The news spread like wildfire. No, it’s not another politician’s sex scandal or the latest (definitely not greatest) gas prices. It is the monumental statement made by Warren Buffett that he would buy up “a couple hundred thousand” single-family homes. The catch is that he would do that if it were something he could practically manage. He may not be able to practically manage it but individuals certainly can.
Think about that. For months, if not more than that, countless Realtors have been urging their clients and potential clients that now is the perfect time to buy. Now
that it comes from one of the biggest investors of our time, it brings
new light to the subject for many investors and has generated widespread
industry buzz from the moment the billionaire uttered those words.
In an interview where he discussed several topics, soon into the discussion with Becky Quick
of CNBC’s Squawk Box, he said that in addition to equities,
single-family homes are probably the most attractive investment there is
out there right now. With the
low rates that seem to be heading further down still, he suggests buying
at these low interest rates and then for homeowners to refinance if and
when the rates dip even more.
He
cited that the only reason he has not purchased as many homes as he
would have liked is because of the practicality of managing the
transactions and properties. Apartment
units might have been more manageable and in his words, he said he
would “load up on them” had that been the case. But for the everyday
investor it makes perfect sense to seize this opportunity and Warren
Buffett highlights this repeatedly in his most recent discussion on
CNBC.
Mr.
Buffett shared his perspective on the idea of buying homes at
distressed prices, fixing them up and renting them out as an ideal way
to get a solid return on investment. Referring
to the changing trends and attitudes within the housing market, he also
said this is the perfect way to “short the dollar” because with a
30-year fixed rate mortgage it can go two ways; either the interest rate
is too high down the line after which you can go and refinance or if
it’s too low the other guy’s stuck with it for 30 years. Could this be the return of the house-flipping craze that we saw boom in the mid 2000s?
Mr. Buffett’s statement brings new light to something that so many agents and mortgage consultants have been saying all along. Buy now. At
a time when stocks are just now rebounding after four years of inching
their way back up, he says that consumers should acquire 30-year fixed
rate mortgages and then refinance when rates go down further.
If
homeowners can hold on to their property for a long time after
purchasing it at the lowest rates the industry has to offer they are
sitting on the best investment possible of our time. Of
course equities are still very strong but they have come up quite a bit
and Warren Buffett says owning a home is a “leveraged way of owning a
very cheap asset”, making it quite possibly the most attractive
investment that you can make.
