The widely respected "Oracle of Omaha" cites a number of reasons why he thinks that home sales and prices should start rising sooner rather than later.
Q. Is it true that Warren Buffett, the billionaire investor, believes the housing market will recover soon?
A. Yes -- or at least sooner rather than later.
Buffett, whose net worth is estimated at about $50 billion, is considered by many to be the smartest investor in America. In his annual letter to shareholders of his Berkshire Hathaway investment conglomerate about a week ago, he wrote that the housing market is on the mend, thanks to the prolonged drop in new construction and a leveling-off in foreclosures.
He also noted that the number of new marriages is on the rise again, after years of couples postponing their vows because of the recession. Those newly betrothed and their growing families will need a place to live, which should boost sales and fuel a gradual rise in home values.
"People may postpone hitching up during uncertain times, but eventually hormones take over," Buffett wrote. "And while 'doubling-up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure."
The so-called "Oracle of Omaha" is putting his money where his mouth is. He and his company have accumulated major stakes in several real-estate-related stocks, including lending giants Wells Fargo & Co. and Bank of New York.
Q. I owe about $17,000 in back taxes to the Internal Revenue Service. Can I wipe it out by filing for bankruptcy?
A. No. Unpaid income taxes, as well as any child- or spousal-support payments that may be in arrears, generally are the only three types of debt that cannot be erased in a bankruptcy. Depending on the type of filing, though, the judge might be willing to give you more time to pay back the money.
Q. I was watching a high-speed car chase the other night on the news, and one of the patrol cars that was pursuing a carjacking suspect spun out of control and crashed into someone's house. When this type of thing happens, who is responsible for paying to repair the damage -- the bad guy, the local government or the homeowner?
A. Laws vary from one area to the next. But generally, law-enforcement officials are responsible for paying for damage only if it was caused by their own negligence: The property owner is typically stuck with the bill if the damage stemmed from legitimate police action.
To illustrate, say the police try to serve a warrant on a suspected criminal at 123 Elm Street but mistakenly wind up busting down the door at 321 Elm instead. The police department very well might be liable for the cost of repairs to the innocent owner's home, and the money would come out of the city's treasury or through its insurance company.
Conversely, if a squad car spins out of control and crashes into a home while an officer is in hot pursuit of a suspect, it's often considered just another cost of crime in society, and the homeowner usually must foot the bill for the repairs.
Of course, the owner would be able to file a claim with his or her own homeowner's insurance provider for reimbursement. Suing the crook whose flight eventually led to the accident probably would be fruitless, in part because most bad guys don't have a lot of money to pay for repairs.
Q. If we form the type of basic living trust that you often recommend and put our home and other assets into it, could we stipulate that those assets automatically pass only to our daughter after we die, not be shared with the lazy, drunken bum she's married to? If he got his hands on the money, we're sure it would be all gone within a year!
A. Yes, you probably could include wording in the trust that insists that the money go directly to your daughter and not be shared with your son-in-law. That's because, in most states, assets that are specifically left to one heir cannot be touched by the heir's spouse.
This law applies in California, where your letter states that both you and your daughter reside. Parents whose heirs live in other states but have similar concerns about their in-laws should check with an attorney for details.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.