long been highly respected for his investment advice and his wealth has grown even in the last year but his recent comments on taxes may have many wondering about his motivations and whether his judgement is still sound. So does his optimism make sense?
Of course Warren Buffett has made out very well from real estate investing through Clayton Homes and still calls his own home his best investment ever (besides buying wedding rings for him and his wife, but he has to say that right?). His current optimism on real estate investing and the economy comes from his experience with the many business and life cycles we are constantly going through. He may have been through a lot of them but does that mean they will really repeat themselves in the same way?
In his Time interview he argues that growing building starts will rocket employment and thus the rest of the economy, that younger generations won’t last long living at home and as the economy improves more relationships and marriages will generate more home buying.
While it’s always great to be ‘bullish’ and these trains of thought seem to make sense there may be two things to watch out for that really stick out. The first is that relationships have changed a lot and so has many individuals relationship with money. There could be quite a few more divorces once the economy improves and people can afford to separate and buy their own homes and marriage certainly doesn’t seem to have the attraction it used to. So from a real estate investing stand point could it be there will be a bigger surge in one parent families and a larger demand for smaller housing units?