Tuesday, March 2, 2010

A Word from Warren Buffett

Buffett predicts downturn will end in 2011

NEW YORK – March 2, 2010 – Billionaire investor Warren Buffett predicted that the real estate market downturn would end by 2011 as the housing inventory declines.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote in his annual letter to the shareholders of Berkshire Hathaway, where he is chairman and CEO. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means.”

He also pinpointed what he sees as the cause of the downturn. “People thought it was good news a few years back when housing starts – the supply side of the picture – were running about 2 million annually,” wrote Buffett, “But household formations – the demand side – only amounted to about 1.2 million.”

Source: Bloomberg News, Andrew Frye (03/01/2010)

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