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Buffett warns on real-estate bubble

June 24, 2005

Asked if he thought there are imbalances in the real-estate market and whether that could be dangerous, Buffett said "I think the answer is probably."

Lending practices, low interest rates and herd mentality are "coming together in the real-estate market in a way that would lead me to believe that -- certainly at the high end -- people who buy houses today may have some periods when they regret it," Buffett added.


Rating: 4.0/5 (1 vote)


Buffet_junior - 12 years ago    Report SPAM
Mr. Buffet has made a career out of going against the herd. As usual, he has chosen his words carefully in addressing the Real-Esate Bubble. I feel that the Real-Estate Market has carried the U.S. economy for the past 5 years.

While many major US companies are downsizing, outsourcing, rightsizing, etc....Many Americans have been forced to turn to the equity in their homes to sustain their lifestyles. This borrowed money has allowed Americans to buy cars, take trips, furnish their homes, send their kids to college, pay off debt, etc.

I don't think any of us have to be Warren Buffet to see where this train is headed....What's going to happen in the coming years is more unemployment, more outsourcing of good jobs, the creation of more fast-food and retail-type jobs, leading to increasing mortgage defaults and a flood of Homes on the Market.

All the while, the Federal Reserve will keep raising interest rates in an effort to sustain the diminishing value of the US dollar, while claiming to be trying to keep inflation at bay. This will create a huge opportunity for those individuals with enough cash and credit to capitalize on the Reality Check that's looming over the Real Estate Market.

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