Does Buffett Buy Mean Good News for Real Estate Investing?

Warren Buffett’s company Berkshire Hathaway is acquiring Prudential’s real estate agent network from Brookfield Asset Management and launching a new brokerage brand for those agents. Berkshire and Brookfield will start Berkshire Hathaway Home Services and begin switching agents to the new firm in 2013.

According to the Real Estate Center at Texas A&M University, Warren Buffett’s purchase of Prudential shows he believes real estate is on the road to recovery. Real Estate Center Chief Economist and Director of Research Dr. Mark Dotzour says in his latest blog entry, “When Wall Street-caliber investors start to move into residential brokerage, it is a clear sign that a recovery in the business is in the making.”

He said, “Warren Buffett knows what he is doing when he makes a major commitment to invest in a segment of the global economy. He knows that you don’t make money by buying at the peak just because everyone else is doing the same thing.”

Dotzour says Buffett “looks for real value in companies and industries. He attempts to find industries that have gone through a troubled period and are preparing for a significant turnaround.” He points to Buffett’s successful investments in Goldman Sachs, Burlington Northern railroad, and Bank of America. “Clearly, Buffett sees the brokerage industry in the early stages of recovery, and he wants to participate in the event.”

Buffett said he’s happy to lend Berkshire’s name and financial strength to the new company. “I am confident that these partners will deliver value to the residential real estate industry, and I am pleased to have Berkshire Hathaway be a part of the new brand.” Berkshire owns roughly 80 subsidiaries and also has major investments in such companies as Coca-Cola, IBM, and Wells Fargo.

Dotzour says he believes this year will be remembered as the turnaround year for the U.S. housing market, especially since now “Warren Buffett has voted with dollars that the brokerage industry is going to be a source of growth in coming years.”

Are you interested in real estate investment properties on Lake Austin or perhaps downtown? The Austin, Texas real estate market has been a leader in a sagging global economy. Contact the experienced agents at Regent Property Group to learn more about potential real estate investment opportunities in the Austin market.