Ronald Peltier, CEO of Berkshire Hathaway owned, HomeServices of America, the launch of a brand new “Berkshire Hathaway Home Services.” The plan is to launch a global real estate brand in the second half of 2013. Ronald thinks that this global brand with an online presence will be the place to search for real estate. Peltier also discusses the current housing recovery, and why he is bullish.
Video and computer generated transcript below:
when warren buffett is bullish on a industry or sector he doesn’t hold back on where he sees an opportunity. i think it’s a good investment if you can handle the management of it. i mean it’s management intensive. but i think for somebody that is in a growing city, that can buy a house at a price that’s 60%, maybe of what it was five years ago, and they could borrow 80% of it or 4% interest rate, they’re going to make money. those were comments that mr. buffet made last may just ahead of the berkshire hathaway annual meeting. recently berkshire hathaway affiliated launched a new network called the berkshire home services. joining us right now is ron peltier, ceo of home services of america. and ron, thanks for being with us this morning. good morning, becky. can you tell us a little bit about this new brand and what it will do? well, yes. we announced last october that we have actually been thinking about this for a long period of time to create a a global brand in the real estate space using a great name and a world recognized name in berkshire hathaway and pairing that with home services to create a global real estate brand that will be launched later this year in the second half of 2013, known as berkshire hathaway home services. and again, we’re interested in seeing why this is taking on. why are you launching it now? you know, as more and more of our business is being displayed and searched online, we have lots of companies under the nner of home service america but they’re all inpend brands and we continue to see the real estate market move online and they’re looking at national sites and, in fact, they’re actually looking at global sites to search for real estate or begin the process. we want to have a single point of entry. a single contact and a single brand that can help, you know, idea the place to search for real estate, and that will be berkshire hathaway home services. let’s talk about where you see the housing market right now. what’s happened? well, last year was a very, very clear, definitive evidence of the recovery. the first real serious evidence of recovery, 2011 was really the bottom. last year we saw prices up about 7%, 8% nationally. we saw unit sales up about 10% nationally. clearly it’s not an even recovery. there are some markets that are much better than others. and some where the prices have appreciated up higher than others. but we clearly have a recovery. and i think the key issues that we have going forward, we see this, the recovery, continuing in 2013, i will tell you we have a switch from a surplus of inventory to a shortage of inventory, and we have supply, or demand far in excess of supply currently. together with low rates, and affordability at an all-time high, i think we will see sales units grow again in 2013, about 10%. and prices in the high single digits in terms of growth. ron, it’s richard lefrak. i was wondering what your feeling was about the marginal purchase by institutions and hedge funds speculating in the housing market, not actual users and how that’s been affecting the numbers? well, richard, that’s a great question, and i think, you know, clearly those large purchases of blocks of real estate have gone a long way to, you know, to absorb distressed real estate that has been in the market. and i think they created a simple venue for banks or investors that are or mortgage entities that were looking to unload those in a very quick way. those investors have improved those properties. they’ve provided a rental venue for customers and clients that, in many cases, are not credit worthy and cannot get a mortgage and i think those are going to be tremendous investments. there’s not a hard asset outthere in housing that can be rebuilt for the price that people are buying these homes at 30% to 40% discount par value. in view of how powerful the brand name is, i’m a little surprised that since you announced it last october, you wouldn’t really be putting it into the field until the second half of this year. what’s taking so long? well, you know, we were going through the branding process. we’re working with a very large international branding company, wilbur, and we’re going through the, you know, the f.e.d. regulations, lots of legal documents that are necessary. we did purchase a majority interest in the prudential real estate network. we announced that last october. unfortunately, the timing was bad. it was right around the same time as hurricane or sandy storm and tropical storm, and — but it was really just the announcement. we’re working through all of the legalese and the branding and we believe that we’ll be very ready to make a major launch of the brand sometime early in the second quarter of this year, with several companies that will join in that brand and continue to build an entire network here in the u.s. and north america, and then move globally. ron, we want to thank you very much for joining us.