What would Warren Buffett say about the housing market?
In 2010, Warren Buffett revealed his approach to evaluating market health. When speaking at a shareholders meeting, the Oracle of Omaha stated, “You want a bad number for a while. The only way you clean up an excess inventory is to have more demand than supply for a while.”
This has been taken to mean that markets need to struggle before they can recover. This 14-year old quote resonates with the current market. We’ve seen the housing market struggle with inventory for over a year, but we’re starting to see it turn around. The same can be said for mortgage rates.
Most market watchers are predicting a shift from a seller’s market to a buyer’s market along with improvement in mortgage rates. Watching market signals and moving when the shift starts may allow struggling homebuyers to land their dream home.
How did the Case-Shiller Home Price Indices perform?
The S&P CoreLogic Case-Shiller Home Price Indices from December 2023 were released yesterday. This report is a 20-city composite index that tracks home prices.
The most recent survey showed that home prices in December 2023 rose 5.5% from the previous year. This is great for folks who currently have homes, but indicates that affordability may continue to be an issue for prospective buyers.
CoreLogic Chief Economist Dr. Selma Happ wrote, “Buyers are anxiously waiting to jump in the market as soon as mortgage rates fall. That means that 2024 will show another year of home price highs.”
Where are the hottest housing markets for the wealthy?
According to a recent survey, nearly 25% of people with a high-net worth surveyed are planning on buying a home this year. In this case, High net worth individuals are defined as people worth at least $30 million.
But where would they buy? In the U.S., Miami, New York City, and Los Angeles were the top targets of the ultra wealthy. Globally, they would look to buy in Auckland, New Zealand, Mumbai, India, and Dubai, UAE are the top international destinations.
While all of these locales are among the most expensive in the world, Miami is one of the more affordable. $1 million can buy 646 sq. ft. in Miami, that’s nearly 500 more sq. ft. than Monaco. If you only have $1 million to spend in Monaco, you can only afford about 172 sq. ft. of space.
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