In Business Week today, an article focusing on the housing market indicated that Billionaire Warren Buffett said the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

In his annual letter to shareholders of his Berkshire Hathaway Inc, he wrote: “Within a year or so, residential housing problems should largely be behind us,”  “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”

The current real estate market has left one in five U.S. mortgage holders owing more than their houses are worth. In addition, record foreclosures last year flooded a real estate market already stocked with unsold property, causing new construction to fall to the lowest in at least 50 years.

“People thought it was good news a few years back when housing starts -- the supply side of the picture -- were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations -- the demand side -- only amounted to about 1.2 million.”

Berkshire, which owns a real-estate brokerage, a business that constructs pre-fabricated houses and units that make products used in homebuilding, has suffered amid the slump. Profit at Clayton Homes, the pre-fab housing business, fell about 9 percent to $187 million before taxes, while earnings at carpet manufacturer Shaw Industries fell 30 percent. “High-value houses and those in certain localities where overbuilding was particularly egregious” will take longer to recover, he wrote.

Buffett joked that curbing home construction was the best of three ways to reduce supply. The other two, he said, would be to explode homes in a “tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program” or “speed up householder formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.”