Home Building in this Economy: Start Now

Home Building in this Economy: Start Now

Regarding Home Building and My Own House: When?

Home building in America is presently at a virtual standstill.  What’s going to happen?  Most people are adopting a “wait and see” attitude.  Unfortunately for them, and the country at large, this only prolongs the problem and penalizes them as the home building market begins its recovery.  Read on and find out what a genius home building billionaire is doing about this.

We have posted several articles and press releases about Warren Buffett’s now famous 2/27/2010 annual letter to his shareholders, in which he said:  “Within a year or so, residential housing problems should largely be behind us.”  We believe him.  This is a savvy billionaire who takes his investments seriously.  For Buffett’s home building construction company, a $187 million dollar a year cash cow, he is GEARING UP, not down.  Why would he do this?  Because he knows something.

What Does Buffett Know about Home Building in this Economy?

He has been plowing big cash into his home building construction businesses, getting ready for the housing market recovery.  Here is his perspective: He said that the U.S. has a demand of 1.2 million new houses a year.  Unfortunately, in the last several years, people looking to cash-in on investment residences built 2 million houses a year.  So what?  Well, this created an excess of of 800,000 houses a year during this over-building period.  As we live in a free country, nothing could stop builders and exuberant investors from doing this.  That is unfortunate.

The Federal Government should have red warning lights that go on all over the country in local building departments that say: “Warning: you are building too many houses in excess of demand.”  We have no such warning system, other than the experienced observations of housing market savants like Warren Buffett.  Hopefully the government will understand the price our country has paid for not having such a warning system and will do something about it, so that we can all proceed with valuable historic information in hand that allows us all to make more intelligent decisions of when to build a house and under what circumstances.

For strictly investment purposes, you don’t build a new house when demand is lower than supply.  You do build a new residence when supply has just about stopped, but demand continues.  That would be right about now.  But what about all those other houses out there, you may ask?  Well, by the time you have your new residence actually built, the existing supply of them will likely be just about gone.  That places you precisely where you want to be.  And you will have the good company of Mr. Warren Buffett, as his home building company posts yet another banner year of profits.  You will have built your new house for pennies on the dollar and be smiling out your windows at the view, because you will have greater equity in your residence.  Do build this house about which you are thinking for the best reason possible: as shelter for you and your family, in which you intend to live.

What gives Mr. Buffett the idea that the current crisis is in the process of recovering and indeed will soon correct to the point during this year and we may well be back to business as usually in a few short months and weeks?  Mr. Buffett has looked at the over-supply of houses and has shaken his head.  He also has noted that America STILL HAS THE 1.2 MILLION NEW HOUSES A YEAR DEMAND, and he doesn’t see anything changing that.  We have presently seen home building pretty much come to a standstill during this current situation.  That is the doldrums of our present economic situation.  So what is the bright light and the saving grace in Buffett’s crystal ball that allows him to see what has convinced him to shovel cash into his own housing construction businesses, in preparation for the coming recovery?  And he has been doing this for the last couple of years.  He knows something.

Simple.  Mr. Buffett sees that 1.2 million new houses a year demand munching its way through the current home building over-supply.  And now that home building has all but entirely stopped, there will be a day when all of a sudden, the “food on America’s plate” in the form of too many residences will have been consumed by that ever-present demand, eating some of it day by day, in towns all across the country.  Because houses are quietly selling, all over the place, bit by bit.

Now then, what happens when that bright day arrives?  The housing supply will be gone.  What happens then?  Simple again: new home building will resume.  Mr. Buffett’s research leads him to believe that the intersection of the current over-supply and the continuing housing market demand will be occurring NOW THROUGH THE END OF THIS YEAR and into the first part of next year.  “Within a year or so, residential housing problems should largely be behind us.”  We have repeated Buffett’s 2/27/2010 quote, because it is so important.

So What Will You Do about Your Personal Home Building Needs?

Kind of important.  Will you wait to be led like lemmings over a financial cliff, to fall into the abyss of higher prices, which are sure to resume for home building, as other construction material providers and builders recognize that they are once again in demand to build new houses?  Don’t make the mistakes that millions are in the process of making through their inaction.


Your architect will love you, your residential builder will love you, your material providers will love you, your country will love you and most of all: your bank account will love you.  Why?  Because if you start your home building project now, rather than waiting for demand to be fully restored (when you will be paying higher prices for everything), you will save a huge amount of money.  We have seen some types of houses in our own resort area being built for discounts of up to $100/sf.  Your mortgage interest rates will also be less, so take advantage of that as well.  Now.

Let’s put things into perspective so that you clearly understand just how good the getting is right now to have your house designed and built.  We have seen houses that would have cost perhaps $350 per square foot being built for $250/sf.  And something we never we thought we would see around here (this is an upscale resort region in the mountains): homes that might have cost $250 per square foot to build several years ago, going for as low as $150 per square foot to build today.  We thought those days were long gone, back in the 1960s and 70s.  And this will not last long.  So get them while the getting is good.

Contact for Home Building and Design:

Rand Soellner Architect   www.HomeArchitects.com 1. 269. 9046