Warren Buffett Explains Why He Prefers Stocks Over Real Estate | Berkshire 2025

[Transcript]

AUDIENCE MEMBER: Good morning, Warren, Greg and Ajit. My name is Jackie Han. I’m from China and now work in Toronto, Canada. This is my eighth Berkshire Hathaway meeting. At this point, I’ve probably spent more time with you than most people spend on Netflix. As you might guess, coming from a Chinese family, we always had a soft spot for real estate. So the question isn’t why don’t you own a house, it’s why are you still buying stocks instead of more property?

WARREN BUFFETT: Well, in respect to real estate, it’s so much harder than stocks in terms of negotiation of deals, time spent, and the involvement of multiple parties in the ownership. Usually when real estate gets in trouble, you find out you’re dealing with more than equity holder. But there have been times when large amounts of real estate have changed hands at bargain prices, but usually stocks were cheaper and they were a lot easier to do.

Charlie did more real estate. Charlie enjoyed real estate transactions, and he actually did a fair number of them in the last 5 years of his life. But you know he was playing a game that was an interesting game to him. But I think if you’d asked him to make a choice when he was 21 – either be in stocks exclusively for the rest of his life or real estate for the rest of his life – he would have chosen stocks in the second.

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. And in real estate, you’re 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 money against it. Maybe the population trends are against them. 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 within 5 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 – you know when you sign the deal, then you go into another phase. I mean – (Laughs) – then people start negotiating more things and more things, and it’s a whole different game and a different type of person, to some extent, enjoys the game.

We did a few real estate deals that came our way in 2008 and 2009, but the amount of time that they would take us compared to doing something intelligent and probably better in securities – there was just no comparison. I mean in a real estate deal, every sentence is important to the person. And in stocks, if somebody needs to sell 20,000 shares of Berkshire or something, and they call us and the price is right, it’s done in 5 seconds and it closes all the time at the – people who you certainly wouldn't want to have marry your daughter or that they behave well actually in stocks partly that's because that they're probably having their wires or phones or whatever it is, recorded as to what they've said and everything. (Laughs)

But the completion rate for working on anything in stocks is – assuming you’ve got a meeting of the minds on price – is essentially 100%. In real estate, it just begins when you agree on deals, and then they take forever. For a 94-year-old, it’s not the most interesting thing to get involved in something where the negotiations could take years.

We have the capability. There have been some huge failures, in fact, if you go all the way back to Zeckendorf in the 1960s, he was going to change the world, and Century City, out in California, is a product of his. And so people tend to get in trouble in that business. The banks usually don’t want to recognize it, but that takes a long time to go through the bank processes.

They just got through redoing the Musk loan that he made when he was buying, three years ago, the company that’s now X, and you know, three years to work out a transaction where you’ve got parties on both sides that aren’t ready to act. We find it much better when people are just ready to pick up the phone, and you can do hundreds of millions of dollars worth of business in a day. I’ve been spoiled, but I like being spoiled, so we’ll keep it that way. (Laughter)

Source: https://buffett.cnbc.com/2025-berkshire-hathaway-annual-meeting/

 

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