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Buffett Says U.S. Housing Woes to End in ‘Year or So’
(Bloomberg) — Billionaire Warren Buffett said the U.S. will recover from the residential real estate slump by about 2011 as demand for homes catches up with the supply that accumulated during the bubble.
“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote today in his annual letter to the shareholders of his Berkshire Hathaway Inc. “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.”
The worst housing decline since the Great Depression, ignited by mortgages to buyers who couldn’t repay, has drained profits from the nation’s largest financial firms. Record foreclosures last year flooded a U.S. real estate market already glutted with unsold property, causing new-home construction to fall to the lowest in at least five decades, according to the U.S. Census Bureau.
“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”
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