Warren Buffett: Housing Market Rebound is happening
According to a recent Bloomberg report, billionaire Warren Buffett said that a housing market rebound is happening and should be corrected towards the end of 2010: "Within a year or so, residential housing problems should largely be behind us."
Online, March 12, 2010 (Newswire.com) - That is a quote from Buffett's 2/27/2010 annual letter to his shareholders.
©Copyright 2010 Rand Soellner, www.HomeArchitects.com All Rights Reserved Worldwide.
Buffett said one of the reasons for the current housing slump was overbuilding. Buffett's company builds prefab homes and construction products. He knows the home construction industry. Insiders state that Buffett has positioned his company for the housing market rebound.
Observers could conclude that if a solid investor like Warren Buffett uses his own capital to be ready for the housing market rebound, that it must be not only be coming, but that it is happening. Now.
HOUSING MARKET REBOUND DUE TO EXISTING INVENTORY BEING CONSUMED.
Mr. Buffett said the DEMAND for new homes in the U.S. is 1.2 million a year. He said that SUPPLY was about 2 million homes a year being built just a few years ago. This means that America was making 800,000 more homes a year (66% more) than it needed. We are now eating this heap of food on our plates. Prices have fallen, but demand remains, so Buffet feels that during the next several months, we will see this glut of over stocked homes reconciled with demand. At that point, home design and construction will resume. This forms the basis of this housing market rebound.
HOUSING MARKET REBOUND AND YOUR COMMUNITY.
If you live in a small place where the annual home buying demand is around 403 homes a year, and you were subject to the same overbuilding rate, you had a construction rate 66% higher than demand, meaning that you are now working your way through 403 x 0.66 = 266 too many homes built (per year) x 2 years = 532 More that need to sell before a normal construction rate can resume. And they are selling (data per www.CashiersNCHomes.com ).
HOUSING MARKET REBOUND & WHAT TO DO DURING THE PRESENT RECOVERY:
When you are lost in the woods, you may not be able to see the forest for the trees. In other words, we are IN THE RECOVERY NOW, but we can't see it, even though the overbuilt homes are being consumed, one by one, day by day, all around us. That means the day is coming in your community that normal home construction will resume.
SunTrust just reported that the Fed is discontinuing the purchase of mortgage backed securities effective March 31, 2010. SunTrust said this means that housing mortgage interest rates will soon be rising.
THINGS TO DO NOW AND THROUGH 2010 TO REDUCE YOUR NEW HOME COSTS DURING THE HOUSING MARKET REBOUND:
A. Anyone considering building a new home should obtain their financing as soon as possible, because rates will be rising soon. It seems that the lowest rates are likely to go is RIGHT NOW. ACT NOW to obtain financing for your new home.
B. If your new home is to be designed, ENGAGE YOUR HOME ARCHITECTS NOW.
COMMENT FROM WARREN BUFFETT FOR THOSE WHO PREFER TO "WAIT AND SEE" UNTIL THE ECONOMY IS FULLY RECOVERED BEFORE ACTING:
"Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance...We've put a lot of money to work during the chaos of the last two years." Buffett's been readying his company for the housing rebound.
In other words, if you wait until you are 100% in the middle of the corrected housing market, you will suffer higher prices for construction, because builders and architects will once again be busy meeting renewed normal demand, once the overstock is gone. You will also pay higher interest rates for your home construction loan, as rates are starting to go up.
Here is what a 3% rate increase in a mortgage note could do to a $750,000 loan over 30 years: an Additional $553,730 in payments! Waiting for "meaningless reassurance" can cost you plenty (6%/30 years fixed vrs. 9%).
ACT NOW. One of the most successful investors in the world is taking advantage of this housing market rebound. Why can't you? Especially if you have already decided to have a new home designed and built and you were just waiting for the "right time?" NOW IS THE RIGHT TIME. Find your custom home architects now.
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