Following statements of confidence in the U.S. housing market, investor Warren Buffett is entering his holding company Berkshire Hathaway into a venture with Toronto-based private equity firm Brookfield Asset Management, Bloomberg News reported. The deal gives Berkshire Hathaway a controlling interest in the Prudential and Real Living brokerages, but the companies plan to launch their own realty brand, Berkshire Hathaway Home Services, by next year.
Berkshire Hathaway has been actively acquiring businesses related to the housing market, including a brick manufacturer, the loan portfolio of the bankrupt mortgage lender Residential Capital and real estate brokerages in Oregon and Connecticut. Buffett is counting on low interest rates, inventory and prices to spur a housing rebound, according to Bloomberg.
“We have significant inventory shortage across the country,” HomeServices CEO Ron Peltier told Bloomberg. “When you add the pieces up together with low interest rates, we see a housing market that will continue to improve.”
Brookfield manages $88 billion and 280 million square feet in property assets, according to its website. The firm also controls some 100,000 parcels of land for potential development. [Bloomberg] –Christopher Cameron