Warren Buffett is stepping down as CEO of Berkshire Hathaway, marking the end of an error for one of the most iconic investors in history. Not at the same time, we're seeing big shifts in the housing market from shrinking home sizes to a boom in home equity, and that is tempting for many people. Joining us to break it all down and explain what it means for your money is Joel Larsguard, host of Hoda Money. Good morning, morning, Heather.
All right, let's talk about Warren Buffett. What a legend he's been guiding so many people for generations and investors. What do you think his biggest legacy is going to be for the average person who are trying to build wealth?
Oh Man, Warren really is the goat, and he is so humble as well. I mean the way he talks about his longtime partner who passed away not too long ago, Charlie Munger, just he makes it sound like Charlie did everything. But Warren has been investing since he was eleven years old, and I think his biggest legacy is really all the
wisdom he imparted over the years. This is something Warren did incredibly well for himself as investor, but the fact that he was so forthcoming with other people about what a successful investor needs to look like when we're talking about long term investing, we're talking about simplicity, prioritizing value, and patience, all of these things Warren has spoken so
eloquently about over the years. And I just think if you're an individual investor, the goal is not to do what Warren Buffett did, because, as jason's Wig wrote in The Wall Street Journal, he says that he thinks Warren Buffett conservatively read over one hundred thousand financial statements of different companies over the years. Heather, I don't know about you. I'm not doing that. I think probably most people listening right now, that's not their idea of a good time.
That's Warren's idea of a good time. And so for Warren, because that was his superpower, he was an incredible investor because he just he eat it, he ate it, he slept it, he breathed it like this was this was his lifebloodved he loved this stuff. Most people don't. And so what Warren says for most people I think is spot on, is hey investing in low cost index funds
is the way to go. You don't have to think like me, You don't have to do all the hard work that I do, and you can still enjoy awesome returns in your investing lifetime.
I mean, it's truly a great story of someone who has found their passion in life and really pursued it and built an entire career and life out of it. And it's very inspirational. Okay, let's shift gears just a little bit. We're seeing a trend towards smaller homes. What's something we should keep in mind when it comes to home equity.
So okay, yeah, I love this trend in so many ways. And let's talk about home equity in a second. But first, when it comes to us home sizes and apartments that are being built right now, we're seeing them actually go down in size. And so for something like forty years, we saw the average square footage of new homes go up and up and up. And so when people say, hey, it's more expensive, it's harder to buy a home, well, part of that is because what we consider a home
has changed, and it's been HGTV right. It's fancier than it was thirty years ago, new homes are and so our aspirations have grown alongside alongside the square footage of these homes, and so we're finally starting to see part of it's the cost of materials, part of it's just an attempt to build more supply because there is so much demand still, so much pent up demand still that US home sizes are finally shrinking, and same with apartment sizes.
And I think this is a good thing because we've gotten used to bigger is better, and the truth is like the bigger your home, the higher your maintenance costs are going to be, the higher your utility bills are going to be. Yeah, exactly, So be thoughtful about the size of home your mind. And overall this is a
good trend as well. And you mentioned home equity. That is a really interesting thing too, because the average person who has bought a home over the past decade fifteen years has seen a substantial rise in their home equity. So we're talking about collectively as a country, over thirty five trillion dollars in home equity, which is cool. The problem is with that is it's hard to tap and a lot of people are saying ooh times are tough.
I want to go in there and snag some of that home equity that I have a mast over the years, and there's homes are a liquid for a reason, like it's good that you've saved money essentially by owning a home and paying your mortgage every month, but using it, that's where things get tricky, and I want most people to leave their home equity b.
I would be lying if I said I haven't caught myself watching tiny homes on HGTV and thinking could I live in a three hundred square foot home. I don't know I'm at that point yet, but I certainly see the appeal from a financial standpoint.
So Yeah, in California, accessory dwelling units ADUs have caught on like wildfire, and more and more people are building little units in their backyard. They're running it out, they're making some extra cash, and they're providing another place for people to live. I think ADUs are one, at least one of the solutions to the housing problem that we face. But yeah, it's going to require more people to say I'm okay living in four hundred.
To our feet right right, Well, we'll see. I'm not there yet, but maybe someday, Joel, thank you so much. Everybody. Make sure you listen to How the Money every Sunday right here on KFI from noon to two.
Have a great rest of your day you too, Thanks Heather,