Warren Buffett thinks most of the country's housing woes will be over by the end of next year.

"We're not too good at avoiding challenges, but we're marvelous at surmounting them," Buffett told a crowd that had gathered in Des Moines to help a family-founded firm unveil one of the 10 largest furniture showrooms in the country.

Looking around the store, he added, "I don't see how anyone can be a pessimist about the future of the country."

On the mounting federal debt, he observed, "It is not dangerous where we are now. It may be dangerous where we are going."

And Buffett had this to say about taxes: "I would make the tax rates a little more progressive. I would help my cleaning lady and take a little more out of me."

A recent survey by the National Association of Realtors found nearly three-quarters of real-estate agents said buyers were purchasing smaller houses due to tighter credit requirements.

“We're in a 'trade-down' environment for the first time since the 1930s," Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California told The Wall Street Journal.

Sales of low- and moderately priced homes are picking up but high-end homes remain stuck in a deep slump and price declines there could accelerate.