Bad Times to Buy Bank of America Stock and Charlotte Real Estate?

 

“(Warren) Buffett famously bought $5 billion worth of BofA's (Bank of America’s) preferred stock and warrants in 2011 in the aftermath of the financial crisis, shoring up confidence in the embattled lender struggling with losses tied to subprime mortgages.”

7/30/24 CNBC.com article by Yun Li

 

“The Charlotte Regional Business Alliance reported about 113 people moved to the Charlotte metro every day between mid-2021 and mid-2022. That's more than 41,000 people moving to the region every year.”

CLT Today 3/11/24

 

I remember hearing many years ago that the longer you live, the more economic cycles you’ll see.  The “Dot.com Bubble” (2011) and COVID (2020) are ones I remember readily.  But from a severity perspective, ‘The Great Recession” (2008-2010) was the most memorable and crushing.

 

Living in Charlotte, Bank of America casts a big shadow as it houses our largest corporate headquarters.  And it got hammered during the Great Recession.  Warren Buffett, arguably the greatest stock investor in history, invested $5B in 2011 when it was trading in the $5/share range.  The lowest it had dipped to was $3.14 in 2009 and it was teetering along for years as it hemorrhaged losses from its Countrywide Financial acquisition.   

 

At the time of his investment, Buffet said,

 

“Bank of America is a strong, well-led company, and I called Brian (Moynihan) to tell him I wanted to invest in it,” Mr. Buffett said in a statement. “I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That’s what customers want, and that’s the company’s strategy.”

 

Today, Bank of America’s stock price is around $40/share and Buffett has been in the news lately for selling some of his shares for billions in profit.

 

That’s what all investors want- buy low and sell high!  But Buffett’s big payday took a long time to come to fruition as the stock languished for years.  It was unknown when Bank of America, and the economy in general, would come back.  But Buffett believed in Bank of America’s fundamentals. 

 

We’re starting to see a real estate slowdown in the Charlotte market.  There was a time, no too long ago, when a house on the market for sale would get multiple offers.  Now, things have slowed, houses are sitting a bit longer, and price increases have waned. 

 

Are home prices too costly?  Interest rates too high?  Economy too risky?  A combination of these and other factors?  Are these buyers right?  Is it a good time to sit on the sidelines? 

 

Or… is this price stabilization a great opportunity for real estate investors?

 

It’s tough to know for sure. 

 

There are facts, though, that are undeniable.  People continue to move to Charlotte every day in droves and have been for years.  Everyone moving here needs a place to live.  Housing is a needed commodity. 

 

As Buffet said about his investment in Bank of America during an uncertain time, he wanted to get involved based on the company and its direction.  Charlotte has an average of 113 people moving here everyday in need of housing.

 

Is this a bad time to buy Charlotte real estate?  Or is it a great time?

 

Happy Landlording!