Home > Blogs > Suze Orman vs. Warren Buffett: Whose Real Estate Advice Should You Follow?
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By Tara-Nicholle Nelson | Broker in San Francisco, CA

Suze Orman vs. Warren Buffett: Whose Real Estate Advice Should You Follow?

You know Suze Orman - she delivers hardcore financial gut checks to everyday Americans on a regular basis. In her latest book, The Money Class, she also recently delivered a pretty striking declaration: that the American Dream - which, for many, includes home ownership and upward economic mobility - is as dead as a doornail. To back this up, she points to huge numbers of jobless and what she sees as the near impossibility of getting credit these days.

But you might also have heard of Warren Buffett. He just so happens to be the third richest human being on the planet.  In Buffett's most recent letter to his company's shareholders, he, too, made a striking declaration of his feelings about owning a home: "[h]ome ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates."  And the Oracle of Omaha didn't stop there - he literally raved about home ownership, saying that "the third best investment I ever made was the purchase of my home." Now, that's a big statement from a guy whose investment decisions have earned him a net worth over $50 billion!

Suze says the American financial dream is dead. But Buffett says buy, and buy now.  Who's right?  (And who's wrong?!)

Orman is right that one extreme version of the American Dream is dead.  But not the traditional American Dream of owning an affordable home that appreciates over time. That basic premise of the value of homeownership is valid. But it may be valid for a smaller segment than ever before. Orman believes that renters should save, save, save up every penny and they may never be a candidate to own a home.

Buffett believes now is the time to purchase as affordability has never been better.  Buffet wins here; he's right that a home is a very strong investment, with abundant yields, both financial and emotional. And according to our latest survey, the American Dream of homeownership lives on in the hearts of the 72 percent of Americans who say owning the place they live is a part of their personal American Dream.

How can you make sure your exercise in owning a home is set up to be like Buffett's 3rd best investment (#s 1 and 2 were wedding rings, btw), rather than Orman's image of the American nightmare? Here are 3 basic steps Buffett urges every American who owns a home - or wants to - to include in their approach to home ownership.

1.  Ditch your "dream home" for a practical pad. When it comes to homes and mortgages, bigger is not always better.  What is better is to buy a home that makes sense for your family's future and its finances. In Buffettt's own words, "a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender . . . facilitates his fantasy."  Instead of buying dream homes, Buffett went on, the goal should be to buy a home you can afford.

2.  When you buy, plan to hold. Warren Buffett is worth $50 billion, and he still lives in the home he bought 52 years ago - for $31,500. Many Americans got caught in the housing crash when they took on mortgages they could only sustain for a short period of time, then weren't able to refinance as expected. Buffett's stock investing advice has long been to avoid making investments you can't hold for at least 10 years. Likewise, buying a home should be done with a long-term plan to avoid catastrophe when home values fluctuate in the short term.

3.  Mortgages should have fixed, affordable payments. In his shareholder letter, Buffett points out that a housing company he holds has done vastly better than other real estate and mortgage industry players and attributes their success to the fact that "our approach was simply to get a meaningful down-payment and gear fixed monthly payments to a sensible percentage of income."  Buffett believes these two mortgage musts are the key to avoiding foreclosure, opining that "[i]f home buyers throughout the country had behaved like our buyers, America would not have had the crisis that it did. . ..  This policy kept [the company] solvent and also kept buyers in their homes." 

Unless you are one of those rare buyers who know their income will increase by a predictable amount at a predictable point in time, like a lawyer prepping for partnership, a good rule of thumb is to stick with a fixed mortgage payment (including taxes and insurance) that's under 30 percent of your take home income.

P.S. - You should follow
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Comments

By Alba,  Thu Mar 17 2011, 11:11
Warren Buffet Wins!
By Dale W Doughty, Jr.,  Thu Mar 17 2011, 11:15
I think it is safe to say that Warren Buffet's track record far exceeds that of Suze Orman. Its also a safe bet that Suze's home is much more extravagant than Warren's showing that he also heeds is own advice.
By Jcollum,  Thu Mar 17 2011, 11:16
The actual average inflation-adjusted appreciation over time is so low that this sentence is debatable: "But not the traditional American Dream of owning an affordable home that appreciates over time." If I recall, it's about 0.4% over time. Not much of an appreciation.
By Mark Finchem, Associate Broker,  Thu Mar 17 2011, 11:17
Great article Tara. I look to Warren Buffett and his conservative history. Mr. Buffett has a much wider view of the total economy. No offense intended to Ms. Orman but I don't think she recognizes the intrinsic value in ownership. After all, someone will own the property you live in. Will it be you or someone else?
By Jim G,  Thu Mar 17 2011, 11:22
Orman's advice is old and out dated and should not regarded as an expert and more of a nit-wit. It amazes me who can be a so-called expert these days. She says save, save, save... Does she not realize that we are printing money out of thin air and it's only a matter or time before we hit hyperinflation (ie Carter Administration) and are money will be only worth the paper it is printed on? Buy houses with land. There is a finite amount of land in the world while the dollar is not tied to anything, since we went off the gold standard in my birth year or 1971. Buy, Buy, Buy real estate -- just ask 95% of the millionaires how they made there money--Real Estate. Also, Buy with cashflow in mind and residual money. Multiple streams of income because you lose you j.o.b. and most people are missing paddles in a creek. Ahh, Suzy please go back to your trailer park.
By Erika Pilimai,  Thu Mar 17 2011, 11:22
Warren Buffet!!!! Great article.
By Stephen Lingley,  Thu Mar 17 2011, 11:23
Warren Buffet is an icon. I certainly respect and value his opinion supported by his own actions.
By Voices Member,  Thu Mar 17 2011, 11:24
I agree with Warren. Orman is overboard on this one. Everyone is already down why bring them down more. Give solutions. Maria
By T.C. Hyatt,  Thu Mar 17 2011, 11:26
We have to have a place to live and why not own it or pay toward paying it of. It can be a great security instument for many reasons. I do agree also it not the day of the McMansions and buying homes you cannot afford, but one that works for your family and finances is worth it on many levels. With Rates and prices today it would be crazy for someone to not buy a home because they feel it is a waste of money. If anything buy a home ( one that you can afford) for even the tax benefits and the security for the family.
By Michael,  Thu Mar 17 2011, 11:29
Firstly....All things in finance being cyclical, I agree with Warren, emphatically!
When was the last era home loan interest rates were so low?
That you can buy a home(s) more than 50% less than a few years ago with selections abound?
That with good credit at a younger age you have an opportunity to build wealth for your future in Real Estate
investing as readily as today? 50 years or younger investors should be all over and all about this opportunity.
From what I know about Orman and Buffet, Unquestionably, follow Buffet, and besides the Orman comment
"The American Dream is Dead" stinks with negativity and bad Karma. NOW is definitely the time to buy homes!!
Michael F
Naples FL
By Flavia Brown,  Thu Mar 17 2011, 11:29
If we listened to Suze Orman nobody would buy a house, the housing industry would dry up, and the economy would go bust. Her advice is scary.
By Michael Weaver,  Thu Mar 17 2011, 11:29
ARE YOU KIDDING???? Who how is this even a question:) Buffett is older, wealthier, and I would take his advice hands down over a talk show host any day.
By MaryAnn Williams,  Thu Mar 17 2011, 11:31
Warren Buffet! I'd follow his advice over Suzie Orman's chatter anytime!
By Cheryl Doran,  Thu Mar 17 2011, 11:32
No question. Warren has it RIGHT!
By Voices Member,  Thu Mar 17 2011, 11:32
What do good business people like Warren Buffet do? They buy investments and hold on to them for a long time while the value increases. What is the famous adage? Buy low sell, sell high. Now is the low point, not just for home values but also for interest rates. With the prospect of inflation on the horizon as the fed continues to print "electronic money" by purchasing securities, having your money in a mortgage will protect your cash from being devalued by potential inflation. The days of the masses buying a home as a short term opportunity to make big returns may be gone, but as a long term investment it still makes sense, and can protect you from inflationary pressures.
By Patrick J. Baggiano,  Thu Mar 17 2011, 11:32
I'm a Real estate agent and agree more with Orman. Although the climate is the best it has been in decades average working people
never have the opportunity to take advantage of these so called "right time to buy" concepts. There is always an inverse relationship.In these difficult times the average "American dream holder "
has suffered the dings to their credit, lost a job or have taken less pay to keep one, exhausted any savings to supplement bad times therefore would never qualify to meet the strict guidelines for obtaining a mortgage. You know what market will thrive? The high end waterfront All those buyers are flush with the rebound of the stock market. They possess discretionary income". Are not bothered much about unemployment or rising interest rates.
and 90% pay cash! Otherwise how else would the" rich get richer. Warren please share your wisdom with me (or anyone else. pbaggiano@tampabay.rr.com
By Ronn Huth,  Thu Mar 17 2011, 11:34
I would say that a great number of Americans will not be able to buy and hold their home as they could a stock. I do agree with Buffett that real estate is almost always a good long term investment. I agree with Orman that the American Dream as we have always know it died several years ago. Much of that was due to irresponsible lending and artificial appreciation. However, I'm one of those "rose colored glasses" people who believes the American Dream will be revived.

I'd also like to give an opinion on Tara-Nicholle Nelson. I do not know the woman, but I am very impressed with posts she has written and her grasp of real estate issues. She is a credit to our industry.
By Mary Ann Graboyes,  Thu Mar 17 2011, 11:37
By Mary Ann Graboyes,Coldwell Banker Preferred. Thu Mar 17, 2011.

Great article. The American Dream is not dead it is just smaller. Ownership is the pride of America. Prices will adjust accordingly and I will go with Warren Buffet.
By Karen Smith,  Thu Mar 17 2011, 11:37
Warren buffet gets my vote. I like Suze but Warren has vast experience and he's actually right. The prices of homes is at a all time low and if you can get a loan and afford what you actually can in a home, then this is the right time. Great Article by the way.
By Heather Jelic,  Thu Mar 17 2011, 11:38
Warren Buffet hands down!
By Matt,  Thu Mar 17 2011, 11:41
This is silly. They're not saying opposing things. They're both right. Buying real estate right now IS probably a great investment. Buffett's surely correct on that. He's financially brilliant. But for many people, even the smallest home isn't something they can afford. As someone who talks to people of ALL walks of life about money every day - let's not forget this expertise in all the bashing of her here - Suze realizes this. And as the dichotomy of weath becomes greater and greater all the time, that portion of the population may never have an opportunity at owning a home.
By Mary Ann Graboyes,  Thu Mar 17 2011, 11:41
Great Article. The American Dream is not dead it is just smaller. Home Ownership is the pride of America. Prices will adjust accordingly along the way so I will go with Warren Buffet.
By Berealistic,  Thu Mar 17 2011, 11:42
It must be an insult to Buffet to even be compared side by side to Suze. Please...this must be a joke!
By Isaac Bensussen,  Thu Mar 17 2011, 11:43
I have always advocated for home ownership. If you pay your mortgage you can never be kicked out. If you rent, you are subject to the landlord's wishes. When I started renting many years ago my landlord told me she was going to hold the house as a rental for at least 5 years. One month short of one year she told me she needed to sell the house because she was buying something else so I had to look for another house. Due to the housing meltdown, unfortunately 20% down payments were in many cases evaporated. Nevertheless, if you plan to live in your house for a few years, your home will be worth more than what you paid for it, lets say 10 years ago. Mr. Buffet is not the only investor that has made a fortune from Real Estate Investments.; thousands have. Again, for Buyers: If you have a steady job and plan to live in your home for a few years; buy now. Interest rates are low, low, low and prices are even lower. Sometimes, a home is just a place to live comfortably and should not be considered an investment, even though, when years from now you look at the value of your home, it would just proved a great investment.
By Genaro Pulido,  Thu Mar 17 2011, 11:45
Get me those buyers I will put them on a house in California. Handsomeness is contagious and today is the day that God has made!
By Brenda Fletcher,  Thu Mar 17 2011, 11:47
Thank you Warren Buffet! Can you believe he is in the same home he purchased 30 yrs ago? As a real estate agent I have been totally irritated about people using their homes as banks, going back and re-financing and pulling money out left and right and then when the market changed they are the biggest cry babies. Home ownership YOU CAN AFFORD is the only way to go. Let's not forget about pride in our nests and stability. Brenda Fletcher, Sandpoint Idaho
By emcsqard,  Thu Mar 17 2011, 11:48
You're all brokers, what else would you say? Written by a broker/realtor and commented on and seconded by broker/realtors as if to lend it more credence. All you want to do is sell homes. You all (most of the Realtor/brokersl) were part of the problem of 2008, sometimes selling homes or have sold homes to people you know can't or couldn't repay the mortgage loans. This column is such a farce, mostly self-grandiosity!!!

Suze Orman knows what she's talking about.
By Lisa Hensinger,  Thu Mar 17 2011, 11:51
Warren Buffet, he practices what he preaches and for that his success. Buy and live within your means.
By Rob Richards,  Thu Mar 17 2011, 11:51
I can't believe they're being compared! Suze pumps common sense and financial trends. During the peak of the real estate market she continued to preach on her show that people should invest in real estate. As a supposed "Financial Advisor" she didn't have the slightest clue that the real estate market was abnormally overvalued. I'm an average Joe and I knew that something was wrong when people I knew who made a third of my annual salary were buying homes and I couldn't afford to buy.
By Denise G. Driggers,  Thu Mar 17 2011, 11:54
I just bought a 3 bedroom 2 bath home for half as much as it sold for in 1979! Now is definitely time to buy.
By Deb Staley,  Thu Mar 17 2011, 11:58
Trulia distorts what Suze Orman says in her book. I own the book and have READ THE BOOK. I even re-read the section on home ownership just last evening. Suze says amost verbatim what Buffett outlines in his three steps. Shame on Trulia for twisting what Suze Orman said.
By Jerry Nunez,  Thu Mar 17 2011, 11:58
BY JERRY NUNEZ

LET'S BE REALISTIC, SUZY IS CORRECT TO SAY THAT THE AMERICAN DREAM IS SHOT ON HOME OWNERSHIP, SINCE A VERY LARGE PERCENTAGE OF HOME BUYERS LOST THEIR HOMES, BECAUSE THEY WERE UPSIDE DOWN ON THEIR MORTGAGE. THANKS TO BANKS STUPIDITY, AND CONSUMER IGNORANCE, YOU PEOPLE NEED TO GET YOUR HEAD OUT OF YOUR........AND THINK TWICE OF WHAT THE AMERICAN DREAM REALLY IS, EVEN THOUGH I STILL AGREE WITH BUFFET, NOW IS THE TIME TO BUY, BECAUSE OF PRICE REDUCTION AS A LONG TERM INVESTMENT, JUST REMEMBER DO YOUR HOMEWORK.
By Eqart,  Thu Mar 17 2011, 12:01
Brokers show homes and list homes. Brokers have nothing to do with financing or deciding who gets financing.
By John Crowe,  Thu Mar 17 2011, 12:02
Best advice for any pros helping clients - be practical, don't over-extend and plan to stay a while.
By Carmen Gutierrez,  Thu Mar 17 2011, 12:04
I agree with Warren Buffett! Buying right now is a great opportunity.

Marietta Realtor
By Hannelore Kaplan,  Thu Mar 17 2011, 12:04
If you can afford to buy a home.... now is the time to buy. Buffett is correct!
BUT as Suzy always says buy what you can afford.
By afford a home I mean if you are capable of a 20% deposit (with savings to spare) or qualify for an FHA loan now is the time.
By George Szkup,  Thu Mar 17 2011, 12:06
They are both RIGHT! If we consider "American Dream" = home ownership - it is not going to be financially for everybody, especially if our government grossly reduces its involvement in real estate (which is now planned). Once we get 'through our heads" that living in an apartment is not "a stigma" or a necessity "to live happy live" we will be OK! Warren Buffet says that house ownership is GOOD investment because IT IS! However, many people made millions in other forms of investments living in rented penthouses on 5th Avenue. This writer FAILD both ways and is still OK and “kicking” (as a real estate broker). There is no one way to make money or be happy.
George in Tucson
By Peter Crabtree,  Thu Mar 17 2011, 12:09
Warren Buffet gets my vote but I would take issue with his statement that his housing company has been successful simply because it gears "fixed monthly payments to a sensible percentage of income". Many homeowners (and mortgage holders) are in trouble because their income, which looked very sensible and stable pre-recession, is now gone (unemployment) or substantially less (under-employment) than it was.
By Brian Mcgreevy,  Thu Mar 17 2011, 12:11
I am a real estate broker and owner of a Sarasota Home Realty http://www.SarasotaHomeRealty.com a Florida real estate company. I've lived through the ups and downs of the real estate market. I've seen up close and personal, how it has affected the buyers, sellers, renters, my agents and even my own income. This is a great article and I must say that as usual, Mr. Buffett is dead on. Home ownership is a longterm commitment and over time has proven to be a great investment. Many of those who viewed homes as a "get rich quick" opportunity lost their shirts because they extended themselves and bought at the top of the market. While my customers who bought with a conservative and longterm outlook are in good financial shape. I am proud to say that in 100's of sales only one of my buyers has had to short sale their home. Timing and knowledge are everything...now is the right time to buy and a conservative "longterm" approach works.
By Tom and Jan Monson,  Thu Mar 17 2011, 12:11
If Suzie thinks the American dream is dead then she is a MORON!
By Jack92262,  Thu Mar 17 2011, 12:11
Suze Orman is only advising against buying things you cant afford, and living in the future (or the past). She's not against the concept of home ownership. Orman is offering up a reality check to those who think having more stuff is better than not having more stuff and sacrificing their financial well-being to have it.
By Barton449,  Thu Mar 17 2011, 12:12
Orman is right when it comes to everyone ownining a home, as all (Both Dems & Reps.)
the politicians were saying during the Clinton and Bush administrations.

Buffett is right when it comes to the people who can afford the house they are buying.
By Randy Landis, ABR, ACRE, GRI, RFS,  Thu Mar 17 2011, 12:13
However viewed by Buffett, this is now and yesterday was then. Orman may be right in real time, but Buffett probably has it right if we could re-live the 1950's, 60's, 70's & 80's. Problem is, Americans today are a different breed and want it all now. We are born to have it now. We are not interested in hard work and careers anymore. We just want large paychecks. We live to spend and spend to live it up! Unless our country and the world returns to Buffett's sense of conservatism, I will lean to the side of Orman. The odds are against any simple and true definition of "long term" so I have to believe the trend of homeownership will decrease in this country.
By Scott & Lisa Loper,  Thu Mar 17 2011, 12:16
I am a real estate agent, so naturally I have some bias towards Warren Buffet on this. Also, I usually find that when Suze Orman is on target, it's usually about something that was plainly obvious anyway. In this case, I believe Orman is way off base. Nobody can deny that housing and its related industries have taken major hits and are still struggling in many areas. But dead? Not even close. People still believe in home ownership and for very good, solid reasons (financial, family, community, stability, etc.). Although distressed properties and an overall shaky economy will continue to pressure the housing market in the coming months, there are some positive signs that a recovery in housing may be quite close if not already starting. Whether this year, next, or soon thereafter, I believe housing will begin to appreciate again and those that bought when prices and interest rates were low will be thankful that they listened to the likes of Warren Buffet, Donald Trump, and John Paulson and ingnored Suze Orman. - Scott Loper
By Moxa Chiu,  Thu Mar 17 2011, 12:17
They are both right. Do not forget about the TIME, PEOPLE, AND SPACE (Where). Like majority of American, Property investment is my #3 best investment, my home. BTW, #1, goes to investing in myself. # 2 is my children and employee. Investing in people is my top priority. BTW, Timing, this is a rare opportunity to buy a home you can afford.

The different between the 2 is Suze is looking from short term, solving a problem. Buffet is looking at a long term vision. Moxa
By Jim Walker,  Thu Mar 17 2011, 12:17
Dave Ramsey and Suze Orman are entertainers. Their wealth is earned from book sales, appearance fees, endorsements. While this does not automatically make all of their advice bad, it doesn't automatically make it all good either. I remember the year Warren bought his house fifty two years ago. We were in a recession and real estate prices were soft then, too.
By Paul Francis,  Thu Mar 17 2011, 12:22
Hmmm... let's see. Take the advice of somebody who has actually made money investing or take the advice of somebody who makes money because they have a TV show that preaches basic financial common sense?

No Brainer...

I think in your "3rd Basic Step" ... you need to add in the simple Rent Vs. Buy Calculation. If buyers and their agents (and lenders) would have followed this basic simple calculation in the 2003 through 2006 era.... the current mess would NEVER have taken place.

It NEVER made financial sense to buy $400,000 homes when you could rent the one next door for $1,500 a month. Today it makes COMPLETE financial sens to buy a $130,000 home when it's going to cost you $1,100 to rent the one next door.

Simple calculations to figure out the cash flow analysis and BOTH Orman & Buffet will agree to what makes the most financial sense....
By Mechelle Cranford,  Thu Mar 17 2011, 12:25
I agree with Jim Walker...be careful what you read and hear on TV and the internet. However, I have to admit that I do enjoy the rants of Suze Orman, from time to time! I enjoyed this article and got a lot of good advice. So, I reposted it to facebook!
By Patrick J. Baggiano,  Thu Mar 17 2011, 12:28
Lets look at it from this perspective. How many Americans today can qualify for a home even at discount prices
If you are a blue collar worker you most likely have been out of work (construction) Nobody is building.
Your previous tax returns look like crap
If you are employed there is a good chance your credit has suffered. How many working Americans
Have 20- 25% to put down? a 700 plus credit scoreNo bank is going to lend them money. By the time these folks get back in shape . The market will have made its upward correction. MISSED THE BOAT AGAIN. Besides how can self employed people afford a home when health insurance runs $1000 / month (= to the cost of borrowing $200,000). The biggest joke is the inflation rate what the ....?
are they measuring? antiquated indexes? Global commodities? The average American ,not the guy who supplements his income with stock market revenue is dying. Give me a break the high cost of fuel ,food and insurance ( health /homeowners/ Car ). By the way I'm a Realtor.
By Irina & Jeff Shoket,  Thu Mar 17 2011, 12:29
Buy a home you can afford and that is practical for your needs - the concept we as homebuyers or even real estate agents often ignore or forget. Who doesn't know the tagline ad "let me help you find your dream home..." But as we all have witnessed how quickly that dream home the buyer could hardly afford would turn into a nightmare liabillity. What an example of wisdom and "BEING HUMBLE" by Mr. Buffet, which many of us, living in California, should learn - being worth $ 50 Billion but appreciate and value his best 3 investments: wedding rings and a home he still lives in which he bought 50 years ago!!! Irina Shoket, Westlake Village CA
By Wanda Wayne,  Thu Mar 17 2011, 12:34
Orman and Buffett aren't even on the same planet. I've found Orman follows what she thinks are trends and with Oprah in her corner and she's feeds on talk show circuits with her so called advise to promote another book that is bad advice. This by far is the best time to buy with our industry being flooded with foreclosures by Fannie and Freddie convincing folks they could afford a larger house without securing a better ARM to protect them from a repeat of the 80's housing market. Susie was really big on Mutual Funds and I lost 100's of thousands of dollars because like her investors pushed Mutual Funds. Warren Buffet is a billionaire and I'd not only take his advice any day of the week but I wished he'd adopt me!!!! :-)
By Emily Medvec,  Thu Mar 17 2011, 12:35
As an experienced Realtor, I help people buy and sell homes in Santa Fe, New Mexico. This is a destination market and people still can not believe it is still a buyer's market today. In some ways, Suze and Warren are both right for different people. The Santa Fe rental market is very tight and beginning to experience monthly rent increases. If you can buy and take advantage of our rare buyer's market prices, then Buffet is on target. If you do not have the resources for a downpayment or credit to satisfy lenders, then in some ways your dream for homeownership may be on hold. Will it ever be dead? In my opinion, no way. I am helping first time home buyers and boomers discover and purchase affordable homes in Santa Fe. If you dream is to be here, then get started and look for value and purchase only what you can afford.
By Kristin Hamilton,  Thu Mar 17 2011, 12:38
I sell REO properties and if the offer is sent to a major bank, usually 2-3 days. If it is an outsource company, the time could be from 3-10 days typically.
By Maureen,  Thu Mar 17 2011, 12:43
By emcsqard, Thu Mar 17 2011, 11:48
You're all brokers, what else would you say? Written by a broker/realtor and commented on and seconded by broker/realtors as if to lend it more credence. All you want to do is sell homes. You all (most of the Realtor/brokersl) were part of the problem of 2008, sometimes selling homes or have sold homes to people you know can't or couldn't repay the mortgage loans. This column is such a farce, mostly self-grandiosity!!!

Suze Orman knows what she's talking about.

Thank you Esmcgard! You are a voice of reason. Yes, the only responses here are from Realtors and Brokers.
I agree completely with you and Suze Orman gets my vote! Realtors are greedy. Where else can you take peoples money without working for it???
By Dan Chase,  Thu Mar 17 2011, 12:47
Does anyone else remember Warren Buffet losing several $$$ BILLION when he thought that Dexter shoes was a great opportunity also? This is also going to be a loss in the future unless rents cover all costs.

NAR cheerleaders here. Far to many who do not recognize reality.

http://www.zillow.com/advice-thread/Do-you-know-what-the-housing-bubble-really-looks-like-What-were-normal-sales-like-over-100-years/377656/
By Bill,  Thu Mar 17 2011, 12:54
Orman is useless. I've heard some really stupid things come out of her mouth. I also believe she is a man hater - I'm guessing she was abused when she was young.
By Pete Prisock,  Thu Mar 17 2011, 12:54
Am I mistaking, or did Buffet endorse Obama? YES HE DID and that decision was, in my opinion. says volumes about this Fat Cat. A very poor choice and I don't care if he is the 3rd richest man on the plant with that decision I think he wanted to be at least #2 if not, # 1, and was planing to ride on the backs of the American people TO GET THERE!. Home owners and buyers today suffer the consequences of the collapse of the real estate markets Nationwide! That, fact even though no will say it , lies squarely on the democratic agenda, yes Congress, and the Senators like Barney Frank, who pushed Fannie May and Freddie so hard to allow unqualified buyers to buy (mortgage) properties, no way, they could afford. Thinking all along he would be a hero to all those unfortunate people who now had their own homes. Most all of them now have been foreclosed and are back where they started, or waiting for our so called Government to figure out a way to give them the rest of our country wealth if there is any.
Come on Guys and Gals who cares and what difference does it make what Suze Orman or Warren Buffet says they are sitting in their plush offices pushing their own agenda! Us Realtors are on the front line seeing and living the nightmare that the big dogs created for us. We see the heart breaking dilemma from average folks that are trying to sell their homes that just 2 short years ago had equity and as much as 30% more value.
Have you seen any of our political leaders do anything other than act like this collapse was our fault by creating more regulations, paperwork and rules to make a bigger smoke screen so we keep looking over here and not at them?

I say vote out all the career politicians and have 1 term limits after that they can get a dam job like the rest of us! NO MORE lifetime retirement programs or health care fit only for kings!

I think the Real Estate Market can be rebuilt barring any more brain storms from Obama, Barney and his friends like Buffett.

If you need it and can afford it, then buy it ! If you don't need it and can't afford it ON YOUR OWN, then work hard save your money until you can. (the truth doesn't mean anything, it just is).

THE ELEVATOR TO SUCCESS IS BROKEN! WE HAVE TO TAKE THE STAIRS ONE STEP AT A TIME!
By Czarina,  Thu Mar 17 2011, 12:55
C'mon.. .they are both right. I didnt buy in the heyday of crap mortgages because I couldnt afford it, despite everyone telling me I could because of the introduction of ARMs, etc. Now, I live in an economy destroyed by banks and stupid people buying things they couldnt afford. So, Orman's message is to those people who think they can have the American Dream of owning a home but under no circumstances can they realistically afford to do so. Those people need to get honest with themselves about what they have and what they can afford. Now I am in Buffett's boat where the easiest/best way to create wealth is to own property. I am in my 4th year of no pay raises despite having changed jobs (former company went under as a result of the economy.) My best chance at building wealth is in real estate. It will be another 2 years, however, til I will have significantly enough to afford a 20% downpayment. I may miss Buffett's window of opportunity but, like Orman, I will be buying something I can afford.
By George J Donaldson Jr.,  Thu Mar 17 2011, 13:01
Looks like Buffet has the edge for most of the responses, which I happen to agree with.
I would like to see a poll on this subject, how about it, Trulia?
By 022453,  Thu Mar 17 2011, 13:02
Even though the appreciation of housing has been sporatic, the escallation of rents has been steady and profound. The best thing about a 30 year mortgage is the 361st month is free, and every month thereafter. As long as income tax policy allows the deduction of mortgage home interest, the after tax costs of a home are far better than rent. Ask yourself, what has happened to rent levels in Omaha in the 52 years Mr Buffett has owned his own home? Do you really want to enter retirement with someone else in charge of your housing costs?
By Pam Hickey,  Thu Mar 17 2011, 13:06
I want to scream every time I see Suzy on TV and she opens her mouth and makes a sensational statement. She's not trying to help anyone, she's trying to make a name for herself.

Everyone is making a mortgage payment--they're either paying it to their bank or to their landlord. In 10,20,30 years someone is going to own the home I'm living in. I want it to be me. Oh, wait, it already is!
By Joe Rivera,  Thu Mar 17 2011, 13:07
Realistic approach to home buying is the best advice that can be given. Yes, if you're in it to make a big profit in 5 years time, Ms. Orman is correct. Home values are not going to rise they way they did in the past. That was greed from Real property agents, Counties appraising higher for more taxes, Lenders approving new methods of mortgages for bigger gains. If you plan to make your purchase for family and residential value, Mr. Buffet is right. Your mortgage will not go up, but your rent will.
By Bonair,  Thu Mar 17 2011, 13:11
I am not sure why you all feel it is necessary to bash Susie Orman. She has the credentials and you should read her CV before critically posting online. Many of you will look really dumb when you read your post again in a year or two. Warren Buffett is not perfect. He has made mistakes. They just don't highlight his mistakes. I am an investor and have owned personal and investment properties. Susie is correct. People got mighty use to credit and buying what they cannot afford and charging it on credit (including homes). You cannot accumulate wealth if everything you earn goes to the bank. I don't care how much money you make. If you spend most of your income on monthly expenses, you cannot save for a house or any wealth. If you are married and you can get your spouse to agree to it; allocating one salary as a savings is about the only way to purchase a house along with a substantial down payment to begin steps towards wealth accumulation in the form of real estate. Pay raises get spent in one form or another and most always never get applied towards retirement accounts or liquid assets. Most of the people I know who are upside down now are ex-real estate brokers and they deserve it. They were greedy and purchased more and more real estate until the day came and they could no longer make the mortgage payments. I don't feel sorry for nary a one of them. The only people I feel sorry are the ones who purchased based on the garbage their real estate agents fed them to make their sales. It was garbage. When I got back into the real estate market as a buyer I was shocked to hear that buyers were now asking sellers to allocate monies toward their settlement costs! This is beyond greedy and arrogant. No wonder we had to fire six brokers in order to finally find a competent real estate person to complete a sale. Moreover, we had to demand financial proof that the person looking at the property had money to do the deal. We had to demand no more tire kickers or hopeful buyers; we wanted people who could actually do the deal. Apparently, agents no longer qualify their buyers. Susie is right. This country and house buying has changed forever. You just don't want to hear the bad news because most of it is of your own doing. Don't blame Susie or even Warren. You and the banks did it to yourselves.
By Dena,  Thu Mar 17 2011, 13:12
Is it a good time to buy a second home now--I always wanted a home at the beach--should I leave my money in the bank to do nothing or perhaps lose it--or should I buy a House so my Family/grandchildren can enjoy it with me????? please answer Dena
By Pam Davis,  Thu Mar 17 2011, 13:14
I am definitely w/ Warren on this one!! Low fixed rates and low prices make it a no brainer!
By Julia St. Marie,  Thu Mar 17 2011, 13:18
Thumbs up for Warren.....
Suzi has disapointed me.
With all of her knowledge, I would assume that she is privy to the concept of "market cycles."
By Bonair,  Thu Mar 17 2011, 13:20
I am not sure why you all feel it is necessary to bash Susie Orman. She has the credentials and you should read her CV before critically posting online. Many of you will look really dumb when you read your post again in a year or two. Warren Buffett is not perfect. He has made mistakes. They just don't highlight his mistakes. I am an investor and have owned personal and investment properties. Susie is correct. People got mighty use to credit and buying what they cannot afford and charging it on credit (including homes). You cannot accumulate wealth if everything you earn goes to the bank. I don't care how much money you make. If you spend most of your income on monthly expenses, you cannot save for a house or any wealth. If you are married and you can get your spouse to agree to it; allocating one salary as a savings is about the only way to purchase a house along with a substantial down payment to begin steps towards wealth accumulation in the form of real estate. Pay raises get spent in one form or another and most always never get applied towards retirement accounts or liquid assets. Most of the people I know who are upside down now are ex-real estate brokers and they deserve it. They were greedy and purchased more and more real estate until the day came and they could no longer make the mortgage payments. I don't feel sorry for nary a one of them. The only people I feel sorry are the ones who purchased based on the garbage their real estate agents fed them to make their sales. It was garbage. When I got back into the real estate market as a buyer I was shocked to hear that buyers were now asking sellers to allocate monies toward their settlement costs! This is beyond greedy and arrogant. No wonder we had to fire six brokers in order to finally find a competent real estate person to complete a sale. Moreover, we had to demand financial proof that the person looking at the property had money to do the deal. We had to demand no more tire kickers or hopeful buyers; we wanted people who could actually do the deal. Apparently, agents no longer qualify their buyers. Susie is right. This country and house buying has changed forever. You just don't want to hear the bad news because most of it is of your own doing. Don't blame Susie or even Warren. You and the banks did it to yourselves.
By Roxanne Sarmento,  Thu Mar 17 2011, 13:20
Tara, Tara, Tara; bet 90% of the responses are from Real Estate Brokers, Agents and Loan Officers. What Ms Orman said was not fully presented. She is very correct that with so many people out of work and the FACT that loans are harder to come by people are going to have to SAVE< SAVE< SAVE if they want to buy a home. The American Dream of homeownership is in fact dead for many Americans who now have foreclosures on their record and/or are out of jobs. Gees Chase; B of A Wells Fargo etc are doing just fine.
By John DL Arendsen,  Thu Mar 17 2011, 13:23
Sounds to me like Suzie is really saying that investing in a home to turn and burn is in fact dead unless you're dealing with distressed properties and really know what you're doing. But investing in a home that you can afford to buy and hold and raise a family in is and will always be alive and well as long as America stay's America.

Warren Buffet better be a big proponent of home ownership as he now owns one of the biggest "Factory Built" home manufacturing company's in the world.

But I still contend that it all comes down to affordability index and there's a lot of zip codes that are just too expensive for the average wage earning Johnny Six Packer and Linda Lunch Bucket to ever dream of owning. And therein lies the problem. Who's going to fill that void and how long will it take to fill? That's the one trillion dollar + question.
By Elaine Zachary,  Thu Mar 17 2011, 13:35
Homes should be bought to live in. Warren is right. Suzi is just trying to sell books.
By Tero Paananen,  Thu Mar 17 2011, 13:45
Why am I not surprised that a site devoted to real estate used by many real estate professionals is championing an opinion by someone, who says buying real estate is good for you.

I'm sure it is. Those commission checks would make me feel that way, too.

I'm, however, not a real estate professional, and for a 0.4% annual appreciation, I'd put my money somewhere else.

Suzy Orman is ABSOLUTELY right. Home ownership is a terrible INVESTMENT right now. The expected appreciation of an average home today is miserable, if even positive at all. All the economists are predicting a LOOOONG recovery with unemployment rates staying high for several years to come. Even a real estate broker should understand what that means.

Now, if you're buying a home to live for the next 30 years, that may be a different thing. But that's not really the American Dream the real estate brokers are trying to sell when they smile in front of multi-million dollar homes.
By Kerry Greene,  Thu Mar 17 2011, 13:53
Agree with Warren. Warren's track record is solid. Suzie, is really trying to continue to educate today's buyers". Save, save, save", so that u do not repeat your mistakes. But $$$ has no value if u don't invest it. Most millionaires/billionaires began and have ended with RE...
Great post Tara:-)
By Wendy Glazer,  Thu Mar 17 2011, 13:56
Being a big Buffet fan, of course he is right.!!!!!
By Isaac Bensussen,  Thu Mar 17 2011, 14:01
When I started selling Real Estate in La Jolla, California 32 years ago, I showed an ocean front home that was listed for $ 325,000. This same home 32 years later was listed and probably sold for $ 7,000,000 !!!Seven million dollars!!!. If you like to use leverage, you could have purchased this home with $ 100,000 down payment.. If instead you had invested this $ 100,000 at 8% per year and reinvested again and again principal and earned interest for 32 years, you would have $ 869,000 approximately in your Bank Account including your original $ 100,000. But if instead you had decided to purchase the home, your principal and interest payments for a $ 225,000 mortgage through 32 years at 7% interest per year would have been $ 574,000. Your property taxes in 32 years would have amounted to approximately $ 121,000, your property insurance, lets say $ 36,000 and the earned interest in your $ 100,000 that you did not earned because you bought the home instead would have been $ 769,000. So, your total house payments including the interest that you did not earned would have been $ 1,500,000 excluding maintenance. A big difference between $ 1,500,000 and $ 7,000,000. In the meantime you would have enjoyed living in a luxury ocean front home in La Jolla, California. Was that a good investment or is Mr. Buffet wrong in recommending to buy property now?
By Nicaury Miller,  Thu Mar 17 2011, 14:06
i AM 100% WITH WARREN.
By Ray Akers,  Thu Mar 17 2011, 14:10
Let's be real here! Suze Orman is selling books and public appearances. She's very good at what she does. She's a PROMOTER and she promotes herself. Warren Buffett isn't selling anything, he's an experienced investor. To whom should you listen for advice, the darling of the talk show circuit, or one of the smartest investors on earth?

Suze Orman is intentionally sensational, otherwise how would she sell her latest book or tickets for her seminars? Trust me, the sky isn't falling and the real estate market will recover, and homes will appreciate. Renting offers virtually none of the benefits of owning a home. The majority of people on earth dream of owning the land beneath their feet. Human desire to own your own home isn't going to change anytime soon. What will change is the price of homes ---prices are already rising in many cities.

One more thing; recessions and economic fluctuations are nothing new there will be more of them in the future. It's time to stop the hand-wringing. Remember this; the population of planet earth continues to grow, but there is no new real estate being created. So, unless there are plans to colonize the moon, you should expect the value of earthly real estate to continue to rise, just as it has throughout history.

I recommend you save the money you'd spend on Suze Orman's new book, and take Warren Buffett's advice: buy now!
By Dwayne & Maryanne Moyers,  Thu Mar 17 2011, 14:19
Berkshire Hathaway (BRK.A) (NYSE): On 3/17/11 Warren Buffet's company closed at $124,025.00 per share. The answer to this question appears obvious.
By A. Paul,  Thu Mar 17 2011, 14:23
Just because the author has a broker's license, it doesn't mean she's qualified to do anything other than pass an exam.

She has misrepresented Suze's position - and one of the comments following the article actually calls her out on it by re-reading the section of the book on home ownership to make sure.

Moving into a home you plan to stay in for a period of time has always been her advice, provided you have no credit card debt and 8 months of emergency reserve.

Minus those things, it's not a good idea for people to continue to pursue - particularly if they're viewing real estate as a short term investment vehicle.

Suze's book is clearly written for day to day working folks who are trying to manage their financial health.

Warren's audience is typically the established investor who is looking to gain even more. It's not exactly rocket science to look at a house you bought in 1964 and proclaim it one of your better investments.

To someone with 3 kids working two jobs to support his family during tough economic times, that person is likely going to gain more from listening to Suze Orman than he will listening to the advice from Warren Buffet.

I think Buffet has good advice, don't get me wrong, but this is nothing more than a real estate broker misrepresenting a financial advisor's words because they contradict her own personal financial gain from selling houses.
By Terry McIntosh,  Thu Mar 17 2011, 14:24
Suze Orman's advice is what many consider common sense. Warren Buffett's advice is how you might go about getting to the next level once the common sense ideas from Orman are already part of your routine. It's like comparing a high school diploma to a doctorate -- they're both education, but one prepares the foundation for the next.

Think of Orman as Finances for Dummies... the problem is that America has no shortage of dummies and the evidence is those that have allowed themselves to financially self destruct due to bad decisions.
By Steve London,  Thu Mar 17 2011, 14:28
Suze, Suze. She got it wrong again. She probably meant that the poor and middle class are squeezed out of the American Dream as the country's wealth continues to grow in the wealth classes. Right now the best values in homes are available to those who can purchase foreclosed properties. I agree with T. McIntosh. Suze is Finances for Dummies.
By Luis Dias,  Thu Mar 17 2011, 14:29
Buffet By Far, Lets think about this, in some places, you can purchase a home for 30-40 cents on the dollar, that is a 20-25 years depreciation. Anyone that purchaes real estate at today's low prices and doesn't need to sell for the next 5 years will be sitting real pretty on that investment. Remember, no matter what, people still need a place to call home even if renting.
By Terry Stewart,  Thu Mar 17 2011, 14:37
Oh come on now. I need someone to listen to Suzy. I have rentals and I need those tenants making my mortgage payments!!! :)
By House Sale Advisors Real Estate,  Thu Mar 17 2011, 14:48
My financial advisor suggested that HIS opinion is that jail time would be appropriate for Ms Orman as a direct consequence of most of the advice she gives. I don't have enough information to agree emphatically at this time, but he made a pretty darned strong case for putting her in an orange jump-suit.
http://www.HouseSaleAdvisors.com
By Joyce Lowe ABR,CRS,GRI,CNS,  Thu Mar 17 2011, 14:52
I think that Suzie Orman has given a lot of good advice over the years. However, I have listened to her lately about the real estate market and feel she is way off base. She believes that a buyer should not buy unless they have saved up at least a 20% down. By the time many buyers save up this much money in todays economy they will have lost a great opportunity to purchase. I would go with Warren Buffet's advise!!
By Ernie,  Thu Mar 17 2011, 15:04
Though I am a fan of The Oracle of Omaha, I have to agree with Ms. Orman. Leveraging and debt encumbering is destroying America. When you buy a home of car over time you don't own it until you pay it off. The amount you pay over time for these items and others can be 3 or 4 times the original price. While the majority of investors followed the advice of the Buffets of the world, those that moved their savings to banks or US stocks and bonds may not have seen huge returns, but they did not see the devistating losses that most did. American homes will continue to lose value and fall in price. There we be those that will buy, but they will not be doing so to see a return anytime soon, it will be an emotional investment, and they will see the value drop. As foreign pressures extract jobs from the US, the need for houses for unemployed will be weak and those that do have money will still experience the drop in their current home's value. What Ms. Orman is saying is don't waste your future earnings.
By Rchmd19,  Thu Mar 17 2011, 15:20
Seriously...Orman couldn't shine Warren Buffets shoes. I watched one of Suzy's shows and she gave the caller the wrong mortgage advice. She was incorrect and I would know as I was doing mortgages at the time.
Warren on th eother hand has more than proven himself.
By T,  Thu Mar 17 2011, 15:21
Mr. Buffett! Real estate ownership has always been a great investment, if you do your homework correctly when
buying!! Don't rely on your real estate agent or lender for guidance, that would be the first mistake, educate yourself on all financial matters.
By Rose Essy Group,  Thu Mar 17 2011, 15:34
When Warren Buffet speaks, there is always silence in the room. We want to learn as Americans and live our freedoms, Home buying allows us both. Knowledge of Real Estate and the Freedom to choose. Warren is correct on this one for the obvious reasons, low interest, lots of inventory, and Realtors with lots of knowledge to educate our customers. Let’s help our customers find the home that they can be Rich in the satisfaction knowing they are living still the American dream. Good article by the way Tara!
By Robert Lozano Jr,  Thu Mar 17 2011, 15:44
I believe Orman is speaking out of term based on her lack of experience in understanding the importance of stability and creating a solid foundation for a marriage or raising a family with children in a stable rooted environment. Home ownership is possible through programs in areas to help keep neighborhoods in the positive value verses renters bringing down the property value.
By Aaron Mtuanwi,  Thu Mar 17 2011, 16:04
Now, right now is the time to buy. But more importantly, buying right should be the dream. It is rather more of a reality than a dream. I open the eyes of my clients and let them wake up to the realities of home-ownership instead of the dream.
http://www.123HomeSearch.ListingBook.Com
By Raymond Cardoza,  Thu Mar 17 2011, 16:13
Buffet is absolutely on top here. His advice is sound and PRACTICAL. If everyone was to listen to Orman there would be no economy. Saving is a great idea and a necessity, but lets face it, you have to spend too. I much rather pay $2,000 a month for a fixed number of years and get all my money back and then some vs. paying someone else $1,000 for the right to park my stuff temporarily.
By Patrick Ballasch,  Thu Mar 17 2011, 16:21
It's tough to put a price on the stability of a right sized home with a fixed mortgage. (As per Warren Buffett ) Ownership also promotes the purchase of all kinds of home related products. With so many wacky variables in life, knowing you have a place to go is comforting. If you need to move often, divorce often or are not good at maintaining things, rent or buy a motor home. One size seldom fits all. :-)
By Ann Wilkins,  Thu Mar 17 2011, 16:29
Yes I sell real estate and I usually work with first time homebuyers. The last few sales have been all people who have been renting for the past 15 plus years. They NEVER thought that they would be able to purchase property in the San Francisco Bay Area. With our very high rents, it definitely makes sense to purchase if you can. I like both Orman and Buffet but sometimes Orman is more enterntainer and needs to stir the pot so people listen to her show and buy her books.
By Sue Archer,  Thu Mar 17 2011, 16:30
Both are saying live within your means. But Warren will get my vote everyday (except when it comes to Obama, that's where we part ways...) But as for investment strategies, the tax laws are still set up to help you build wealth through home ownership. Neither said to invest outside your financial ability to afford. Suze Orman? Sometimes she's off track but she's definitely an entertainer.
By Bob Travaglione,  Thu Mar 17 2011, 16:30
Buffett is my choice. I am a Realtor! But I also know that his Company owns over a dozen of the Largest Real Estate Companies in the world. (Including Reece & Nichols Realtors right here in Kansas City)
By Shiloh watts,  Thu Mar 17 2011, 16:34
Warren Buffett gets my vote I Think it’s a great time for first time entrepreneurs, as well as first time home buyers, and those looking to move up. yes i agree we were hit hard but, I think alot of good will come out of it in the end.
By Craig Schaid,  Thu Mar 17 2011, 16:36
I think they are BOTH amazing people to listen to and learn from! Fact is, they both have things to learn from and some strategies work better for some then others. I think if you can pick up ONE thing from every thing you partake in then its a success!
By Marsha Bowen-Washington,  Thu Mar 17 2011, 16:46
I think a lot of discussions about who can afford to buy a home has diluted the fact that several Americans could afford their homes, had fixed rate mortgages, good credit and mortgage payments they could afford until the financial meltdown occurred. Several Americans are unemployed and underemployed which has caused their financial hardship, not the fact that they could not afford their home when they purchased it. I think Orman's comments are not in line with most of the Americans that are sufferring financially right now. Buffet's comments are more in line with those who are not suffering a financial hardship. As a foreclosure counselor and real estate agent, I do see weight on both sides.
By Diane Silverberg,  Thu Mar 17 2011, 16:52
Buffet is one of the smartest money person I know. He follows his own advice and shares it with the world. He has made investments and lots of money -- not because he has a tv show. By the way, does she own a home?
By Ajspirit,  Thu Mar 17 2011, 17:10
I think the answer depends on one's risk tolerance. I favor Buffet's view.....and I think that his advice is on point (regarding planning to keep the property for at least 10 years; taking a fixed rate mortgage and making certain the mortgage is a conservation % of one's income. I think everything in the market points to r/e starting to sell again (inventory is decreasing in formerly sluggish markets, albeit at lower prices).....and it will take several years for prices and sales volume to come back fully, but by then prices will be so high (bid up by all the buyers and sellers who will be in the market then) that many people will be priced out of most markets.....but, on the other hand, of course, there will always be those who are not going to own - either because they can't, they don't want to, or they fold due to bad luck, illness, etc.....there's really nothing new about that.....and as one commentator said on CNBC the other day, 70% homeownership in the US is probably not a sustainable level...but even at less than 70%, that leaves a lot of Americans who can and will be home-owners.
By Ray Wood,  Thu Mar 17 2011, 17:35
Neither Buffet nor Orman are qualified to give us advice. Warren Buffet is a likable guy that operates in the financial stratosphere. Suze Orman is a TV personality that is concerned more about her celebrity image than she is about the quality of advice she doles out in snappy one-liners.

Truth is, things have changed and owning a home from here on out will be different from ownership over the past 30 years. We will have to start treating homes for what they are, a place to live. For some, ownership is the best way to go. For others it won't be. It's no longer a one-size-fits-all thing.

Of course when you ask a group of people whose livelihood depends on the sale of homes they will vote for the optimist!
By Deanna L. Parks,  Thu Mar 17 2011, 18:43
Both Warren and Suze are are saying basically the same thing. We in the US need to be more realistic about what we can afford and make a much stronger effort to live within our means. Home ownership is not for everyone and that is ok. Home ownership is not a "right", but has to be "earned" and managed responsibly. We need to change our old spending habits and make sure we have money put away for those emergencies that might and as we know will definitely happen. When planning on buying a home we need to find out what we can afford and start saving if we have not already. It's a good idea to save money towards the 20% down so we do not have to pay the added expense of P&I insurance. Also if we need to refinance in the future we will have a much better chance if there is equity in the home. For the people who have saved, are financially responsible and know what they can afford, now is a great time to get a home since prices are at historic lows and interest rates are still really low. Owning a home is a good investment and you will not have to worry about your monthly house payment going up as compared to rent. I recommend a fixed rate loan so you can plan and budget for your house payments. Last of all make sure the house you get makes financial sense for you.
By Kimberly M Addelman,  Thu Mar 17 2011, 19:21
With interest rates at all time lows my money is with Warren...The American Dream is alive and well. Make practicle real estate choices with in your means...perhaps an owner occupied multi family property (great for a firrst time buyer).
By Bob Mudge,  Thu Mar 17 2011, 20:00
The American Dream will remain on life support until a viable market returns. And this won't happen until 1.) prices finally stabilize, 2.) the economy improves, and 3.) unemployment drops to something close to normal. Don't believe the government published unemployment figures. It's closer to17% than 9%; I work in the building industry, and many are working 2 or 3 days, and bidding jobs at half the rate they used to. These guys don't appear on the unemployment stats. In other words, no one, except Buffett apparently, is making money. Plan a home purchase for the long term? What if I get transferred? Have a few kids? Or my elderly parents have to move in with me and I need a bigger home? Without a viable reseller market, you are better off renting.

One more thing to consider: from an investment standpoint, a home provides both tax deductions, as well as market appreciation. But we are light years away from seeing normal price appreciation. And since the gov't is broke, at all levels, look for all those "loopholes" like mortgage interest deductions to vaporize. Again, rent for awhile, and keep your money safely invested.
By Patrickh,  Thu Mar 17 2011, 21:29
Orman has some good advise, but I wouldn't follow her advise if you want to be rich. I would follow her advise if you want to struggle for the rest of your life so you can retire comfortably.
By Albert Clayton,  Thu Mar 17 2011, 21:40
Great article again from this fine lady.
Of the 30 wealthiest cities on earth, 15 are in the USA, if home ownership there is a dream god help the rest of the world.
we as a group of foreign investors recognise the investment opportunity your market now offers, Most of the properties we have purchased will probably ( hopefullyy ? ) fall back into the owner occupier segement over the next few years, we will have made a capital gain, the market will have stabalised, tennants will be able to purchase at prices which will be more than viable and in many instances cost them less than their monthly rental payment.
People can claim mr. Buffett was / is a lucky man......well he is a very hard working, very clever..... lucky man !

Splash property group, Sydney, Australia
By Dog days afternoon,  Thu Mar 17 2011, 21:52
So what do you do once you have saved , saved, saved?
Buy a house?
THis downturn is no different from the 1990's If you buy today and hold your properties I I did for the past 25 years you will see enormous returns and not know what to do with all your money unless you like to buy planes.
I do like the idea that people should rent as it just drives up my rent and increases my cash flow all the time. What cost $50,000 may not be worth $450,000 but it is now free and clear and worth $300,000 plus. Next go round it will be worth $900,000 in 2019. So buy when the numbers are right and keep buying. It's an investment you can control.
JUST REMEMBER IT IS A LONG HAUL INVESTMENT. If you own the home free and clear one day it does not matter if it is worth $100,000 or $900,000 as it is all cash in the bank should you ever need to sell it.
By Greg,  Thu Mar 17 2011, 22:59
I put $33K down on my $330K first house in Los Angeles in 1988. I sold it for $385K in 1999 and used my $167K in equity as a down payment on my $670K house in Palos Verdes. Today that house appraised for $1.2M for a refi. So on an initial investment of $33K I now have over $600K in equity even after the real estate crash (we appraised at $1.8M in 2005). I think real estate is a solid investment and now is one of the best time ever to buy. I am investing everywhere I can where values are overly corrected.
By Mike Dutch,  Thu Mar 17 2011, 23:02
The rich uncle image of Buffett is just that.. an image. He's undoubtedly calculating and ruthless as well as wise in the financial department. The WSJ had an in-depth article a few months back which made a good case that home ownership was clearly NOT a good financial investment. While I find the type-A Orman personality rather annoying, I'll have to agree with her that home ownership is not for everyone. I've paid off my own mortgage but won't be able to afford to live in it after I retire because property taxes are too high in California ($23K / year, increasing about 1% / year in perpetuity). Home ownership is objectively NOT an investment... just ask anyone with a home over a dozen years old and well maintained how much of a money pit it is. However, what ownership (or pseudo ownership if you have a mortgage) does offer, is the freedom to choose what to do to/with your house. The real benefit of home ownership is emotional, not financial. During the bubble, people used homes as ATMs, but that was ephemeral. As the owner (no mortgages on either) of two homes, I can tell you for a fact that it is NOT an investment... it is a money pit... BUT it is nice because it offers you more freedom... BUT ONLY if you don't have a mortgage. Bottom line is that If you can't pay cash for your home, rent until you can. Otherwise, you will be a slave to your mortgage. Even if you pay cash, there's a good chance you can't stay there in retirement because the government effectively owns your home regardless of whether it's paid off... they will kick you out if you can't pay your property taxes. Home "ownership" is ultimately just a way for government to keep the population under their thumb.
By Chris,  Thu Mar 17 2011, 23:33
For those who think Orman is right,. Who is she to be giving advice? From a waitress , all of a sudden she is an expert???? " Hello", She then rights a book and now she is a Guru!!!!!!!!, How can you compare Warren Buffett To this Bellegerint, abnoxious, arrogant, sarcastic indiviual, that thinks, that we are all the octomoms. that she embarssed on " Oprah " .

She gets a publicist, and an agent and gets all these bookings to embaress someone where ever she goes, and askes for all this money to talk B.......t. like we do not know what is happening in the world. For those that compare Warren Buffett to Orman, " That is an insult to even imagine that Orman can evenbe in his catagory. Warren is from the old school 4 years ago, nobody knew Orman, and all of a sudden she is who???????? . Why???? because she went on Oprah, talks to Trump and shows up preaching to do what she says on Public TV .

That is suported by donations of the public. She does "NOT" go on there for "FREE", she gets paid to appear and speak the crap she high on and paid for her B......t, by those donations. What she should do isgo to D.C. and become a lobbyist, that way we do not have to see or hear her voice. For all you supporters that send a donation to keep your Public Station "Look Out" Think Before you send your donation, She now has a talk show. Do you Guys and Gals, actually think for a second, that she is not making money!

Think again!! I am tried of seeing people use all of us in general, trying to tell us what to do in our lives, ourselfs and our families. Now let's all Think???????, If she knows and always knew so much"in finance" Where was she when Madoff was taking everyones money?????? I could never listen to someone that trys to tell me how to live my life or with my family.

How could anyone put Buffett in a catagory with a wanna be. Orman parents did not even know each other, and I am sure that they where not even thinking about concieving Orman, when Buffett was making his money in real estate. I read in one of the statements before I commented, that she hates men, She is from the rainbow club. That is not news. But to alot of americans she is a Finance Moron, that sells books, has a brokers license and insults anyone she can.

I personally think that her comments in finance. real estate a very scary. This Is America, " The Greatest Country In The World ". Who Does She Think She Is??? America's Finance and Real Estate Sweetheart??? LOL, I don' t think so. The American Dream Will Always Be Here. That's why everybody wants to come here to the USA. Hey people I am not a real estate agent or broker, Stop knocking them off. These agents and brokers are not the problem it is your gir Orman, Okay .

For your information : The 2 guys that got these people to lose the homes are still fighting in court not to go to jail. There came from Lehman Brother' NY Stock Exchange Hedge Funds, and did all the Prime Mortgages. They are responsible for the begining of the recession, loss of employment, foreclosures etc., When Lehman Brothers went down, so did everything else. My Vote Goes To BUFFETT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 150%. INVEST NOW WHILE AND IF YOU CAN. A HOME WILL ALWAYS BE A VALUEABLE INVESTMENT IN THE FUTURE. GO WITH WHAT YOU CAN PAY AND AFFORD." DO NOT GO ABOVE YOUR MEANS" YOU CAN HAVE THAT HOME ONLY IF YOU BELIEVE IN THAT DREAM. IT WILL NEVER DIE IF YOU BELIEVE IN IT. BE OPTOMISTIC IN KEEPING ALL YOUR FINANCES STRAIGHT. iT WILL ALL WORK OUT.
By Johnny Marr,  Thu Mar 17 2011, 23:46
Buffet is right only if you can buy your home with cash. Cash in the bank gets you a 1% pre-tax yield at best (if online savings). If you have $200,000 (15% higher than the median home price), buy it with cash.

Your annual "cost" including a relatively risk-free opportunity cost would then be $2,000 for lost interest; $4,000 in prop tax at a 2% rate ($3,000 if you itemize and are in the 25% marginal tax bracket) and $1,000 for insurance. That's $500 a month for a $200,000 home. You can't rent a 200k house for $500, so even if the house never appreciates, you may save $6,000 to $9,000 annually due to a lower housing cost based on rental payments of $1000 to $1250 for that 200k house).
By Jack Fleming,  Fri Mar 18 2011, 05:51
Ten years from now it will be Orman who? And we will still be reading the thoughts of Buffet. I'll go with Warren Buffet anytime. You don't amass a $50,000,000,000 fortune by chance.
By Kathy Delbridge,  Fri Mar 18 2011, 06:45
Warren Buffet HANDS Down is right on the money correct! Sorry Suze!

The American Dream is NOT dead by a long shot. We certainly should not be putting those thoughts in the minds of all the current non-homeowners.

Buying a home is still a great investment. Interest rates are ridiculously low and home prices are extremely low as well.

We will always need a roof over our head and for the individuals that are responsible enought to make a monthly rent payment, they certainly should turn that into a housing payment.

There comes a sense of pride with owning a home and we NEED that! The key is to NOT buy more than you can not only afford on a monthly basis as a payment, but also be able to maintain the upkeep..

For the first time in my ten years as a lender, I see more and more buyers be more conscious of their monthly payment and keeping their price range in a more comfortable zone. That is extremely refreshing to me.
By Ricky Wrisley,  Fri Mar 18 2011, 07:58
Both Suzie and Warren have valid points, and explained their points -- Although Suzie made a rather harsh statement the realization is if you CANNOT afford a home using reasonable credit limits, down payments etc. then you should not purchase just to purchase. THis is the same message that Warren Buffet has as well!!!

By the way the only winners here are responsible home owners that know and appreciate their limits and prepare for the unexpected.
By Randy Pereira,  Fri Mar 18 2011, 08:26
The American Dream is Dead... but smart investment isn't! I believe in the buy and hold approach... however just like any investment have a plan. Will it be to rent it out or sell it? If the numbers make sense, then do it. If they don't, then it obviously isn't the right time to buy. Appreciation isn't a given and neither are the tax benefits of owning.
By Voices Member,  Fri Mar 18 2011, 08:59
Hands down. Buffet Wins! A very smart man.
By Steve Fryer,  Fri Mar 18 2011, 09:12
As a long time Broker ( 40 years) I assure you that now more then ever, Warren is dead on! Prices reduced by as much as half in some areas, interest historically low. Why wouldn't it be the time to buy your home? Buy it, hold it, live in it, build the equity with ever cheaper dollars. ask MY fathers father who paid $3500 for his Los Angeles home 80 years ago. It sold last year for $660K! Good investment? You be the judge. And he raised his family and retired in that home!
By Terry Pronia,  Fri Mar 18 2011, 10:24
The responsibility of the buyer is very much to blame. Why blame a Realtor for a buyer losing their home? If a lender told you that you could afford to buy a yacht, would you? Give me a break. Take responsibility. You know your income and outgo, or at least, you should. You should be able to figure out how much you can afford to pay for a monthly mortgage payment. I get so tired of people pushing blame to everyone other than themselves. I can remember way back when I was 24, my husband and I bought our first home. We were told we "qualified" for more than we thought, but of course, we didn't want to have those higher payments, no matter how much we qualified for. Maybe the school system should return to teaching Ecomomics 101, so that people can learn to calculate their budgets themselves, and not have everyone else to blame for their need to showboat.
By Don Maher,  Fri Mar 18 2011, 10:26
The WB
By Terry Pronia,  Fri Mar 18 2011, 10:28
The responsibility of the buyer is very much to blame. Why blame a Realtor for a buyer losing their home? If a lender told you that you could afford to buy a yacht, would you? Give me a break. Take responsibility. You know your income and outgo, or at least, you should. You should be able to figure out how much you can afford to pay for a monthly mortgage payment. I get so tired of people pushing blame to everyone other than themselves. I can remember way back when I was 24, my husband and I bought our first home. We were told we "qualified" for more than we thought, but of course, we didn't want to have those higher payments, no matter how much we qualified for. Maybe the school system should return to teaching Ecomomics 101, so that people can learn to calculate their budgets themselves, and not have everyone else to blame for their need to showboat.
By Kelly Fortune,  Fri Mar 18 2011, 10:53
I respect Warren Buffet's stance on home ownership. His perspective is rooted in common sense, which is how people of his generation did business. I don't completely discount Ms. Orman's perspective, but I recognize that her niche is helping people who have extreme financial issues. The reason that I don't believe the "American Dream" is dead is because the banks recognize that the free fall in real estate prices, commercial and residential, is not complete. They will lend again when unemployment declines and RE prices stabilize.
By Mary Davin,  Fri Mar 18 2011, 11:15
Okay, Middle Americans, Orman Doomsayers and Buffet Trusters, don't forget that through all the market ups and downs over the years, some of us have been so downsized and underemployed for so long, and we are aging well toward and beyond retirement age, that there will NEVER be a chance in hell of getting caught up financially to even consider coming up with a meager downpayment to buy even the cheapest of foreclosres! Just being able to come up with increasing costs of monthly rent money, food and transportation is a challenge! For us, alas, the American Dream of Homeownership is lost forever - short of winning the lottery or a substantial inheritance!
By Mark Cooper,  Fri Mar 18 2011, 12:28
If you are looking for investment advice there is no competition between the two. Even mentioning Orman in the same capacity is a travesty. Self mad Billionaire compared to once bankrupt talk show actor. What's amazing here is the power of Oprah she can magic gold out of dust. I wish I was one of her favorite things!
By Bj,  Fri Mar 18 2011, 14:22
Reply to Pete P. Not that everything you said was wrong... but much of it was! Obama wasn't even President when all these loans failed, so to blame him is ludicrous. The Republicans were in power when most of this mess was created and it was the lack of regulation that allowed the big banks to speculate and take these kind of investment risks. The Glass Steagall Act of 1933 would have prevented a lot of this from happening, but it was the Republicans who pushed to repeal this law for years and are still fighting against regulating these big banks and Wall Street...even after this nightmare! Endorsing a Presidential ticket with half-term Governor Palin on it? Now that would have been intelligent! I agree with Warren! These celebrity TV stars are a dime a dozen!
By Sharond Delance,  Fri Mar 18 2011, 17:46
Warren Buffett does it again. Great financial advice, in an important time. Suze Orman touched on some important issues. Buyers beware, is such an important statement. You have to do your research in your target area. You have to know your limits and plan accordingly.
By Joseph Crane,  Fri Mar 18 2011, 19:38
Both! It's timing. They both have valid points.
By Terry Hershberger,  Fri Mar 18 2011, 21:33
Warren Buffet rocks! Just compare his wealth to Ormans, actually there is no comparison!Obviously, Orman has lost it. Saying the American dream is dead is absolutely dead wrong! More millionaires are made in a down market than any other time. Orman's advise is dead wrong!
By Karla Wagner #1 Broker JLS LTP,  Sat Mar 19 2011, 11:20
No question here. Warren Buffett. Self-made Billionaire.
By Gregory Vermeychuk,  Sat Mar 19 2011, 12:56
Suze Orman is an intellectual and financial lightweight. Buffett has done it all. Even if your home does not appreciate, you're still ahead because you need a place to live. Buffett's best advice is for the FIXED rate mortgage. Stuff happens, and if something can go wrong, it usually will. Fixed rate is the way to go.
By Darrell Davis,  Sat Mar 19 2011, 15:38
Orman is a quack! She claimed on CNN that no-one should be able to buy a home without 20% down in cash. In other words, no poor people should ever be able to buy a home - no matter how modest. Home-ownership is now and always will be one of the best investments an American can make. Yes, short term rapid appreciation is dead for now - BUT she's even wrong there! It's NOT gone forever. When the market absorbs the current overstock of inventory - and yes it will take years - and builders will not start building again until credit starts to flow freely - there WILL be another boom cycle. Hopefully it will not get as out of control as it did this time but it WILL happen again. American's are a boom and bust society - we have short memories and we don't want government regulating how rich we can get. Oil, houses, commercial real estate, tech stocks, gold, platinum, bio-med stocks - I've seen them all hit at least 2 boom and bust cycles since I graduated college. Orman is so caught up in her own hype she is incapable of seeing the market for what it is. She's a goof!
By Jennifer Poillucci,  Sat Mar 19 2011, 18:06
The article posted referenced a small portion of Orman's comments. Taken out of context it doesn't sound very optimistic. I watched an interview on the today show where Suze Orman disagreed with "the Economists" that predict a double dip and further decline in the housing market. Suze referred to the death of the "American Dream" as developing a more a realistic idea that people need to save for a 20% down payment and borrow below their means. That this may mean that more people will have to rent and She also reports that the market is improving with increased Open House attendances and that this will usually show in an increase in sales approximately 3 months from now. I think that Suze was giving the realistic as well as optimistic side of the market but that wasn't conveyed in this article post....We need the whole story, as usual, to make an accurate assessment of any situation
By Eddie Lush,  Sat Mar 19 2011, 19:51
I don't believe they are contradicting one another Buffett says you should buy a home. That statement is only for people who are currently able to buy. If you are unemployed or have a very low credit score you cant buy a home now even tho it is a great time to do so. Ms. Orman is saying that most people aren't currently able to buy a home not that they shouldn't.
By Bob,  Sun Mar 20 2011, 00:04
I have to say it always seems more than a little self-serving when real estate pros are giving advise in favor of buying versus renting. It's like a car salesman debating the merits of public transportation.

It isn't deception, but there is obviously a strong element of bias at work. I would expect a far more balanced and objective treatment of the topic from someone who doesn't profit from the buying and selling of real estate. Wouldn't you?
By Gina Nugent,  Sun Mar 20 2011, 09:59
When I read the article, I got really angry with Suze.
Then, I started reading through all comments..... I realized the spin in this report and I lost total respect for the writer.
I agree, shame on you, Tara! Either you were trying to mislead us and I am glad some comments called you on it and made us aware of it, or you just didn't do your homework by finding out what Suze really meant. Either way, this is typical biased reporting as it turns out. I am not necessarily a fan of Suze, but a writer should be fair and factual which is not the case here.....
By Angelica,  Sun Mar 20 2011, 11:21
I think both Orman and Buffett are right and they speak for 2 very different categories of Americans. Orman has been very realistic on the economic situation. What she is saying is that the ABILITY to make the American Dream come true is, at this moment, dead. So many Americans, and especially the Baby Boomers and middle age in general, are ending up with lost homes, bad credit, reduced income, close to zero savings that it will be impossible for them to buy a home in the next 10 years. What she is saying is that a very large portion of Americans will NOT be able to afford buying a home at this time, neither on credit or cash. Buffett is very right that this is the time to buy a home, and yes he has a track record and the money to do it. The hope for the American Dream now rests with the 20-30 years old who has just finished school and landed a decent job, and who not has not yet to destroyed his/her credit and can attempt to purchase a home. The rest, the ones that buy with cash, are investors and are not pursuing the typical American dreams quest, they have already achieved it some time ago and are now reaping the fruits
By Alan Strange,  Sun Mar 20 2011, 15:15
C. Dave Ramsey ;) Good article. Very interesting.
By Elise Timpe,  Sun Mar 20 2011, 17:44
One point to consider is this: If you can purchase an affordable home and pay money every month towards mortgage, you have a chance of accruing equity.

However, if you continue to rent, your chance of keeping that monthly payment in the form of equity is zero.

That fact alone points to the wisdom of buying an affordable home with fixed, predictable payments.
By DAVID COOPER 1.888.616.6226,  Mon Mar 21 2011, 11:11
Both Suze and Warren are media hounds with publicists and books to sell.
There are multi-millionaires in real estate who shun the media. Those are my role models and mentors

David Cooper Las Vegas Foreclosure Houses Bank Owned! FReee List +1-7024997037
davidcooper@lasvegaswinner.org
By Howard Novetsky,  Tue Mar 22 2011, 06:00
I'm with Warren all the way!!



Howard Novetsky @ http://www.Housemavens.com
By Joe Cawley,  Tue Mar 22 2011, 06:21
Very disappointed in Suze Orman. I agree with Buffet and I also like that he lives in the same home that he purchased over 52 years ago.

This issue with today's real estate market is that you have too many Suze's stating that it is not the time to buy real estate, because the market is not softened all of the way. Well Suze, if everyone lived by your words you are doing a disservice to not only future homebuyer's, but also to the current homeowners who want to sell, mortgage officers, builders, real estate agents, laborers and a multitude of others whose life depends on the market for their livelihood.

People listen to things being said and if Suze states everyone should be a renter, then she is just flat out wrong. She definitely missed the boat when she stated this and I for one was watching her the day she said it. Too many people are going to lose out on the fantastic mortgage rates and they are also going to lose out on putting a small percentage down as their down payment, because coming around the corner it is going to be that in order to purchase a home you may have to put up to 20% down to get financed.

In closing, I hope that people like Suze Orman really review what they are stating, before stating it.....there is a big picture and it does not just involve selling books.
By Jim Sparkman,  Tue Mar 22 2011, 06:43
Whether you agree with Ms Orman or Warren Buffett there are a few things to keep in mind when looking at home ownership. With our economy flapping in the wind, we need to ensure that we are buying homes within our means. Affordability is the Key!

Manageable monthly payments, and not over committing is the way of our current market. Buy what you CAN afford, and you will agree that you have made a very sound investment!
By Joe Patel,  Tue Mar 22 2011, 07:26
I agree with Warren Buffet's each words that come out from his mouth.I like his other advise "be greedy when others scare and be scary when others are greedy".So after housing crash most people are scared in buying home and because of low interest rate and half the housing price compare to peak value, it's best time to buy affordable house.
By Marcia Weiss,  Tue Mar 22 2011, 07:45
Buffet knows of what he speaks. This is opportunity time for those who want to buy and have been sitting on the fence. It's all about the positive aspects of buying and owning a home. I've been telling this to clients all the time these days. No gloom and doom Suze - here's the time to have your own home at an affordable price. Who wouldn't want to have a piece of the American Dream. Listen to Buffet and buy.
By Helen Oliveri,  Tue Mar 22 2011, 07:59
Great post as always Tara, on a very hott subject.

Both Suze and Warren make valid points. While it is one of the best times ever to buy based on housing prices, don't spend more than you can afford, which is what got a lot of people in to this mess in the first place.
By Patreecia Spaulding,  Tue Mar 22 2011, 08:26
Apples and oranges.I don't get why the author chose these two to compare - and actually don't think she meant to compare them. She already was very excited about Buffet and just found someone to contrast him with. She only said the most minute amount about what Orman had to say - no details to help us understand, and mainly focused on Buffet. Anyway, of course they are both right and both talking about different things. I don't know about where you live, but where I am there are people who cannot and should not own a home. They can't afford a home. They couldn't make the payments and they couldn't afford the maintenance. Let's be real. That's just life. To think we can all afford to be homeowners is what caused the mess we're in now in the first place. For those who can afford to be homeowners, this is a great time to buy. It's that simple.
By Sheryl K. Lord,  Tue Mar 22 2011, 09:34
The old adage is still on the table. Live within your means and being practical is very good advice.
By Ryan Andersen,  Tue Mar 22 2011, 12:44
The American Dream of Home ownership is still out there and still going strong. The current downturn has had a huge impact on many people losing their homes, but it has created opportunity for many people who were previously priced out of the market. There are many first time home buyers out there who are now able to take advantage of home ownership. Shame on Suzi for saying the American Dream is Dead. It only dies when you let it die! By the way financing is still available if you have good credit.
By Aaron Schreiner,  Tue Mar 22 2011, 12:53
The 3 words that jumped out at me from this blog: fixed, affordable, practical.
By Elt,  Tue Mar 22 2011, 14:41
Suzie preaches to her audience---- financial lightweights
By Hoof Harted,  Tue Mar 22 2011, 15:00
Well, if you are lucky enough to be able to buy a house right now, you probably agree with Buffitt. If not, then you probably agree with Orman.

Buffitt is wealthy beyond all means and has little knowledge of what the "middle class" economy or working a "salaried" or "hourly" job is all about. Nor does he have to worry about being "laid off."

Orman, on the other hand, obviously knows what the middle class working stiffs go through.

So, they are both right in their own way.
By Carol Gordon,  Tue Mar 22 2011, 22:03
Very interesting comments by all. They are both right. The market is good for those who can afford to buy a house which is affordable, on the other hand, there are still many people who simply cannot afford to buy a house even in this downturn market. The key is: "Think before you leap."
By Paul Howard,  Wed Mar 23 2011, 07:09
I got tired just reading the comments. Seems to me Warren Buffett and Suze Orman are on the same page. Suze just fleshed it out a bit more. (whoever said comparing Suze with Warren is a joke probably never read Warren Buffet's book (Snowball). He is no snob.
Warren Buffett said: (In his last Annual Letter to shareholders) " Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford".
Suze Orman said (Page 80-"Learn to create your new American Dream - The Money Class"): "...homeownership is still a viable and smart step for many families. But it must not be viewed exclusively in terms of an investment, it is a place to live, first and foremost,..."

I agree with both of them. By the way "House of their dreams" does not mean exactly the same thing as "American Dream".
By Alittlerealtor,  Wed Mar 23 2011, 20:27
Warren is as usually right on the $$$. I would say if you are currently a normal average working person who is lucky enough to either own his/her home outright, or at least have plenty of equity, now is the perfect time to buy. I live in NE Florida and if you are an investor, well, I used to joke about the fact that you can purchase a home cheaper than you can a car....now you can buy 2 homes for that price and it is still going down! I don't know how much farther some of these can go, it is sincerely getting ridiculous. There are so many foreclosures & short-sales on the market here that some judges are putting a moratorium (although it's voluntary) on foreclosures for a whole 45 days (whoopie). I have done bpos on the same homes 3 & 4 times now (you can only do the same house every 6 mos). People have caught onto this and are just staying there and saving up for a new one. Just be careful and don't buy a brand new home, they are not built as well as the older homes were and make sure to get a home inspection, it is worth it.
By Gary Coffin,  Thu Mar 24 2011, 09:06
I have to agree with Warren Buffett, now is the time to buy! Mortgage rates are still low and housing prices have come down. Mortgage rates will most likely rise in the coming years and this will impact a buyers ability to purchase a home. For example, a buyer obtaining a $150,000 loan today at a 5% fixed interest rate will pay approximately $805.23 to amortize the loan over a 30 year period. If rates increase to 8% over the next several years, that same loan will cost the buyer $1,100.65. If the buyers income is such that it only supports the $805.23 payment, they will only be able borrow about $110,000 at the 8% rate. So unless the housing market continues on a steep decline the buyer will either have to purchase a lower priced home or come up with another $40,000 in downpayment money. Of course, as Buffet suggests, the key will be to make certain they not only purchase a home at a price level they can afford but also obtain a financing package that will be affordable over the longterm.
By Mitch Larrivee,  Thu Mar 24 2011, 21:22
Just another reason I'm a Warren Buffett fan!
By Ryan Smith (951) 595-7490,  Thu Mar 24 2011, 22:27
I'll go with Buffett!
By Terri,  Mon Mar 28 2011, 07:42
I can't stand Suzie Orman. But if the american dream is still to own a home then a person needs to be sure they want to live in that state, that city, for the rest of their life. I know I don't want to live here for the rest of mine. I'd like to live in a couple different places before I die, so buying to own is not a possiblity. I lost money on my first house, made very little on my second and will probably break even on the third. Buying a home in my opinion sucks. Not only has it not been an investment, but I've been stuck here for the last year trying to sell and can't. If I were renting I could've moved a year ago.
By Jen Butel,  Mon Mar 28 2011, 13:44
Great post! I recently heard Warren Buffet's address to his shareholders and his belief that real estate is a good investment. I can't say that Orman's advice carries the same weight.
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By Rose Wilkinson,  Wed Mar 30 2011, 18:32
I will listen to whoever makes the most money, and the last time I checked... Warren Buffet was either the 1st or the 2nd wealthiest person in this world while Suse Orman didn't even make the list.
By Lolita,  Thu Mar 31 2011, 08:04
I agree, Warren Buffet for sure but Suze shares solid advice as well, great post!
By Wilkinson & Associates,  Thu Mar 31 2011, 15:38
Honestly I say neither. The reason why is that they are talking about different areas than where I live. They both may be correct for their particular area but not for the Charlotte, NC and surrounding areas. Although foreclosures may seem like bad news for some agents but for some it has been nothing but a gold mine.
By Wilkinson & Associates,  Thu Mar 31 2011, 15:39
Honestly I say neither. The reason why is that they are talking about different areas than where I live. They both may be correct for their particular area but not for the Charlotte, NC and surrounding areas. Although foreclosures may seem like bad news for some agents but for some it has been nothing but a gold mine.
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By dfgfdgfdgfgdf,  Sun Apr 3 2011, 08:15
I'd have to side with Warren Buffett for sure. He's been around the block a few more times that Suze.
By Nuvia Rivera,  Mon Apr 4 2011, 09:32
Definately Suzy!
By Shane Ofoia,  Tue Apr 5 2011, 06:04
This article is B.S. Warren Buffett and Suze Orman are both right.

Class is now in session:

(High School)
Suze Orman talks about the "New American Dream" and "LIving Within Your Means But Below Your Needs"
1. 8 month emergency
2. save for 20% down
3. find a great deal on a home

(College)
Warren Buffet the professor investor:
1. Educated consumer
2. Best loan deal possible (Loan Structure)
3. Value investing (Do The Math)


Once those 2 steps are taken you will be on your way to being a homeowner and a property investor at the sametime and have the American Dream.

The PROBLEM is people want instant gratification: buys a home with no savings, took home loan that a consumer can't pay for or didn't understand the what they were signing, bult up consumer debt, job layoffs, no income. So really for people that have these issues those are the people Suze is talking about by "New American Dream".
Now on the other hand for the people that don't have these issues which will probably be a small percentage of the middle but mostly upper class then these are the people that Warren Buffett is talking about. Value investing into a property for pennies on a dollar with a great rate where your ROI in a longterm sense will be appreciated in value once the economy corrects itself.

Buy Buy Buy for the people that can invest in property now and Bye Bye Bye for people who can't invest in property now.

We all know Warren Buffett is king when it comes to investing and Suze Orman can't touch him on that but she's just trying to give common folks common sense, it's that simple.

People need to stop trying to buy homes they can't afford and for all you lenders stop trying to tell people they can afford it when they can't, you should be ashamed of yourself.

In the end It's not rocket science.
By Spencer R. Madison,  Wed Apr 6 2011, 00:09
I tend to be more inclined to listen to someone who has built their own fortune than I am to listen to a talking head. As much good advice as Suze Orman has given throughout the years, her advice here is not only bad for those people who can afford to make payments on a home, but bad for the economy in general.
Warren wins here.
By Scott Cleveland,  Thu Apr 7 2011, 10:41
Yes, while it may be true that Warren Buffet is worth more and has a proven track record, there are many things to consider from both Orman and Buffet. Yes, Buffet still lives in the same home he bought many years ago, but he does own a sprawling multi-acre retreat estate in Bel Air, California. He also owns several jets and other transportation items as well. The fact is they both offer great advice, but Orman beets Buffet out with her concept of owning more liquidity in your home. The truth is no matter how you look at it, the more ownership you have of your home the better off you are going to be. If you can quickly get to the point where you will have 50-60% equity with only the remaining 40-50% mortgaged the much better off financially you will be, regardless of how you could have used that money to invest in other investments such as stock markets, mutual funds or other financial mechanisms.
By Don Maclary - Realtor* ABR*,  Wed Apr 13 2011, 12:08
Both give excelent advice! However with either of them you may have an exception to the rule. And for both of them the exception usually applies to families with lower income.
Lower income people still need a place to live and making a mortgage payment may be the only option to secure a future income.
Even if a reverse mortgage is the only way to a retirement income at all.
By Referralagents.org,  Thu Apr 14 2011, 07:00
Warren Buffet will go down as the most successful investor of all time. Suze Orman will never have that type of legacy, yet she provides logical and prudent advice to those looking to learn via 30-60 minute segments. Take what you can from both of them, but always make decisions based on your personal goals and circumstance.

http://ReferralAgents.org
By a,  Fri Apr 15 2011, 10:23
Warren Buffet has the better advice on this topic. As I was taught early in life, if you want to be in someone elses position when you get to their age, take their advice. Suzie has good financial advice, she's just doesn't qualify as an expert in real estate transactions. But she is a good first step for our current overspending generation of "entitled" young couples. A significant portion of our current crisis is the result of social welfare programs that required lenders not to discriminate against the Irresponsible, No Income, No Job, No Assets, buyers who will let their home go to foreclosure while continuing to spend on overpriced vehicles, cell phones, designer clothing, etc. I realize that during this "sales frenzy", many responsible buyers were caught up in the action without adequate and full disclosure by the selling and financing brokers. Also, that the economy has put many out of work, due to no fault of their own. The American Dream is just that, a dream. It is not a right, it is a responsibility to own a home.One that can be attained if you work smarter and longer than your counterparts. Dave Ramsey has some very good advice on getting yourself out of debt, but most of us are not willing to forego immediate gratification for future financial security.
By Angela Glaze,  Sat Apr 16 2011, 13:25
Warren Buffet, he practices what he preaches ,that is his success. Buy and live within your means.
I agree with Warren Buffet for sure but Suze shares solid advice as well, great post!
So, maybe both right in their own way ? There's no one fits all.
By Bill Eckler-Florida,,  Sat Apr 16 2011, 14:09
Everyone deserves an ear.....but the reality of life is, no one is completely right. With this said, perhaps the best position would be advocating what you feel are the good points from each. Even "Moe" of the Three Stooges, who said "there's a sucker born every day" had a valid point.
By John Walin,  Sat Apr 16 2011, 14:45
I would take Jimmy Buffett opinion over Suze Orman, hehe...
By Dave Beckmann,  Sat Apr 16 2011, 14:51
I have watched Suzi sometimes give great financial advice and sometimes the advice she gives is totally off base. She is not consistent and probably leads people that follow her "down the wrong path". Warren has proven his ability in the markets and I would trust his advice more that Suzi's...
DenverMortgage
By Mike Harding,  Sun Apr 17 2011, 06:11
I would also take Buffet's opinion over Orman, Buffet understands the very simple "buy low, sell high"; I am sure Orman was telling folks to buy, buy, buy when real estate was over valued as well.
By Gus Pishue,  Tue Apr 19 2011, 10:56
I tend to lean to Buffet rather than Orman, not to say that some of the things Orman has to say isn't good.
By John Walin,  Thu Apr 21 2011, 14:22
Bad news sells books and Orman likes the controversy for her own ends. I went to Brian Buffini 2 day seminar and he said in two yearswe are going to have a housing shortage! No new construction past 3 years plus normal population growth and families put their plans on hold the last several years. A lot of pent up demand. Add to that mortgage money is cheap. Doom and gloom sells books and seminars Suze is riding the wave of paranoid followers. Housing will stabilize, maybe not appreciate much but the good stuff will sell and junk will sit there. Buy a place you want to live! Don't think of it as a milk cow for quick cash! That is about the only thing Suze is right about. Everything is pure self important self promotion.
By Vicki Marsh,  Wed Apr 27 2011, 17:37
I'm with Buffett, all the way. He seems to know about financial wealth. At one time I heard that Suze Orman doesn't even own real estate...she is/was a renter.
By Annette Lawrence,  Thu Apr 28 2011, 05:53
Tara, excellent article....right or wrong, a writers objective is to engage the reader. You have acheived success!

Orman, in identifiying the incredible difficulty the non-homeowner will encounter to accumulate the savings to purchase a home, is identifying that eventhing in todays economic environment is working against them.

Buffet, in addressing those who have accumulated sufficient captial to have choices, always advocates the long term investment.

It is that bridge to accumunating the critical mass that seems to be in disrepair. If you are in the real estate business, you need to have the resources and patience to guide your buyers in the disapline of controlled spending, saving not nickels and dimes but big wads of money as a result of the decisions they make. It not a pretty picture for those who have a dream, but find the bridge is been washed away.
By Gregorio Denny,  Fri Apr 29 2011, 02:02
Suze who? Wasn't she the mother on The Brady Bunch?
By Gatita,  Mon May 16 2011, 14:56
Warren Buffet came from a generation of people who did not spend the least penny on self gratification. Such that he is wealthy now. Unfortunately, that is not America's generation now. People in America are busy keeping up with the Jones and thus their eyes are bigger than their pocket. People Warrens advise buy something 30% less is wise. But to not buy right now is even wiser. if you are working for a government job or a job that is not a stable company. Stay away from debt b/c government jobs will soon disappear. It iss even wiser to get out of debt and be free to relocate to another country. Why b/c wall street will crash again sometime in 2011 and far worse than before, houses are going to be worth nothing. More people will loose their homes. Bible prophesy says America will no longer be the worlds economic power. I am sorry to disappoint everyone. But America has taken God out of everything. Thus, it will not be protected. People not only we are going to loose homes but there will be a shortage of food in this country soon. Don't be fool by the media. Pay attention what goes on in Israel and you will know where we stand in the time zone. Remember what happen in Germany with hyper inflation. People are not waking up to the signs. Everyone has made money an idol. A home is not a fancy house but where their is peace, security, respect, and love.
By Seodipa,  Tue Jun 14 2011, 05:06
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By Jenng,  Fri Aug 12 2011, 14:27
Both are correct. We no longer have the American dream of owning a home, at least not at this moment in time. No job, no mortgage. Best time to buy a home is now, but if you have no job, what good is it. Mr. Buffet has a huge investment in Wells Fargo, I am speaking "huge investment " it stands to reason he is pushing all to buy now into the American dream, he could lose a lot in the housing industry as Wells Fargo is the biggest investor in the housing industry in California, where they are struggling with jobs, the economy and losing their homes daily. So yes, of course Mr. Buffet is going to push the ideal of buying a home now, but if you have no job, no income to speak of, the house is just that "a dream" no matter how low the interest nor how great the deal. California is drowning in debt with the housing foreclosures. But if Wells Fargo won't budge for the average home buyer, what good is pushing the American dream? When Buffet saw the $$$ for Wells Fargo he had no idea it would take a huge hit like it did, he had to cover his investment, I am sure it is a good one, but for now, it's every ones concern. After all banks are privately owned. To keep your bank afloat you would do anything to save it, just as Warren Buffet did when he sold his stocks to cover the billions he had invested in Wells Fargo. Yeah, he has an ulterior motive, an agenda he is following. Make no mistake he is good at what he does. That is how he makes his money, but also make no mistake, he is making sure you heed his wisdom, he is protecting his investment. So when your cursing the banks for your overdraft fees, banking fees, atm fees, direct deposit fees, or any other fees involved with banking business, think of this man, he implements these ideals and says "yea or nay." If he doesn't do it personally, he has approved of these actions by his non actions. As for Suze Orman, she is going on what she has learned from doing, reading and personal knowledge, no different than Buffet, just in a much smaller scale.
By Jeremy,  Mon Sep 12 2011, 10:02
Well Buffet says it the best investment he ever made because of the emotional gains it brought to him and his family. The article is taken out of context in that the house it isn't an economical investment to Warren. Warren had many better financial investments than his house, obviously.
By Tchau08,  Mon Oct 24 2011, 12:06
i recently came across a book that details how warren buffett invests in real estate, its pretty informative for people who want to know how the man would do it.
http://www.amazon.com/Warren-Buffett-Invest-Estate-ebook/dp/B004M8S4ZO
By Sun Realty - Graham Ginsberg,  Thu Nov 3 2011, 07:12
I for one love Orma, watch her show whenever I get a chance. If anyone wants property in Naples Florida invest wise and check out http://www.naples-fl-real-estate.com/2010/pelican-bay-naples/
By Gloria Matthews,  Thu Mar 1 2012, 08:15
Lets face it, they are both motivated by their own interests. Suzie Orman was late on the fix your finances agenda. She began that part of her overatures well into the financial crisis, NOT before the crash, she is selling how to fix it. once she sees the recovery in 3 years, perhaps she'll say buy buy buy. Now Warren, he is a buy low, and hold kinda guy. In fact, I read recently that he has made MAJOR investment in some real estate brokerage and information platforms, so now that he has "bought low", he is ready to reap rewards from his investments.

I bought a rental for myself this last year and hope to grab another one or two. this year. buy and hold as a long term investment. For most of us, buying a home is an investment in our future for our families. Its where we put down our roots, and create our lives for those around us. In 2006 I said the party was OVER, ...(I sold my personal home in 2005). and have repurchased a home and rental this last year.

I go with Warren here, as he knows economic cycles and real estate is very cyclical. I agree with Warren, but dont have the big bucks to buy national and international real estate companies, then benefit from my world wide media exposure. We can all do, what we can do. Its a GREAT TIME to buy your first home, or a rental investment.
By Brad.potter,  Wed Nov 21 2012, 02:27
The property business is very hit and miss at the moment being a estate agent myself I see where Suzie is coming from. This is a good article because you have two sides of the story like any other arguements really. Anyway thanks for posting up an interesting read! http://www.onlineestateagentslmy.co.uk/
By christyjeni702,  Sat Jan 5 2013, 02:02
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By Voices Member,  Wed Jun 19 2013, 12:31
I think that Warren Buffets advice' is the most relevent. That guy is a genius! :)

David | http://www.dsbahr.com/ROOFING.html

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