Posted by: Nick Will in General on Mar 01, 2010
Jonathan Stempel of Reuters wrote yesterday that Berkshire Hathaway's "oracle" Warren Buffett sees the housing crisis as mostly behind us, as do we at our firm. Writes Stempel:
[Buffett] said "residential housing problems should largely be behind us" within about a year as supply falls into line with demand, though "prices will remain far below 'bubble' levels."
This is the same observation we're hearing from non-celebrity analysts and industry colleagues on the ground. The crisis is largely behind us, but it still hurts. The key insight here is that we can and we do expect an upward steady trend moving forward.
The challenge for property investors (homestead or commercial) is every investor's conundrum -- whether or how to "time the market." Generally one can study the history of any market and see, in hindsight, that recoveries have a "window of opportunity" wherein an investor may not have exacted the bottom, but wherein an investor who bought into the window reaped the rewards of courage from calculated risk.
"Bubble Levels." Let's be clear: the idea that nobody is predicting a return to real estate prices (mostly in markets in other states such as CA, NV, AZ, FL, NY) of "bubble levels" is a very good thing. Wealth in this recovery will be made by those who understand how to capitalize in an environment of measured but steady gains -- not something we've seen in our boom-bust lives in quite some time.
And once again, it bears repeating about the Houston metro area and particularly the high-quality areas of the north side: prices are holding, supply is in check, and buyers are mostly solid. With this unique balance, it is not a bad time to sell. It is not a bad time to buy. And depending on the particulars, it can be an excellent time to do either. We certainly don't expect prices on good properties to go materially lower, and we see banks showing more willingness to price their REO inventory more realistically.
Make no mistake, things are complicated right now, but with the right advice and professional help, there's a lot of gains out there to be had.