Buffett Says Housing Still in 'Depression'

Omaha, NE, Feb. 27, 2012 -- Berkshire Hathaway CEO Warren Buffett admitted that his predictions for a housing recovery were premature.

In his letter to investors Buffett said: "Last year, I told you that a housing recovery will probably begin within a year or so. I was dead wrong. We have five businesses whose results are significantly influenced by housing activity. The connection is direct at Clayton Homes, which is the largest producer of homes in the country, accounting for about 7% of those constructed during 2011. Additionally, Acme Brick, Shaw, Johns Manville (insulation) and MiTek (building products, primarily connector plates used in roofing) are all materially affected by construction activity.

"In aggregate, our five housing-related companies had pre-tax profits of $513 million in 2011. That’s similar to 2010 but down from $1.8 billion in 2006.

"This hugely important sector of the economy, which includes not only construction but everything that feeds off of it, remains in a depression of its own. I believe this is the major reason a recovery in employment has so severely lagged the steady and substantial comeback we have seen in almost all other sectors of our economy."

Related Topics:Shaw Industries Group, Inc.