Could a cure for housing bubbles have been found?
A solution to prevent any future housing bubbles may remove a lot of fear from the market but if one has really been uncovered is it something that real estate investing pros should really want anyway?
Apparently researchers at the University of Miami, FL think they have found the cure. A study by the university’s School of Business Administration seems to blame a lack of sharing data and more details about how to value assets by the government to the public and suggests a “Kelly Blue Book” equivalent of home values could be the answer to preventing further housing bubbles.
Considering there are already endless tools out there for determining home values and the recent crash appears to be more of a case of the government being out of touch than having the knowledge to share this probably seems like a pretty bogus answer to most real estate investing pros.
So what can prevent housing bubbles? Housing bubbles have always existed and are a normal part of real estate cycles. It is probably true that tight government controls could control them better and limit growth, though form the most recent crash it seems like they need to be listening to investors a lot more and learning from the street, not the other way around.
Of course without roaring boom times there would certainly be a dampener on real estate investing profits. Investors could still find distressed properties and add sweat equity but stagnant appreciation would definitely limit wealth building and the incredible profits some have been bringing in from flipping houses over the last 12 years.
Perhaps the question investors ought to be asking is not how to stop appreciation but how to avoid getting caught out by bubbles.
Clearly the key here is knowing the signs of various stages of the housing cycle, what factors influence them and building on real estate education to know how to capitalize on each phase the best way for maximum profits.