Interesting strategic insight.-Stefan
Warren Buffett Just Made A Huge Bet On The US Housing Market
Getty Images/Gabe Palacio
Perhaps the most bullish indicator for U.S. housing is Warren Buffett.
The legendary investor has been buying up real-estate brokerages
around the country as he bets on a housing turnaround.
Now, he is partnering with Brookfield Asset Management, a
Canadian real-estate investor, to more than double the size of
his brokerage business.
Berkshire’s HomeServices of America Inc. unit will be the majority
owner of the venture to manage a U.S. residential real-estate affiliate
network, according to a statement on the new company’s website. The
firms plan to offer a new franchise brand, Berkshire Hathaway Home
Services, starting next year. Brookfield’s network has operated under
the Prudential Real Estate and Real Living Real Estate brands.
Berkshire’s managers have been positioning the firm to benefit as the
U.S. home market recovers from its worst slump in seven decades.
The Omaha, Nebraska-based company has bought a brickmaker,
won the loan portfolio of bankrupt mortgage lender
Residential Capital LLC at auction and built its HomeServices
unit by agreeing to acquire real-estate brokerages in states
including Oregon and Connecticut.
The press release says the brokerages that will make up the new
company did a combined $72 billion in sales in 2011. That’s more
than twice the $32 billion in sales that Berkshire did in 2011 without
the new brokerages.
The combined networks of more than 53,000 Prudential Real Estate
and Real Living Real Estate agents generated in excess of $72 billion
in residential real estate sales volume in 2011, and operate across more
than 1,700 U.S. locations.
“Berkshire Hathaway HomeServices is a new franchise brand built upon
the financial strength and leadership of Brookfield and HomeServices,”
said Warren Buffett, chairman and CEO of Berkshire Hathaway Inc.
“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.”
“The strength of the Berkshire Hathaway name, coupled with the
operational excellence of HomeServices and the franchising experience
of Brookfield, positions Berkshire Hathaway HomeServices® as a leading
real estate franchise in the U.S., building on our traditions of exceptional
client service and innovation. Brookfield is excited to be a partner in
creating a home for the best real estate brokers and agents in the country,”
said Bruce Flatt, Brookfield Asset Management CEO.
Buffett has been public about his bullish housing call for a while as he’s
built his residential real-estate brokerage business, but this is a big addition.