Buffett’s Real Estate Guy Says Housing Not Near Recovery

When a realtor badmouths the real estate market that’s news. When the realtor happens to be David Sokol who heads up Warren Buffett’s HomeServices of America, the second largest U.S. brokerage, title and mortgage lending firm it’s probably worth heeding.

Speaking at a conference today, Sokol had this to say:

“As we look at the economy, I have to be honest: we’re not seeing the green shoots,” Sokol said at the annual Ira Sohn Investment Research conference, which drew some 1,200 hedge fund executives to hear top investors share trade ideas.

“That’s not surprising to us. It took us 11 years to get into this mess where it is. We went into the emergency room last fall and by January the banking system and economy generally were in intensive care, and we’d expect it to stay there for some time,” Sokol said.

If anything, the glut of housing supply could grow larger as a new wave of foreclosures and pending sales breaks on the market.

“We think the official statistics of 10 to 12 months’ backlog is actually nearly twice that amount,” he told the gathering, which raises funds for the treatment and cure of pediatric cancer.

“There is an enormous shadow backlog of about-to-be foreclosed homes and of individuals who need to sell but have time, and there are already six (for sale) signs on their block,” he said.

Assuming the economy does not worsen, he said: “It will be be mid-2011 before we see a balancing of the existing home sales market.” He defined “balanced” as a six-month backlog.

You certainly can’t accuse him of trying to talk his book. Given the size of the enterprise he runs, it seems logical to assume that he has access to enough information to back up his statements. Additionally, in view of the fact that he’s part of the Buffett empire — a group not known for deluding themselves — his information should be granted some credibility.

more: here

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