Warren Buffett sees "significant downward adjustments" in housing market

Buffett: Real estate slowdown ahead
The Oracle of Omaha expects the housing market to see "significant downward adjustments," and warns on mortgage financing.
Money Magazine
By Jason Zweig, MONEY Magazine senior editor
May 8, 2006: 3:29 PM EDT

http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/index.htm?cnn=yes

On the real estate bubble

Buffett: "What we see in our residential brokerage business (HomeServices of America, the nation's second-largest realtor) is a slowdown everyplace, most dramatically in the formerly hottest markets. (Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.) The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We've had a real bubble to some degree. I would be surprised if there aren't some significant downward adjustments, especially in the higher end of the housing market."

On mortgage financing

Munger: "There is a lot of ridiculous credit being extended in the U.S. housing sector."

Buffett: "Dumb lending always has its consequences. It's like a disease that doesn't manifest itself for a few weeks, like an epidemic that doesn't show up until it's too late to stop it Any developer will build anything he can borrow against. If you look at the 10Ks that are getting filed (by banks) and compare them just against last year's 10Ks, and look at their balances of 'interest accrued but not paid,' you'll see some very interesting statistics (implying that many homeowners are no longer able to service their current debt)."

because he sees the value of the dollar tanking.

Kiss those overseas trips goodbye, unless you are a richie rich!

:)

Wall Street should hit 8500 by Friday.

To invest in the stock market, to keep the stock market propped up.

Yes, IdiotSon would do it to keep his house of cards from falling, and so he can still say things have never been better.

style home (the house is 50 years old) on a slab in a NJ shore community. Mind you the house is not on the water and sits in the middle of a block. He got.......$1,750,000.00 for it. The guy that bought the house only spent 10 minutes in it before signing a contract. Crazy or what?????

My friend's in construction. He was saying that in just the last couple of months, dry wall went from $9-something a foot to $19-something a foot. Anyone who bid a flat rate on a job at the beginning of the year or earlier is screwed. This is just because of the cost of gas getting passed on.