Debt-Based Capitalism Is Over, Gives Way To Asset-Based System

Warren Buffett just made a shocking move that nobody’s talking about – and it could completely change how you think about buying a home.

While everyone’s waiting for a housing crash, the Oracle of Omaha quietly bet big on something that reveals where the real estate market is actually headed. But here’s the twist: it has nothing to do with traditional home sales.

In this video, I expose the hidden strategy behind Buffett’s latest investment and why major homebuilders are pivoting to a business model that could lock millions out of homeownership forever. Plus, I’ll reveal the controversial signal this sends about whether we’ve hit the market bottom.

If you’re trying to decide whether to buy now or wait, or if you’re an investor looking for the next big opportunity in real estate, you need to see what Wall Street already knows.

The housing market is transforming right in front of us. The question is: will you be a winner or a victim of this shift?

Warren Buffett just bet nearly a billion dollars on two of America’s most controversial homebuilders. Companies known for building what some call disposable houses. That’s right. While everyone else is panicking about a housing crash, Berkshire Hathaway quietly accumulated $800 million worth of LAR stock and another $191 million in DR Horton shares during the first half of 2025. But here is what should really blow your mind.

These builders aren’t making most of their money selling homes anymore. They’re becoming America’s biggest landlords through something called Build-to-Rent. And the numbers are absolutely staggering.

The Build-to-Rent sector has exploded by 270% since 2019, with these companies now controlling over 350,000 rental homes across America.

Look, I’m about to show you something that most investors completely miss about this housing market. There’s a reason Buffett’s team is piling into homebuilders right when mortgage rates are stuck above 6.5%, and the average American needs to earn $126,700 just to afford a median-priced home.

And no, it’s not because he thinks home prices are about to crash. It’s actually the opposite. But before we dive into that, let me ask you something that might sound crazy.

What if I told you that DR Horton and Lennar don’t actually care if you can afford to buy their homes anymore? What if their entire business model has shifted to something far more profitable? And what if the housing shortage everyone’s talking about is actually their golden ticket to decades of guaranteed profits?

Stick with me for the next few minutes because I’m going to reveal three game-changing shifts happening in real estate right now that explain exactly why Berkshire Hathaway is making this massive bet. And trust me, once you see what’s really happening behind the scenes, you’ll understand why this might be the smartest housing play of the decade. All right, let’s start with the elephant in the room.

According to Berkshire’s latest SEC filing from August 14th, 2025, they now own 7.05 million shares of LAR and 1.48 million shares of DR Horton. Combined value, just over a billion dollars. Now, before you say Warren Buffett’s lost his mind buying homebuilders in this market, here’s the kicker. Probably wasn’t even Buffett who made these trades.

These positions are below Berkshire’s typical billion dollar threshold for Buffett’s direct involvement. This was likely Todd Combs or Ted Weschler, the portfolio managers, who each run about 10% of Berkshire’s portfolio. But here’s why that matters even more. These guys don’t make headlines unless they find something really special.

Think about this for a second. Mortgage rates are sitting at 6.58% according to Freddie Mac’s latest data. First-time buyers now make up only 24% of the market, the lowest share since 1981. The median home price hit $435,300 in June 2025. And the average household needs to earn over six figures just to qualify for a mortgage. So why on earth would anyone buy home builder stocks right now? Here’s where it gets interesting.

Remember when I mentioned that these builders don’t care if you can buy their homes? Let me show you what I mean. DR Horton has quietly built over 14,000 rental homes since launching their build-to-rent division in 2019. They’re now operating in 33 states with 38,400 homes in inventory for 2025. In just their last quarter, they sold 1,650 single family rental homes for $313.5 million, not to families, but to institutional investors.

Did you catch that? They’re not selling to you and me anymore. They’re selling entire neighborhoods to Wall Street.

But wait, it gets even crazier. Lennar just partnered with Invitation Homes, you know, the company that owns 80,000 single family rentals across America. Through their Upward America venture, backed by $1.25 billion from Centerbridge Partners and Alliance Real Estate, they’re planning to deploy over $4 billion to buy and rent out homes. The partnership already includes 4,400 homes in Florida, Texas, and the Carolinas. Now, you might be thinking, “Okay, but why would this be profitable?”

Let me hit you with some numbers that’ll make your head spin. The build-to-rent sector now represents 9% of all single family construction, up from never exceeding 3.1% before 2008. Rent Cafe reports that 2023 was BTR’s most successful year with nearly 27,500 homes completed. That’s 75% more than 2022 and triple 2021’s numbers.

Here’s the part nobody’s talking about. These aren’t your typical rental properties. The average BTR home rents for $2,181 per month according to CBRE’s latest data. That’s a 10 to 40% premium over comparable apartments. And get this, they’re maintaining 97% occupancy rates with only 28 to 35% annual turnover—way better than traditional apartments. Stop and think about what this means.

These builders have discovered that they can make more money renting homes than selling them. They get bulk sales to institutional investors, guaranteed buyers for entire developments, and they’re building exactly what renters want: single family homes with yards in good school districts.

But here’s where Berkshire’s investment gets really clever. You see, everyone’s focused on whether we’re in a housing bubble. But that’s the wrong question. The real question is, what happens when an entire generation can’t afford to buy homes?

According to the National Association of Realtors, only 6 million of America’s 46 million renters can actually afford to buy a median-priced home right now. The required annual income to afford that median home: $126,700. Meanwhile, 31.3% of all households are already cost-burdened, spending more than 30% of their income on housing.

This isn’t a bug in the system; it’s become a feature.

Look at what’s happening in California. The median monthly payment for a mid-tier home there is over $5,900. The required income: $237,000—literally double the state’s median household income. Since January 2020, monthly payments have increased by 82%.

Now, are you starting to see why Berkshire’s interested? When homeownership becomes impossible for most Americans, what’s the alternative?

Renting.

And who’s positioned to provide those rentals? The same builders who used to sell you homes. But here’s the twist that should really get your attention. Phoenix has over 10,000 build-to-rent units with 4,460 new ones under construction. Dallas-Fort Worth, another 10,000 units. Atlanta just added 3,350 new BTR constructions. These aren’t random markets. They’re the fastest-growing metros in America where population is exploding, but homeownership is increasingly out of reach.

The demographics tell the whole story. Millennials, who make up 64% of BTR demand, according to industry experts, have a homeownership rate of just 37%. That’s 8% lower than previous generations at the same age. Forty-three percent have saved less than $3,000 for a down payment. Gen Z, they’re only 3% of the home buyer market, but a massive presence in rentals. Now, let me address the elephant in the room about DR Horton’s quality issues.

Yes, they have a 1.3-star rating on consumer review sites. Yes, there are over 1,000 Better Business Bureau complaints about construction defects, mold problems, and cheap materials. But here’s the brutal truth. When you’re building homes that sell for $369,600, which is 28% below the national average, you’re not competing on quality. You’re competing on affordability.

And for rentals, the calculus completely changes. The institutional investors buying these properties care about one thing: cash flow. If they can buy homes in bulk for $300,000 each and rent them for $2,200 a month, while a regular buyer would need a $2,500 monthly mortgage payment to buy that same home, they’re capturing all the people who can afford $2,200 rent but can’t qualify or afford the $2,500 mortgage.

They’re basically printing money.

The quality just needs to be good enough to keep tenants, not perfect enough to justify a 30-year mortgage. This is exactly why inventory has been growing for 20 consecutive months, but prices haven’t crashed. We now have 4.7 months of supply nationally, up from pandemic lows, but still below the six months that indicate a balanced market. New home inventory hit 481,000 units, the highest since 2007. Yet prices are only up 2% year-over-year.

Why? Because builders have an escape valve. If they can’t sell to regular buyers, they sell in bulk to institutional investors for rental conversion. Think I’m exaggerating? Blackstone just bought Tricon Residential and their 38,000 BTR homes for $3.5 billion. Progress Residential controls 85,000 homes. FirstKey Homes has 50,000.

The institutional ownership of single-family rentals is expected to double from 3 to 6% by the end of 2025.

Here’s what really sealed the deal for Berkshire’s investment team. The Federal Reserve is expected to cut rates in late 2025 or early 2026. When that happens, the cost of capital for these BTR developments drops dramatically. But here’s the kicker. Even if mortgage rates fall, they’re not expected to drop below 6% until at least Q3 2026, according to Fannie Mae and MBA forecasts.

That means at least another year where buying remains unaffordable for most Americans while institutional investors get cheaper capital to buy more rentals. It’s a perfect storm for the build-to-rent model. And speaking of storms, let’s talk about what happened when DR Horton tried this before. Berkshire actually owned 5.97 million shares of DR Horton back in 2023, worth over $700 million. They sold everything by December 31st, 2023, banking a 24.9% gain in just six months. Now they’re back with a smaller position.

What changed? The build-to-rent model matured. In 2023, it was still experimental. Now, with partnerships like LAR, Invitation Homes, and proven economics showing 10 to 40% rent premiums over apartments, it’s becoming the dominant strategy. Stuart Miller, LAR’s executive chairman, said it best: “This partnership is emblematic of LAR’s broader focus on building a healthier housing market across America.”

Translation: If Americans can’t afford to buy, we’ll rent to them instead.

But here’s what should really concern you, or excite you, depending on your position. Multiple economists, including those at First American and JP Morgan, say the housing market has found the floor. The National Association of Realtors projects existing home sales will increase 3% by the end of 2025 and surge 14% in 2026. You know what that means? More competition for the limited homes available to buy, pushing more people into rentals.

It’s a self-reinforcing cycle that benefits exactly two groups: the builders creating rental inventory and the institutional investors buying it. Look at the valuations. DR Horton trades at a P/E ratio between 9.2 and 13.1. Lennar around 11. These aren’t tech bubble valuations. They’re value territory, exactly where Berkshire likes to shop. Both companies maintain strong balance sheets with low leverage. DR Horton’s debt-to-capital ratio is just 23.2%. Lennar’s is even lower at 7.5%. The analyst community is catching on. DR Horton has a consensus buy rating from 39 analysts, with an average price target of $164.50. Lennar’s sitting at a hold, with targets ranging from $95 to $180.

The smart money isn’t betting on a housing crash. They’re betting on a permanent shift in how Americans live.

Here’s our prediction, and you can quote us on this: Within 5 years, the majority of new single-family construction in growth markets will be build-to-rent.

The American dream of home ownership isn’t dying. It’s been institutionalized and rented back to us at a premium. The numbers don’t lie.

Texas alone has 20,000 BTR homes under construction. Markets like Huntsville, Alabama, and Jacksonville, Florida, are adding over 1,000 units each. The pipeline could increase BTR inventory by 50% in the near term. Institutional ownership is projected to comprise the majority of capital invested in the asset class by 2030.

So, what does this mean for you? Here’s the thing. When Warren Buffett’s team starts buying home builders after sitting on the sidelines, that’s usually a signal that we’ve hit the bottom. Think about it. Housing inventory is finally rising, mortgage rates have stabilized, and prices have essentially flatlined in many markets.

Could this be the floor everyone’s been waiting for? The new reality is that builders and institutional investors won’t let prices crash much further.

They’ll convert unsold homes to rentals before taking losses.

So, the real question becomes, if Buffett thinks we’ve bottomed, are you still waiting for prices to crash further? What if they don’t crash further? Or is this actually your window to buy before the next cycle starts? Look, we can’t tell you what to do, but when the Oracle of Omaha starts betting a billion dollars that housing has found its floor, maybe it’s time to jump into the market.

If you’re an investor, pay attention to what Berkshire is doing. They’re not betting on home prices or mortgage rates. They’re betting on the financialization of American housing. Companies like LAR and DR Horton aren’t just homebuilders anymore. They’re becoming integrated real estate platforms that build, sell, and rent, capturing value at every stage.

The final piece of this puzzle, the housing shortage isn’t going away. We’re still 3.9 million units short, according to Freddie Mac. Most of that shortage is in single-family homes, exactly what these builders specialize in.

But instead of selling those homes to families, they’re increasingly selling them to Wall Street.

Warren Buffett’s team isn’t betting on a housing recovery. They’re betting on a housing transformation.

The question isn’t whether home prices will crash or soar. The question is whether you’ll be a buyer, a renter, or an investor in this new reality. The choice, as they say, is yours. But looking at these numbers, it seems Berkshire Hathaway has already made theirs.

A billion dollars says the future of American housing isn’t ownership. It’s subscription-based living delivered by the same builders who used to sell you the American dream.

And that’s exactly why this might be the most important housing story you’ll hear all year.

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