Warren Buffett: Housing Market/CNN

On Friday, the Census Bureau reported
that home builders are on pace to add
just under 700,000 housing units a year.
Buffett says in normal times we need
about 1 million or more homes to keep
up with household formation. Housing
economists have been talking for a
while about how rising household
formation and the relatively slow pace
of construction of new homes could lead
to a recovery. "The prospects for household
formation are stronger than people think,"
says housing economist Thomas A. Lawler.

The question is when the number of buyers
will catch up with the supply of houses
already on the market, many of which are
sitting vacant because of foreclosures.

Buffett seems to think that the oversupply
will be exhausted soon. When that happens,
Buffett believes we could see a rebound in
the economy as well. In fact, Buffett says
the weak housing market is a major reason
the economy has created so few new jobs since
the end of the recession.

As a result, many have said that Washington
and the Federal Reserve should do more to try
to boost the housing market. Buffett disagrees.
He says new stimulus measure probably won't work,
and anyway aren't needed. "Fortunately,
demographics and our market system will restore
the needed balance [in the housing market] -
probably before long," writes Buffett.

For more info:
http://finance.fortune.cnn.com/2012/02/25/buffett-on-housing/