Real estate slump will end next year: Buffett
UNITED STATES - America's most listened-to investor Warren Buffett said the United States residential real estate slump will end by next year, predicting that's how long it will take demand for homes to catch up with the supply.
"Within a year or so, residential housing problems should largely be behind us," the billioinaire wrote in his annual letter to the shareholders of his Berkshire Hathaway Inc. "Prices will remain far below 'bubble' levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits."
Mr Buffett's comments on housing came as January home sales recorded a surprise seven-month low despite US GDP growth, prompting foreboding about consumer spending ahead.
But there was great news for Berkshire shareholders. The company's fourth-quarter profit surged to US$3.06 billion ($4.3 billion) - or $1,969 a share - on the recovery of derivative bets tied to the world's stock markets, up from $117 million - $76 a share - in the same period a year earlier.
The profit hike, Berkshire's third straight, helps rebuild a cash pile that diminished since 2007 as Mr Buffett invested in financial firms bruised by the recession. Companies such as Goldman Sachs Group that turned to him for funding are paying Berkshire interest of 10 per cent or more.
"We've put a lot of money to work during the chaos of the last two years," Mr Buffett, 79, said, describing how he had used the last 18 months to go on a buying spree of assets. "It's been an ideal period for investors: A climate of fear is their best friend."
The tone of his letter, which accompanied the company's annual report, contrasted sharply with his report last year, in which he took himself to task for the company's decline in book value. Dubbed the Oracle of Omaha, Mr Buffet's annual letter is watched closely by investors for his assessment of his businesses and of the economy. Source Agencies
"Within a year or so, residential housing problems should largely be behind us," the billioinaire wrote in his annual letter to the shareholders of his Berkshire Hathaway Inc. "Prices will remain far below 'bubble' levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits."
Mr Buffett's comments on housing came as January home sales recorded a surprise seven-month low despite US GDP growth, prompting foreboding about consumer spending ahead.
But there was great news for Berkshire shareholders. The company's fourth-quarter profit surged to US$3.06 billion ($4.3 billion) - or $1,969 a share - on the recovery of derivative bets tied to the world's stock markets, up from $117 million - $76 a share - in the same period a year earlier.
The profit hike, Berkshire's third straight, helps rebuild a cash pile that diminished since 2007 as Mr Buffett invested in financial firms bruised by the recession. Companies such as Goldman Sachs Group that turned to him for funding are paying Berkshire interest of 10 per cent or more.
"We've put a lot of money to work during the chaos of the last two years," Mr Buffett, 79, said, describing how he had used the last 18 months to go on a buying spree of assets. "It's been an ideal period for investors: A climate of fear is their best friend."
The tone of his letter, which accompanied the company's annual report, contrasted sharply with his report last year, in which he took himself to task for the company's decline in book value. Dubbed the Oracle of Omaha, Mr Buffet's annual letter is watched closely by investors for his assessment of his businesses and of the economy. Source Agencies
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