Ask Warren Buffett for investment advice, and you might expect the billionaire CEO to tout his long-held stakes in Coca-Cola or American Express. But according to Buffett, who turns 93 today, his Berkshire Hathaway holdings are less impressive than the personal investments he's made throughout the years.
Among the best: the Omaha house he has famously lived in since 1958, when he and his late wife Susan bought it for $31,500, or around $336,700 in today's dollars. But the housing market has grown in value much faster than the rate of inflation—The home is now worth over $1.4 million, according to Realtor.com, which at roughly 4,300% is a trademark Buffett rate of return.
The world-famous investor has long said the five-bedroom home comes in just behind his two wedding rings in terms of payoff. "All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks," he wrote in a 2010 Berkshire Hathaway letter to shareholders. Like many homebuyers, though, he didn't look at it purely from a dollar-and-cents perspective. "For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come."
Despite being one of the richest men in the world, Buffett is far less flashy than some of his fellow billionaires. The financial media is rife with reports of his love for McDonald's breakfasts and a crisp can (or five) of Coke. He once drove a car with a vanity license plate that read "THRIFTY," according to the Wall Street Journal.
His home, which is located close to Berkshire Hathaway's corporate offices, is one of the better-known examples of his frugality. It is currently the only real estate in his personal portfolio.
"I wouldn't trade it for anything," Buffett, who is currently worth around $120 billion, according to the Bloomberg Billionaire Index, told CNBC in 2017.
Though it's his most famous residence, Buffett had also lived in a different Omaha home for a few years previously, according to the Wall Street Journal. On the more extravagant side, he also owned a beach house in Laguna Beach, Calif., which he bought for $150,000 in the 1970s and sold for around $7.5 million in 2018.
The real estate market in the U.S. has changed significantly since Buffett bought his home in 1958. Now, prices across the country have increased precipitously, and interest rates have more than doubled in just the past few years. With limited inventory, it's harder to find a home to buy at all than it's ever been. For instance, the median home price in Omaha today is around $275,000, according to Redfin, well below the national median but almost nine times what Buffett paid for his house.
As Buffett himself wrote in the 2010 letter, while it is easy to feel pressured into buying a home—and all it represents in American society—it can be smarter to rent, depending on your personal financial circumstances. Even the ultra wealthy can overextend themselves if they're not prudent. That warning rings even truer today, when affordability has deteriorated so much.
"A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender—often
protected by a government guarantee—facilitates his fantasy," Buffett wrote. "Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford."
