Is it possible that a strategy for preventing and avoiding future real estate bubbles has finally been mastered?
One country in particular seems to have found a solution to the real estate bubble that looms over everyone, at least for the time being. So how did they do it? Will it work everywhere and constitute a sustainable solution? What subsequent real estate investing strategies should be deployed in lieu of these findings?
Canada recently appeared to be heading for another major housing and real estate crash, especially in Toronto and Vancouver. The media was full of negative reports and the market appeared destined for an inevitable stall. Now, as Canadian Finance Minister Jim Flaherty bows out of office, it seems that fears of a bubble may have been unwarranted. The latest news reports suggest these markets are now steadily edging up, even despite the massive Keystone XL pipeline debacle and more U.S. economic performance.
Some might consider Flaherty a genius, who is now gracefully resting his crown after a victory of historical proportions. Others may pose that he is slipping out right before it really falls to ruins. After all, those with superior real estate education are well aware how second wind markets get after the first dip. However, it could be that Canada and Flaherty have been able to pioneer a cure to real estate bubbles. It did require some bold and unpopular moves, which did put the country on the brink of collapse.
Of course, based on history alone, it is extremely unlikely that a lasting and easily replicated solution that will send property prices on a never ending upward curve into infinity has been found. Possible? Yes, but the odds are against it.
Real estate has been predictably cyclical for thousands of years. That’s a big giant to slay. Plus, there are just so many variables. So many factors that need to be controlled and executed on precisely including directing the media and public opinion. Last but not least, it is also critical to point out that preventing further bubbles and cycle turns in any industry, especially the real estate industry, is hardly in everyone’s best interest. At least from their perspective. The really big wealth and corporate gains are made jumping in and out of markets at the right times. Those with the most to gain from booms and busts are also notoriously those with the most control and influence.
If cycles have been ‘cured,’ real estate investors ought to expect “slow and steady” to be the theme from here on out. Perhaps 5% or less annual increases in property appreciation. This is still great. It’s awesome for buy and hold investors that can sleep easy while growing wealth and enjoying consistent passive income.
Those that prefer flipping houses will still find opportunity in aiding distressed and motivated homeowners. On the other hand, there is certainly no shortage of distressed properties to be rehabbed or rebuilt.
If this cure is all just smoke and mirrors, expect a lot of sizzle ahead. Expect increasingly rapid rises in home values, real estate sales activity and creative new loan programs to fuel it all.
Either way, it is not an issue providing you see it coming. This may be an extremely unpopular statement, but the real damage felt in the last downturn was due to a lack of real estate education – now we know. So take advantage of this time, know your strategy for later, build your knowledge and real estate education and enjoy ongoing prosperity.