How to profit from a declining market?

[dougie]

I've identified a couple of markets where I'm convinced there will be a decline in single-family dwellings in 24 months.  I know, not what people here want to hear. But I'm not here to argue for or against a bubble, we all have our opinions on that.

How can one profit from an anticipation of a decline in a local market?  I am not interesting in buying foreclosures after an area goes through a decline, that's too late. I want to do it BEFORE the fact.

With stocks, futures and options, I'd know what to do. But what about residential real estate in particular markets?

[niravmd]

wait for foreclosures then do short sales and quick flip them.

[Las Vegas Real Estate]

If you feel the prices are going to decline sell.

[niravmd]

you could try shorting mortgage companies.
or try buying hedgelettes. [www.hedgestreet.com]

[WilsonTaylor]

Dougie,

If you feel that the RE market for the area will decline, why would you buy now?  The only strategy the I can conceive at this point would be to buy waaaay under value. For example, if you feel that the market will tank by 20% then the most that you could pay would be 60% of retail after any repairs that need to be done. That way you would still have a 20 to 25% equity in the property while you are waiting for the property to go up.  If you had to, you could sell for 90% of retail and not be hurt by it.

Wilson