Warren Buffett does not make random moves. He does not chase trends. He does not panic. When he shifts his investments, it means something. And right now, that “something” looks like a major red flag for the U.S. housing market.
Buffett’s Berkshire Hathaway is reportedly in talks to offload HomeServices of America, the second-largest residential real estate brokerage in the country.
This is not just another business deal. Buffett is a long-term investor. He held onto real estate brokerage companies through recessions, housing booms, and market crashes. If he is walking away now, it is because he does not like what he sees coming next.
Implications for Homebuyers and Investors
The housing market is not in free fall, but it is stuck in a dangerous spot. Home prices remain stubbornly high, even though demand has cooled.
Mortgage rates just climbed back up to 6.65%, making affordability worse at a time when it is already near historic lows. More homes are hitting the market than last year, but inventory levels are still about 20-30% lower than normal, according to the National Association of Realtors.
Sellers are reluctant to list their homes because many are locked into ultra-low mortgage rates from 2020 and 2021.
Buyers, on the other hand, are struggling to afford the homes that are available.
Take Denver, one of the most competitive housing markets in the country. The median home price there sits at $550,000, and buying even a starter home now requires an annual salary of around $127,000. The national average homebuyer earns around $77,000 per year.
That gap explains why so many people who planned to buy have been forced to stay in the rental market longer than expected.
And that is exactly why rents are surging too. Some of the most competitive rental markets in early 2025 are in places you would not expect. Chicago’s suburbs, Lansing-Ann Arbor, Grand Rapids, Cincinnati, and Milwaukee are seeing a wave of demand, as buyers get priced out of homeownership and settle for renting instead.
Buffett’s decision to retreat from the real estate brokerage business is not necessarily a prediction of a housing crash, but it does suggest he sees limited upside in the sector. He does not believe home prices are going to keep rising significantly. He does not think the housing market is about to boom. If he did, he would be doubling down, not heading for the exits.
The ripple effects of a struggling housing market go far beyond just home sales. When people aren’t buying homes, they aren’t spending on renovations, furniture, moving services, or other home-related purchases. This affects multiple sectors of the economy.
If home prices stay high and mortgage rates remain at current levels, fewer buyers will enter the market, and that will eventually hit everything from construction jobs to retail sales.
A Cautionary Signal for the U.S. Housing Market
For anyone thinking about buying, Buffett’s move should serve as a wake-up call. Housing affordability is at one of its worst points in history. The Federal Reserve holds the key to what happens next.
If interest rates start to come down, housing might see some relief. If not, affordability will continue to deteriorate, and the market will stay frozen.
Buffett does not time the market perfectly, but he has a better track record than almost anyone else. When he decides a sector is no longer worth investing in, people should take notice. Right now, that sector is real estate.
