Warren Buffett: There is No Housing Bubble

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Real Estate Agent with Keller Williams Greater Omaha 20041001

Warren Buffett: There is No Housing Bubble

 

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With home prices expected to appreciate by over 5% this year, some are beginning to worry about a new housing bubble forming. Warren Buffet addressed this issue last week in an article by Fortune Magazine. He simply explained:

“I don’t see a nationwide bubble in real estate right now at all.”

Later, when questioned whether real estate and/or mortgaging could present the same challenges for the economy as they did in 2008, Buffet said:

“I don’t think we will have a repeat of that.”

What factors are driving home prices up?

It is easily explained by the theory of supply and demand. There is a lack of housing inventory for sale while demand for that inventory is very strong. According to a recent survey of agents by the National Association of Realtors (NAR), buyer traffic was seen as either “strong” or “very strong” in 44 of the 50 states (the exceptions being: Alaska, Wyoming, North Dakota, West Virginia, Connecticut and Delaware).

Also, in NAR’s latest Pending Home Sales Report, it was revealed that the index was the highest it has been in a year.

What does the future bring?

As prices rise, more families will have increased equity in their homes which will enable them to put their home on the market. As more listings come to market, price increases should slow to more normal levels.

Anand Nallathambi, President & CEO of CoreLogic, recently addressed the issue:

“Home price gains have clearly been a driving force in building positive equity for homeowners. Longer term, we anticipate a better balance of supply and demand in many markets which will help sustain healthy & affordable home values into the future.”

 

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Rainmaker
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Sam Shueh
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Affordability is the key that negates higher home prices. There will be a point of flammability when fire starts.

In Silicon Valley, for example, Apple has laid off over 100 contractor recruiters putting a brake on hiring... Over expanding, use VC money to run a business year after year w/o turning a profit will ultimately cool the housing demand as people are getting laid off and cooling off starts. Twitter and other social media companies have not yet make a penny for their investors serves a precursor to another dot com slow down.

May 05, 2016 12:11 AM #1
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Rainmaker
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The Trumm Team Omaha Homes for Sale, Real Estate

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