In respect to real estate, it's so much harder than stocks. There's just so much more opportunity, at least in the United States. There's so much more opportunity that presents itself in security market than it does in real estate. In 2012, Warren Buffett said he'd buy a couple hundred,000 single family homes if he could. So, why is he recommending avoiding real estate altogether in 2025? The answer might surprise you. In this video, we'll break down why Buffett thinks real estate is a lousy investment today and how one simple metric reveals exactly why the deals that once excited him just don't make sense anymore. Let's get into the video. In respect to real estate, it's so much harder than stocks in terms of negotiation of deals, time spent, the involvement of multiple parties in the ownership. Usually when when real estate gets in trouble, you find out you're dealing with more than the equity holder. But there have been times when large amounts of real estate have changed hands at bargain prices, but usually stocks were cheaper, but they were a lot easier to do. So Charlie did more real estate. Charlie enjoyed real estate transactions and and he actually did a fair number of them in the last 5 years of his life. Uh but he was you know he was playing a game that it was an interesting game to him. But I think if he you'd asked him to make a choice when he was 21 and he had to either be in stocks exclusively the rest of his life or real estate the rest of his life, he would have chosen stocks of the second. The there's just so much more opportunity at least in the United States. There's so much more opportunity that presents itself in the security market than it does in real estate. And in real estate, you're dealing with a usually dealing with a single owner or a family that owns maybe a large property they've had a long time. Maybe they've borrowed too much of money against it. Maybe the population trends are against them. But but to them, it's an enormous decision. When you walk down to the New York Stock Exchange, you can do billions of dollars worth of business, totally anonymous, and you can do it in five minutes. And the trades are complete when they're complete. In real estate, when you make a deal, a big deal with a distress lender, it you know, when you sign the deal, then you go into another phase. I mean then people start negotiating more things and more things and it's it's it's a whole different game and a different type of person to some extent enjoys the game. We uh we we did a few real estate deals that came our way in 2008 and 9, but the amount of time that they would take us compared to doing something intelligent and probably better and securities there was just no comparison. I mean, in a real estate deal, every every sentence is as important to the person and and in stocks and uh if somebody needs to sell 20,000 shares of Bergkshire or something and they call us and the price is right, it's done in 5 seconds. Warren Buffett built one of the single greatest fortunes in history by doing one simple thing exceptionally well, buying mispriced assets. From smalltown textile mills to global giants like Coca-Cola and Apple, Buffett's strategy has always been the same. Wait patiently for the markets to undervalue a highquality asset, then strike. But here's the question. Why do these mispricings happen more often in stocks than in real estate? It all starts with one key difference, liquidity. A fancy term which simply means how quickly and easily something can be bought or sold. Stocks are incredibly liquid. That means they're easy to buy and sell. You don't need to negotiate with a seller, wait for paperwork, or talk to a lawyer. You can buy a stock on your phone in seconds or sell it just as fast. Millions of people are doing this every day across thousands of companies all around the world. But that same ease of trading creates a problem. People often act on emotion instead of logic. Because stocks are always being priced in real time, their value can swing wildly based on fear, hype, or headlines, even when the underlying business hasn't changed at all. But while the process of buying and selling stocks is fast and simple, the way people behave in the market is often irrational. That's why Buffett says the stock market is driven more by mood than by math. And it's exactly why mispricings happen so often. The faster and easier something is to trade, the more likely people are to overreact. In the last 10 years, the US stock market has dropped more than 10% on eight different occasions. Not because the system was broken or the economy had collapsed, but simply because in those moments, there were more people rushing to sell than willing to buy. It wasn't always about logic. It was about emotion, panic, fear, headlines. And when that happens, prices fall fast, even if the long-term fundamentals remain perfectly intact. This dynamic is especially true when it comes to individual stocks. Over the last 10 years, there have been four times when Apple stock has fallen by more than 30%. In fact, it was one of those exact sell-offs that Buffett used to make Apple his greatest investment ever. Back in early 2016, Apple stock was falling and fast. The company had just reported its first ever decline in iPhone sales, and Wall Street was in full panic mode. Headlines warned that Apple's best days were behind it. Analysts slashed price targets, and in just a few months, the stock fell by nearly 30%. By the end of 2016, Bergkshire Hathaway had quietly built a massive stake in Apple, taking advantage of the panic when everyone else was focused on the headlines. That investment would go on to become Buffett's most profitable stock bet of all time, generating over 100 billion in profits. The lesson, when emotion drives prices lower, Buffett doesn't run. He leans in because he knows that short-term fear often creates long-term value. Now, compare that to real estate. Real estate transactions are private, negotiated, and slow. There's no live ticker showing you the price of your house every second. Properties don't get revalued in real time. They get appraised maybe once a year, if that. And when it comes time to buy or sell, it's a long process. The buyer and seller have to agree on a price, line up financing, navigate inspections, and coordinate with real estate agents, lawyers, and title companies. In most cases, sellers won't just accept the first offer that comes along, especially if it feels low. They anchor to what they think the property is worth, often based on emotion, past value, or how much they spend on renovations. And buyers can't react instantly either. Even if they spot a deal, it takes time to secure funding, schedule an appraisal, and move through closing. This friction acts as a cushion. It slows everything down and prevents sharp price swings, even in moments of economic uncertainty. Take March 2020 for example. The stock market crashed over 30% in just a few weeks. Companies like Apple and Disney lost hundreds of billions of dollars of market value almost overnight. But real estate, it barely moved. Home prices and commercial real estate values didn't collapse in real time because the system wasn't built for that kind of speed. In fact, most owners had no idea what their real estate was worth during those weeks. And that ignorance actually protected the market from overreaction. That's the key difference. Stocks are built for speed. Real estate is built for stability. And that's why you see far more mispricings and opportunities in the stock market than you do in real estate. Given all these differences between stocks and real estate, you might assume that Buffett would completely avoid recommending real estate as an investment. But that's not the case. While he clearly prefers stock for their speed, flexibility, and opportunity, Buffett has said there are moments when real estate becomes too attractive to ignore. When prices drop low enough, usually during times of distress or dislocation, that even with all the complexity and slowness of real estate, the math can become irresistible. Listen to Buffett back in 2012 talk about the greatest investing opportunities available in the real estate market at the time. Equities are still cheap relative to any other asset class, but they're not. I would say the single family homes are cheap now, too. Yeah, single family homes if but if I had a way of buying a couple hundred thousand single family homes and and had a way of managing the management is enormous is really a problem because they're one by one. They're not like apartment houses. So, but I would load up on them and I would I would take mortgages out at very very low rates. But, but uh if if anybody is thinking about buying homes, 5 years ago they couldn't buy them fast enough because they thought they're going to go up and now they don't buy them because they think they're going to go down and interest rates are far lower. Uh it's a way in effect to short the dollar because you can you can take a 30-year mortgage and if it turns out your interest rates too high next week you refinance lower and if it turns out it's it's too low the other guy stuck with it for 30 years. So it it's a very attractive asset class. Now in that 2012 interview, Warren Buffett made an unusual statement. He said, "If I had a way of buying a couple hundred,000 single family homes, I would load up on them." That was rare praise for real estate from a man who usually sticks to stocks. So what was he seeing? One of the clearest indicators was the price to rent ratio. A simple way to measure how expensive it is to buy a home versus rent one. The formula is easy. Take the price of a home and divide it by the annual rent for a similar property. Think of this as similar to a price to earnings ratio for a stock. Historically, a price to rent ratio under 15 suggests real estate may be undervalued. And in 2012, in many US cities, that number had dropped below 12, even below 10 in places like Phoenix and Las Vegas. That means you could buy a home, rent it out, and earn back your purchase price in just 8 to 10 years before even counting any price appreciation. In Buffett's eyes, that was a compelling opportunity. Borrowing costs were low, rental demand was rising, and the numbers made sense. It wasn't just that homes were cheap, it was that the income you could earn from them made the purchase incredibly compelling. Despite all the headaches of owning real estate, the value was so obvious that even Buffett, who usually avoids the asset class, wanted it. Let's fast forward to today. Today, the price to rent metric tells a very different story. As you can see here, when Buffett was recommending investing in real estate in 2012, the price to rent ratio had dropped below 12. Now, it is closer to 16, above the levels reached in the last real estate bubble. Put simply, if Buffett were focused on real estate today, he'd see prices that are far too high relative to rental returns, the opposite of that 2012 opportunity. With mortgage rates still elevated and house prices outpacing rent, the math just doesn't line up. That doesn't mean real estate isn't a viable investment, but it does show why Buffett was bullish in 2012 and why he stayed cautious today. The critical takeaway, valuation matters, even in real estate. just as he looks for cheap stocks relative to earnings. Investors need to wait for real estate values to realign with rental income before a deal becomes compelling. That's one of Buffett's most important lessons. It's not just about buying assets. It's about buying them when they're mispriced. And that's exactly why the stock market offers so much opportunity. It moves fast, emotions take over, and price often gets disconnected from real value. But spotting those moments takes discipline, structure, and time. That's why we created Investor Center Research, a monthly stock research service to help you invest like Buffett. Each month, our team made up of professionals from Wall Street, private equity, and venture capital shares one highquality stock we believe is mispriced. You'll see exactly how we value it, what price we'd pay, and why it fits Buffett's playbook of quality, durability, and long-term upside. We're opening just 250 founding member spots. And those who join now lock in our lowest price ever for life. So, if you want to invest with more clarity and stop guessing, click the link in the description to join the wait list. If we've already launched, that same link will take you straight to the product. And when you sign up, we'll also send you a free copy of our Warren Buffett investment checklist. 25 timeless questions to help you evaluate any stock like Buffett would. So, hit the link, get the checklist, and start investing with confidence. I will see you over there.