Warren Buffett's Berkshire Hathaway has made another bet on a recovery in the US housing market, agreeing to lend the conglomerate's trusted brand to a new venture with Brookfield Asset Management.
Berkshire's HomeServices of America unit will be the majority owner of a network of franchised real estate agencies, which will begin to offer services next year under the name Berkshire Hathaway HomeServices.
Brookfield will contribute a network of more than 53,000 individual estate agents responsible for $72 billion of residential real estate sales last year. The group acquired the business last year from Prudential Financial, but did not retain the rights to the Prudential name, which are taken back as existing franchise agreements expire.
Mr. Buffett told CNBC this month that he remains bullish on the US economy, which he expects to continue "inching ahead" even as global growth slows.
The billionaire investor said Berkshire's businesses have already begun to see a pick-up in demand related to improvements in the residential property market, and as a consequence he expects them to hire about 8,000 people in response this year.
The latest deal comes as Berkshire, a conglomerate with more than 70 different businesses, has positioned itself for a recovery in U.S. housingas foreclosure rates decline and record low interest rates encourage buyers back into the market after six years of declining prices.
HomeServices is the second largest full service residential brokerage firm in the US, the company said. Acquired with the MidAmerican utility company in 1999, it has been built by buying up real estate brokerages around the country. Berkshire has also acquired a brickmaker and this month agreed to pay $1.5 billion for a portfolio of home loans from Residential Capital, the bankrupt mortgage lender.
Mr. Buffett's optimism has also begun to be backed up by economic indicators. New home construction in the US surged in September to its fastest pace in more than four years, offering further evidence that the housing sector was regaining strength.
Housing starts rose 15 percent in September, to a seasonally adjusted annual rate of 872,000 units, the fastest pace of growth since July 2008.
Brookfield acquired Prudential Real Estate and Relocation Services for about $100 million in December 2011, according to a financial disclosure. Brookfield, a real estate specialist with over $150 billion in assets under management, has retained the relocation business separate from the new venture.