Berkshire housing executive laments dearth of first-time buyers
OMAHA, Nebraska (Reuters) - The chief executive of a real estate brokerage business owned by Warren Buffett's Berkshire Hathaway Inc said the U.S. housing market is more than halfway through its recovery from its recent depths, held back by a paucity of buyers able to obtain financing for their first homes.
Ron Peltier, chief executive of HomeServices of America Inc, said "our industry is probably in the sixth inning of a nine-inning recovery," with very strong activity in coastal markets such as Miami, Boston, New York and Silicon Valley, and in the market for higher-end homes across the country.
"The single most-challenged sector of the market is the first-time home buyer," he said. "Historically, they make up 40 percent of the existing home market. In the last 18 months to two years, it has been 27 to 28 percent. Twelve percent of the market has been missing. It's troubling."
Peltier spoke in an interview on the sidelines of Berkshire's annual shareholder meeting in Omaha, Nebraska.
HomeServices is the second-largest U.S. independent real estate brokerage, and part of a Berkshire unit that was on Wednesday rechristened Berkshire Hathaway Energy.
U.S. home resales in March fell to a 1-1/2 year low, dropping to an annual rate of 4.59 million units according to the National Association of Realtors.
Meanwhile, the Commerce Department said sales of new U.S. single-family homes fell to an eight-month low, at a seasonally adjusted annual rate of 384,000 units.
Bad weather was a factor in both declines. Peltier, though, said many prospective home buyers are facing hurdles that became more commonplace after the nation's housing slump.
"There are still very, very favorable (interest) rates," he said, but "credit standards and down payments are excruciatingly difficult. There's a will to buy, not a way to buy."
In the first quarter, Berkshire reported a $24 million pre-tax loss from "real estate brokerage and other" items within Berkshire Hathaway Energy, as spending rose on employment and marketing. Revenue rose 21 percent to $405 million.
Some of that extra marketing was to rebrand local brokerages as Berkshire Hathaway HomeServices. That puts the Berkshire name on "For Sale" signs, and Peltier said it is helping business.
"The brand is golden," he said. "We have received an incredible number of comments from every market we've launched in that the values associated with the Berkshire brand translate into values that consumers look for: integrity, honesty, trust, value."
That may also be resonating with photographers.
Peltier said that in Vail, Colorado, a winter resort that caters to many wealthy people and where Berkshire's local brokerage is using the Berkshire name, "they've never had so many people standing in front of the signs, taking pictures."
(Reporting by Luciana Lopez and Jonathan Stempel in Omaha, Nebraska; Editing by Nick Zieminski)