Warren Buffett On The Real Estate Market

Warren Buffett is, as most people around the world assume, the best investor on the planet. Although the performance of his investment company, Berkshire Hathaway, has been below par over the last few years, the man has earned his reputation over a very long career.

In an interview with CNBC’s Becky Quick, the Oracle of Omaha showed a side of him that many have never seen before. It appeared that he had a clear vision on the US real estate market, namely. Buffett underlined that the situation is not very encouraging, however.

In his opinion, the US real estate market is not as strong as it should be by now. Of course, it is much stronger than it was a few years ago when everything was in shambles, but the recovery is taking a lot longer than everyone – including Buffett – expected.

The Real Estate Market Has Enough Problems

Should we be worried about the influence of the US real estate market on the stock market? The recovery on the market was indeed not carried by traditional buyers; families that buy a house to live in it. Many houses were purchased as investment properties.

There are big institutional players on the market that are buying houses in bulk to rent them out. Because many Americans cannot afford to buy a house anymore it is possible to charge more for rent. Good business for investors, but not for the average Joe.

Buffett is mostly worried about the low number of transactions, in comparison to the historical average. If institutional investors are not taken into account, the situation looks dramatic. A fundamental recovery of the sector cannot happen this way, according to Buffett.

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