Wholesaling: The Strategy to Avoid Housing Bubble 2.0

Are we already inflating a new housing bubble to bursting point?

Houses are selling fast and home prices are rising with some markets clearly in ‘sellers’ market’ territory again. Still many regular home buyers can’t buy due to mortgage constraints and uncertain financial situations, while many end investors are ‘overpaying’ out of the desperate need for yield. So is it a new bubble, and if so is wholesaling as a strategy the key to avoiding getting caught?

If the goal of the government forcing a ‘correction’ was to ‘correct’ housing prices, then isn’t any increase, especially that of today’s pace with 10% plus growth already pushing real estate prices out of whack? Especially as jobs, incomes and the economy aren’t growing in line with it?

Many of course would instantly argue that the market over-corrected and discounts on distressed properties and foreclosures are below market value right now.

Plus of course there is a good percentage of real estate investors now strictly paying cash meaning plenty of wiggle room. In California alone this number is up over 34% in the last 12 months. Even those using mortgage financing are forced to keep a big equity cushions which should help them ride out any major fluctuations or dips in the future.

Then there is the fact that so many Americans will be captive renters for years meaning buy and hold investors may have little to worry about ever.

Based upon historical housing cycles the new boom phase ought to last a good 10 to15 years. This time around even the most pessimistic economists predict it could last 50 years on slow economic growth.

Still as home values are forced up by massive demand, a surge in multiple home buyers, and inventory stays tight pushing it higher some may worry we might be forcing an early bubble burst this time around. This is especially true if Americans forget their lessons from the last bubble, lenders loosen up too much and homeowners start using their home equity as credit cards again.

Whichever side of the argument you believe, wholesaling as a strategy means it doesn’t really matter.

By using wholesaling as your preferred investment strategy you aren’t at risk of losing anything, even if the market changes fast. Plus, you also enjoy a sustainable business model which can continue to work in any market, up or down, and many wholesalers might actually love a new round of foreclosures to flip.

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