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[1](MCT)—The U.S. housing market disappointed
Warren Buffett last year, but he hasn’t
given up hope. Buffett said in his annual
shareholder letter, posted this weekend,
that he was “dead wrong” when he predicted
last year that the rebound in U.S. home prices
would begin within a year.

This year, though, he’s betting again that the
housing market will recover, and for an interesting
reason: hormones. As Buffett explains it,
the housing market is currently depressed because
young Americans have stayed at home rather than
going out and setting up their own households.

“People may postpone hitching up during uncertain
times, but eventually hormones take over,” Buffett
wrote in the letter to shareholders in his
investment company Berkshire Hathaway. “And while
‘doubling-up’ may be the initial reaction of some
during a recession, living with in-laws can quickly
lose its allure.”

That is not the entirety of his argument. He also
says that home builders are not creating enough new
supply. As a result, the excess inventory that
built up after the financial crisis is slowly
disappearing, paving the way for new demand.

During an appearance on CNBC on Monday morning,
Buffett said he would buy up millions of U.S.
homes if it were possible.

Data out Monday seemed to support Buffett’s
contention. The National Association of REALTORS®
announced that the number of people buying
used homes in January rose to a 21-month high.
As usual, the annual letter was an opportunity
for Buffett to provide a candid assessment of
Berkshire Hathaway’s wins and losses, most of
which were in the volatile energy sector.
He said his entire $2 billion investment in
a Texas utility company may be wiped out unless
natural gas prices rise substantially.

“In tennis parlance, this was a major unforced
error by your chairman,” he wrote.
Buffett also used the letter to reveal that he
has chosen a CEO to succeed him at Berkshire
Hathaway—he just refused to provide the
identity of that person.

©2012 the Los Angeles Times
Distributed by MCT Information Services [2]
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Warren Buffett Is Betting on Housing
Posted By susanne On March 3, 2012 @
12:01 am In Business Development,Business
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