Is A Real Estate Bubble Developing (And What You Should Do About It)

Why do some investors make money in real estate while others do not? You could point to many different reasons, and some might even say that the successful investor was lucky in their timing. However, there’s a key investing skill that is often thought to be a myth, yet it’s absolutely true.

I’m talking about the crystal ball – the ability for an investor to gaze into the future and predict what will happen. Successful investors seem to be able to gaze into the future, act on what they’ve seen, and ultimately profit from their seemingly “magical prophecies”… all while other investors sit on the sidelines amazed.

I know of MANY investors who did exactly that in 2005, 2006, and 2007… and profited wildly when the market crashed in 2007/2008. And I know of many more people who saw the signs, didn’t understand what they meant, and struggled through the exact same time period.

Well, you probably already knew that it has nothing to do with a crystal ball. In reality, investors with impeccable timing are really those that can read the signs and have the courage to act, while the world is still scratching their head and wondering what to do.

If you’re an investor who wishes you had that “crystal ball ability” to read the signs, you’re going to LOVE this article from Reuters, the news publishing company, Home ‘Flipping’ Exceeds Peaks In Some Hot US Housing Markets, which reported on some analysis conducted by RealtyTrac.

Flipping – buying a house (perhaps a distressed house or a house from a motivated seller) and then flipping it fast (perhaps with some modest repairs) for a profit has always been big, thanks to shows on various television networks that show people making big money from it.

In 2005, house flipping reached a peak in some markets in the US and that hinted at a housing bubble. (Of course it wasn’t the only contributor to the housing bubble but it’s a good indicator of a housing bubble). Reuters quotes an economist from the RealtyTrac report who said “When home flipping numbers go up, it is usually an indication that the housing market is in trouble.”

And, according to the RealtyTrac analysis, flipping levels in 2015 actually exceeded those peaks set in 2005. In some markets, those numbers were exceeded by 20% and in three markets, those numbers were exceeded by 50%!

There is profit to be made during an economic recession if you invest wisely. And there might be no such thing as a crystal ball but astute investors should be aware that this type of analysis is the next best thing, further hinting at what other economists and news outlets are warning – of a significant economic recession in the very near future.

So the question is: how will YOU prepare to benefit with the economic instability that’s just around the corner?