Warren Buffett: Single-Family Home Is A Good Investment | May 6, 2013 | Summary and Q&A

Summary

In this video, Warren Buffett discusses various topics including the mortgage interest deduction, the housing market, the Federal Reserve's monetary policy, and the succession plan for Berkshire Hathaway. He shares his views on these subjects and highlights the importance of long-term investing and having a strong succession plan.

Questions & Answers

Q: What is Warren Buffett's opinion on scaling back or eliminating the mortgage interest deduction?

Warren Buffett believes that scaling back or eliminating the mortgage interest deduction is unlikely to happen. He mentions that it would likely be a part of a larger tax package and not a standalone decision. Additionally, there is a significant constituency in support of maintaining this deduction. Buffett clarifies that he and his company, Berkshire Hathaway, are not lobbying for or against this deduction.

Q: Could eliminating the mortgage interest deduction potentially derail the housing recovery?

Warren Buffett states that the impact of eliminating the mortgage interest deduction on the housing recovery would largely depend on the overall tax package and its combination with other variables. For example, if lower tax rates were implemented alongside the elimination of the interest deduction, it would be hard to determine the exact effect on the housing market.

Q: Is investing in single-family dwellings still a good investment?

According to Warren Buffett, investing in single-family dwellings can still be an attractive investment, but only if the investor plans to hold onto the property for a long period of time. He suggests taking out a long-term mortgage to take advantage of the currently low interest rates. While the attractiveness may have slightly diminished compared to a year ago, it can still be a worthwhile investment for those committed to staying in a particular area.

Q: Can the Federal Reserve continue its large-scale asset purchase plan indefinitely?

Warren Buffett admits that he doesn't know how long the Federal Reserve can continue its asset purchase plan. He mentions that he is surprised at the duration of the plan so far and how it has not had any significant inflationary effects. However, he believes that expanding the Fed's balance sheet and reserves could potentially have inflationary consequences in the future.

Q: What is the number one issue that Berkshire Hathaway's board is discussing?

Succession planning is the number one issue that Berkshire Hathaway's board regularly discusses. Warren Buffett emphasizes the importance of having a well-defined succession plan and states that they have complete agreement on who would take over if he were to pass away. Although he doesn't disclose the name publicly, he mentions having multiple candidates capable of fulfilling the role.

Q: Is Ajit Jain, who runs Berkshire Hathaway's insurance business, the potential successor to Warren Buffett?

While Warren Buffett praises Ajit Jain's brilliance and character, he neither confirms nor denies whether Jain is the potential successor. He explains that the topic of succession is not something they discuss publicly. Buffett also uses the example of not knowing the next CEO of the companies in which he has invested heavily, highlighting his approach of not being involved in such decisions.

Takeaways

In this video, Warren Buffett shares his thoughts on various topics ranging from tax deductions to the housing market to the Federal Reserve's monetary policy. He emphasizes the importance of long-term investing and having a clear succession plan. Additionally, he provides insights into his investment strategy and decision-making process.