Warren Buffett Sold His Only REIT Last Year, But He's Betting Big On Housing With Three New Investments

Warren Buffett isn't known for being a big real estate investor, but he has invested in real estate investment trusts (REITs) in the past and reaped significant rewards.

For instance, Buffett's company Berkshire Hathaway Inc. BRK used to own shares of STORE Capital Corp., a REIT specializing in single-tenant operational real estate (STORE).

In September 2022, STORE Capital announced that it would be acquired by Singapore's sovereign wealth fund GIC and Oak Street in an all-cash transaction valued at approximately $14 billion. Shares soared 20% on the news.

Berkshire exited its position in STORE Capital in 2022. According to the latest 13F filing with the Securities and Exchange Commission, there's no publicly traded REIT in Buffett's portfolio.

But that doesn't mean Buffett has given up on real estate. The same filing showed that Buffett is making big bets in housing with new stakes in U.S. homebuilders.

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D.R. Horton Inc. DHI

Berkshire's 13F filing revealed that it bought 5,969,714 shares of D.R. Horton in the second quarter of 2023. At the current share price, the stake is worth $645.4 million.

Headquartered in Arlington, Texas, D.R. Horton is America's largest homebuilder by volume. It operates in 33 states and has a diverse product portfolio with sale prices ranging from $200,000 to over $1 million. The company also builds and sells single-family rental and multifamily rental properties.

In the fiscal quarter that ended June 30, D.R. Horton's consolidated revenue increased 11% year over year to $9.7 billion. Homes closed grew 8% to 22,985, while net sales orders rose 37% to 22,879 homes.

Net income, on the other hand, decreased 19% from a year ago to $1.3 billion for the quarter.

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D.R. Horton shares initially surged after Berkshire revealed its stake but later retraced those gains. Nevertheless, the shares have risen over 19% in 2023.

Lennar Corp. LEN

Lennar is another heavyweight player in the home construction business.

Established in 1954, Lennar builds homes in various markets across the country. It delivered 66,399 homes in fiscal 2022.

In addition to its core homebuilding operations, the company offers financial services, including mortgage financing, title insurance and closing services.

In the third quarter of Lennar's fiscal 2023, which ended Aug. 31, its revenue from home sales slipped 2% year over year to $8.3 billion. The decline was because of a 9% decrease in average sales price, partially offset by an 8% increase in the number of home deliveries.

Lennar Executive Chairman Stuart Miller said, "Short housing supply, absorbed by strong primary and pent-up demand, continued to define a strong sales environment."

Berkshire acquired 152,572 Lennar shares in the second quarter, a position valued at $17.3 million today.

NVR Inc. NVR

Buffett's company also picked up 11,112 shares of NVR in the second quarter. With NVR shares trading at $6,232, the stake is worth $69.2 million.

NVR constructs and sells homes under the brands of Ryan Homes, NVHomes and Heartland Homes. It also has a building products division, a mortgage subsidiary and a settlement and title services subsidiary.

In the second quarter, new orders for NVR's homebuilding business increased by 27% year over year to 5,905 units. But the average sales price of new orders in the quarter was $447,300, down 5% compared to a year ago.

NVR stock has outperformed D.R. Horton and Lennar in 2023 — shares are up 36% year to date.

While investors can leverage homebuilder stocks to access the housing market, new companies have innovated ways for people to earn passive income from real estate. Here's how to invest in rental properties with as little as $100 while staying completely hands-off.

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