What is the key to economic success for the U.S. during these turbulent times? According to Warren Buffett, the housing market holds all the answers. With unemployment plaguing the nation, and the debt crisis acting as a continued hinderance, many people are becoming skeptical of a fast economic recovery. But if we know what will fix the situation, then we will at least have a step in the right direction, right?
According to Forbes, “Warren Buffett says that the housing market remains the key to the economic recovery, and the key to getting the U.S.’s unemployment rate to fall significantly.”
“Unemployment will fall significantly, in my view, when we get back up to a million housing starts,” Buffett tells Charlie Rose.
Below shows the current housing starts and building permits in the U.S. from RTTNews.
However, the housing market will not start to make a real recovery until the excess inventory is removed.
“Buffett says he thinks the housing market could work off its excess inventory before mid-2013. The broad impact of the housing market, which impacts not only homebuilders but other industries (carpet companies are one example), is what’s needed to make a big dent in the unemployment rate, he says.”
The big question now is whether or not the economy will recover enough to help the housing market? If the economy and employment can recover then that will obviously help the housing market, but it will also help commercial real estate.
More jobs means companies are doing better and more likely to expand and invest their money in commercial properties.
Unfortunately, there is still the possibility for a double dip, something that all of us are wary of. If this were to occur then any recovery in these industries would most likely be stifled.
With the threat of European debt possibly effecting the United States, not to mention the effects of our own debt problems, the housing market could have a hard time working off its excess inventory by 2013.
And if the housing market is the answer to unemployment, commercial real estate could see some trouble in the future if housing doesn’t recover causing unemployment to stay stagnant, or even rise.
Of course, commercial real estate is still having a fairly strong showing and might not be as greatly affected by the housing market and employment recovery.
What do you think about the housing market and unemployment recovery? Is Mr. Warren Buffett correct in his predictions? What affect, if any, will this have on commercial real estate? (credit, d, lauder)