Warren Buffett’s Berkshire Hathaway forecasts real estate shift | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Throughout the fall of 2025, the U.S. real estate and housing market continued to struggle, despite three Federal Reserve interest rate cuts, which led to a moderate decrease in mortgage rates.

After inflation surged to about 9% in 2022, the Federal Reserve responded with a series of sharp rate hikes aimed at cooling demand. By the end of 2024, price pressures had eased considerably, opening the door for a shift in policy.

Still, mortgage rates moved counter to expectations, drifting toward 7% rather than slipping below 6%, according to the Consumer Financial Protection Bureau (CFPB).

In 2025, the Federal Reserve implemented three consecutive 25‑basis‑point cuts — in September, October, and December — ultimately lowering the federal funds rate from 4.25%–4.50% to 3.50%–3.75%.

The series of reductions helped strengthen optimism that borrowing costs would continue to ease.

“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” noted the Federal Open Market Committee (FOMC) in a statement.

“The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”

As of Dec. 24, the 30-year fixed-rate mortgage averaged 6.18% and the 15-year fixed-rate mortgage averaged 5.50%, according to Freddie Mac.

Warren Buffett’s Berkshire Hathaway notes homebuyer optimism

As homes struggle to sell, builders and sellers appear to be trying to decrease supply in an effort to increase demand, which can be an impediment for people who want to buy a home.

“Longer time on the market has prompted many sellers to delist their properties, denying would-be buyers fresh options that might have drawn them back into the market,” reported Realtor.com on August 26.

But Berkshire Hathaway HomeServices detects positive news for homebuyers.

“On the bright side for homebuyers, the national median list price was $429,990, the same as the previous year in August,” Berkshire wrote. “Pending sales (contracts written) are at a multidecade-low pace. Homes are taking longer to sell for the 17th straight month. Housing costs are down in 31 out of the top 50 largest metros.”

“All of this points to buyer leverage improving.”

Berkshire Hathaway HomeServices sees blame aimed at zoning

“As the housing crisis continues, many are pointing the finger of blame at local zoning laws,” Berkshire wrote. “Zoning laws are supposed to be beneficial, but often they put money and profits into some hands while restricting opportunity for others.”

What real estate zoning laws should facilitiate

Home values and land development: Zoning is meant to ensure that housing and business districts complement one another, creating environments where people can live and work comfortably, according to Berkshire Hathaway HomeServices. Attractive neighborhoods are preserved, while visually disruptive or heavy‑industrial uses are pushed to less intrusive locations.
Harmony between residents and commerce: Communities function best when disruptive activities are kept away from sensitive areas — no late‑night venues beside classrooms, no low‑flying aircraft rattling homes, and no industrial emissions drifting into residential streets.
Economic growth: A thriving community needs ample amenities — supermarkets, schools, medical facilities, and other essential services — to draw people in. Strong employment centers tend to spark additional hiring, investment, and housing development.
Foresighted infrastructure:Effective urban planning requires anticipating future needs and setting aside resources for wider roads, expanded transit systems, upgraded utilities, and other improvements long before congestion or capacity issues become severe.

Berkshire Hathaway explains real estate zoning variances

Disagreements over how land should be allocated are common, and when conflicts arise — or when someone seeks a zoning exception — local officials typically hold public hearings to gather feedback from residents.

Homeowners tend to be especially sensitive to proposals that might influence property values or alter the overall feel of their communities, explains Berkshire Hathaway HomeServices.

This dynamic often fuels NIMBYism (“not in my back yard”). Much like their opposition to industrial facilities near their homes, many homeowners resist higher‑density developments, believing such projects bring in short‑term residents who may not contribute to maintaining the neighborhood’s standards.

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“This puts zoning commissions into a quandary,” wrote Berkshire Hathaway. “People are moving in but can’t find housing. When they do, the prices are sky high. When apartment complexes are allowed to be built, something else must be torn down, increasing noise and air pollutants.”

“That’s when a variance can help,” the company continued. “A variance is simply a request by a property owner to make an exception to the existing zoning. At a public hearing, the property owner and neighbors can make their cases to the zoning commission.”

“In many cases, the variance will be allowed because it helps solve other problems. For example, an abandoned shopping center can be rezoned for multi-family housing, revitalizing the area.”