Warren Buffett. Michael Holloway. Misery
Warren Buffett. Michael Holloway. Misery.
The Scene: Milwaukee. St. Rose of Lima Grade School grade school a 3-story brick structure constructed in 1915. A third floor walk-up classroom, comprised of five rows of evenly spaced desks, 5 seats to a row occupied (alphabetically) by Bicksadsky, Carney, Dardis, Petchel, Votis, Weber and one Holloway (me).
At a young age I had some issues with authority. Sister Michalene, a tough Sinsinawa Dominican nun (noted with affection), left no doubt about who was in charge – which was not necessarily who I thought was in charge. A clash was inevitable. What does this have to do with real estate? Read on.
In 8th grade, charged one day with some violation of church, state or classroom, I was sentenced to after school detention. My defense? “But Weber was doing the same thing.” I don’t remember the full text of the Baltimore catechism but I’ve never forgotten Sister Michalene’s retort, “Michael, misery loves company and you’ll have no company today.”
The Scene: Milwaukee. Today, a MacPro, IPhone and CNBC on my computer.
Billionaire investor Warren Buffett said Saturday (February 25) that he was “dead wrong” with a prediction that the U.S. housing market would begin to recover by now but remains optimistic about the U.S. economy. Here’s the misery part.
In late 2007 I wrote in my Homebuyer Associates newsletter that I thought the local housing market, the Milwaukee four-county area, would return to normal in 17 months or thereabouts. I did not believe our local market was hit as hard as the national market. I did not anticipate the domino effect in the national housing market and its effect on the Milwaukee area. I was “dead wrong” but now feel less badly because I have a companion in my “misery” – Mr. Buffett.
Buffett said housing “remains in a depression of its own” and went on to say that the housing market will come back because of some human factors that can’t be denied forever. As he noted in his annual 2012 letter to shareholders, “People may postpone hitching up during uncertain times but eventually hormones take over. While doubling up may be the initial reaction of some during a recession, living with the in-laws can quickly lose its allure.”
The Annual Report letter: http://www.berkshirehathaway.com/letters/2011ltr.pdf
Buffett noted on CNBC on Monday, February 27th that he’d buy up “a couple hundred thousand” single family homes if it were practical to do so. If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.
I think Buffett was making a very general point about housing. My guess is he would counsel to make sure a home purchase was affordable, being purchased to live in and not as an investment and that it was bought within the right rent/own ratio. If purchased as an investment vehicle – which I have done over the years – that principal, interest, taxes, insurance and maintenance are factored into the equation.
In the link below, if you set the cursor at 5:00 minutes and follow to the 7:00 minute mark you will hear what he has to say about real estate and home ownership.
http://www.cnbc.com/id/46538421/
When you or your friends or family have the comfort level to begin talking about purchasing a home, feel free to contact me and we will schedule a cup of coffee to discuss your housing wants, needs and goals. I clearly am no Warren Buffett but we do share our one little piece of misery and a belief in the long-term housing market and the benefits of home ownership.
Thanks for reading.
P.S. You can see homes on market by visiting my website. All the homes available online at the big boy and girl companies are available at www.homebuyerassociates.com for your perusal – located in the Quick Search Property link on the top right of the page.