Buffett's Berkshire Is Going Long on Homebuilders. Here's Why I'm Moving in the Opposite Direction
2026-10-16 07:20
•Jeremy Bowman •The Motley Fool
••• ••••••• Axe Cap view
Why I'm Staying Clear of Homebuilders Despite Berkshire’s Big Bet
Berkshire Hathaway is doubling down on US homebuilders, but rising mortgage rates and cost pressures make me cautious from a South African perspective.
Warren Buffett’s move to become a top homebuilder owner sounds tempting, but the US housing market is not a smooth ride—especially for us keeping an eye on rand terrain. Mortgage rates north of 7% are a heavy brake on buyer demand, and building costs keep climbing thanks to inflation and supply chain snarls. Add labour shortages and tariffs into the mix, and new homes are becoming too pricey for the average buyer. That pressure tends to ripple through global markets and send risk-averse rand investors seeking safety. While US mortgage data might seem far away, this kind of sustained headwind could weigh on local banks like Standard Bank and FirstRand, which have exposure to offshore retail and mortgage-linked assets. The rand often strengthens when global growth fears rise, offering a slight buffer. If mortgage rates drop sharply or inflation cools, Berkshire’s long-term enthusiasm may prove prescient. Until then, I’m wary. this is just our opinion and not financial advice
Avoid South African financials with offshore exposure for now, such as Standard Bank and FirstRand, and keep a close watch on USD/ZAR for risk sentiment shifts. Wait on local housing plays or property funds until cost and financing pressures ease.
- Standard Bank
- FirstRand
- USD/ZAR
- Mortgage rates fall significantly, boosting housing demand
- Inflation eases faster than expected, reducing building costs
6/10
Berkshire Hathaway has aggressively invested in homebuilders, becoming the nation's 4th-largest homebuilder through acquisitions and stakes in major companies, betting on long-term housing demand recovery. However, the author argues against this thesis, citing persistent headwinds including elevated mortgage rates above 7%, rising building costs, labor shortages, and tariffs that continue to pressure the sector and make homes unaffordable for consumers.
Our take is based on reporting first published by The Motley Fool.