And then he puts his money where his mouth is
Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on bigger issues.
Over the weekend, thousands of enthusiastic followers of Warren Buffett descended on Nebraska to hear from the famed “Oracle of Omaha” at Berkshire Hathaway’s yearly meeting.
On the agenda was a wide-ranging array of topics, which is recapped in part by Fortune Magazine, which was all over Berkshire Hathaway’s event.
According to Fortune, Buffett touched on the economy, investing, politics and life.
During the meeting, Buffett was asked about the health of the country’s housing market, and whether the country is in another real estate bubble.
And we can all rest assured, because the “Oracle” himself said that the housing market is on stable footing.
From a separate Fortune report:
“I don’t see a nationwide bubble in real estate right now at all,” says Buffett.
Buffett made remarks at the annual meeting of Berkshire Hathaway, which took place on Saturday in Omaha. “In Omaha and other parts of the country, people are not paying bubble prices for real estate,” says Buffett.
According to Fortune’s report, Buffett said that while it’s not quite as good of a time to buy a house as it was four years ago, the likelihood of seeing another housing crisis due to falling house prices is “very low.”
Again from Fortune:
When it comes to housing and mortgage loans, Buffett said, while real estate was certainly a problem in 2008, he didn’t think that would be the source of the next problem for the financial system. “I don’t think we will have a repeat of that,” says Buffett.
But that wasn’t the only housing-related topic that came up during Buffett-palooza this weekend.
Also discussed was Clayton Homes, the nation’s largest manufactured home builder and a part of Berkshire Hathaway, and the allegations levied against the company last year, when The Seattle Times and other publications reported that the company was engaged in predatory lending directed at minorities.
During this weekend’s meeting, representatives from Clayton Homes strongly denied those accusations and said the company makes every effort to only place people in homes that they can afford.
From yet another Fortune report:
“We make a strong effort, any time a customer wants to purchase a home, to verify they have a reasonable ability to repay,” Clayton Marketing Director Carl Hill said in an interview with Fortune. “It is in nobody’s best interest if a home is foreclosed. In fact, if a home is foreclosed, everybody loses.”
“We were very disappointed with the content of those stories,” Hill said. “We have policies and procedures and training in place, and resources as well, to have customers find a lender and choose the lender that’s the best fit.”
Clayton Homes is more than a manufactured home builder though.
The company is also expanding into traditional homebuilders. Last year, Clayton Homes bought Chafin Communities, a Georgia-based residential homebuilder, for $50 million.
As part of that deal, Clayton Homes also reportedly acquired 1,100 lots in the northeast Atlanta area, and in Gwinnett, Forsyth and Hall counties.
And according to a recent report from The Tennessean, Clayton Homes just acquired Goodall Homes, which is “Middle Tennessee’s second-largest homebuilder,” according to the Tennessean report.
From the Tennessean:
Clayton Homes’ acquisition of Goodall Homes includes 180 under-construction homes and roughly 3,600 finished and yet-to-be developed lots in Williamson, Wilson, Sumner, Rutherford and Davidson counties.
Last year, Goodall Homes closed on 436 single-family homes, townhomes and condos, ranking the builder second in the Middle Tennessee market. Professional Builder magazine’s 2014 National Builder of the Year expects to close on about 440 homes this year. Goodall Homes had revenues of just under $140 million last year, which was the highest among all homebuilders in Middle Tennessee.
Financial terms of the deal were not disclosed.
And finally, for just the second time in 2016, there is a bank failure to report in this space.
For every week but one, the last paragraph of HousingWire’s weekly Monday Morning Cup Coffee read “The FDIC reported no banks closed for the week ending April 22,” or some variation thereof.
But that’s not the case this week, as the FDIC announced Friday that the Tennessee Department of Financial Institutions closed Memphis-based Trust Company Bank.
The FDIC will serve as receiver for the failed bank.
Trust Company Bank becomes the second FDIC-insured bank to close in 2016, and the first FDIC-insured bank to close in the state of Tennessee since Community South Bank closed on Aug. 23, 2013.
The FDIC said that it entered into a purchase and assumption agreement with The Bank of Fayette County, which will assume all of the deposits of Trust Company Bank.
The FDIC stated that as of Dec. 31, 2015, Trust Company Bank had approximately $20.7 million in total assets and $20.3 million in total deposits.
According to the FDIC, the estimated cost to the Deposit Insurance Fund will be $7.2 million.
“Compared to other alternatives, The Bank of Fayette County’s acquisition was the least costly resolution for the FDIC’s DIF,” the FDIC said.