I don’t see a nationwide bubble in residential real estate now, at all. In most of the country, you are not paying bubble prices for residential real estate.”
With home prices expected to appreciate by over 5% this year, some are beginning to worry about at new housing bubble forming. Warren Buffet, chairman and CEO of Berkshire Hathaway, addressed this issue last month. Speaking thousands of shareholders at the Berkshire Hathaway annual meeting late April in Omaha, Buffett responded to questions about the state of the residential real estate market.
Buffett shared some encouraging news for those thinking about buying real estate in today’s market stating, “I don’t see a nationwide bubble in residential real estate now, at all. In most of the country, you are not paying bubble prices for residential real estate.
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.
If you are wondering 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. 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.
“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”
Anand Nallathambi, President & CEO of CoreLogic
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