HOUSING RECOVERY - the downturn will end in 2011

The market will recover - there is no doubt about that! It is simply a matter of when it will recover!

Billionaire investor Warren Buffett predicted that the real estate market downturn will 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

First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don't pay enough taxes to cover the credit. Other factors that should spur buyers include low rates. If the Federal Reserve stops buying securities backed by home loans at the end of March, 30-year rates will almost certainly rise to more than 6 percent. Finally, about 30 percent of markets are already experiencing price increases. Prices are falling in 12 percent of markets, says Fiserv, but that only helps if you want to live there. Source: Money Magazine