 Warren Buffett Warren Buffett said Saturday that he sees some signs of stabilization in housing markets: "In the last few months you've seen a real pickup in activity although at much lower prices," Buffett said, citing data from Berkshire's real estate brokerage business, which is one of the largest in the country. Buffett had warned about over-valued house prices before the market collapsed. Buffet is Chairman of Berkshire Hathaway, a huge investment firm that has allowed him to become, along with Bill and Gates, one of the great philanthropists of our time. Buffet spoke at the annual shareholder’s meeting of Berkshire Hathaway.
Here’s Buffet’s explanation for what’s happening in real estate markets (I’ve been making a similar point about Flagstaff real estate inventory levels in this blog for quite some time):
Roughly 1.3 million households are created each year in the United States, while about two million homes were being built a year during the mid-decade housing boom. Now housing starts are running at roughly 500,000 units a year, which means the excess inventory is being absorbed at a rate of about 700,000 to 800,000 units a year. It may take a couple of years to “eat up inventory,” in Buffet’s words, but when that is done we’ll have price stabilization and a demand for more new housing.
Nationally, home prices continue to fall; however, the rate of decline has slowed as the government tries to keep mortgage rates low to stimulate demand. In addition, low prices and the $8000 first-time home buyer tax credit are luring new buyers into the market. This has resulted in “something close to stability at these much-reduced prices in the medium to lower part of the market," Buffett said.
We are seeing a similar pattern in Flagstaff where homes in lower price ranges are moving quickly off the market. Prices have dropped enough in the Flagstaff market to bring many buyers into the market who found Flagstaff unaffordable in past years and now are able to buy a Flagstaff home. The Flagstaff homes market still is rated as one of the most unaffordable in the country, however. And there is a lot of inventory of homes in the upper prices to be "eaten up."
Working with a buyer this weekend, I found that for townhomes sized at under 1500 square feet, we’re in a sellers’ market again. Inventory of new units is about gone and these are the most affordable homes (apart of apartment-to-condo conversions). Within the Flagstaff real estate market, there are segments that are moving faster, and this is one of them. Now is the time to buy if you are a first-time homebuyer in Flagstaff. | 
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