In a recent letter to shareholders, billionaire investor Warren Buffett said American society should encourage the purchase of affordable homes and move away from the very American ambition to own a dream house. It may sound like an oxymoron, but the idea has merit and may be just what the housing market needs to rebound.
Buffett didn’t get to be the third-richest man in the United States by making bad investment decisions. So when he talks about how to make good real estate investments, people who want to own a home tend to listen.
Buffett says it makes sense for people to buy homes in today’s market, particularly because of the low interest rates and reduced prices. But Americans need to be careful not to bite off more than they can chew just to get that perfect dream home. He speaks to both house hunters and mortgage lenders because responsible spending lies in both parties’ hands. While buyers need to adhere to realistic budgets, lenders need to facilitate only those transactions that are fiscally sustainable for their borrowers.
Despite his advice to sidestep the dream home, Buffett still romanticizes the dream of owning a home. “For the $31,500 I paid for our house [in 1958], my family and I gained 52 years of terrific memories with more to come,” he said of his Omaha residence, which Buffett purchased when he was 29 years-old.
It may take some time for our country’s “social goal” to shift from putting families in the home of their dreams to putting them in a house within their means, but the current marketplace presents a great opportunity to find both amazing properties and affordable price tags. See Chicago Condos now!
Most people want the golden ring, so moving them towards a realistic yet within means goal won’t be easy. People thinking with foreclosure that the next million dollar home is theirs for 200k is not helping either.