The more interesting game is the one in which the housing market is not assumed to be homogenous. If you can somehow anticipate a positive change in a local housing area, buy a house there and then sell it after the change occurs, moving to a cheaper, less desirable house, you can indeed make a profit. However, this requires two things: a) that you correctly anticipate the change and b) that you don't want the change for yourself. The nice thing about this play is that even if the change never occurs you still have a house. (There are many examples of positive change - e.g. the new railroad going through Rock Ridge in Blazing Saddles.)
You can do this. This may seem idiotically simple, but you can easily see how very possible this is. Track the market you are interested in purchasing a home. Watch the number of homes sold vs the number of homes coming up for sale. (simple supply and demand) If you see more homes coming on than being sold you are going into a buyer's market (price dropping) If the opposite, then seller's market (price goes up). By doing this, you can stay ahead of the market. Note: you must seasonally adjust, which is very easy to by getting a history of the market you are tracking.
Proof:
Look up historical solds vs "on the market." (ask a realtor for this info, keep calling you will eventually find one who will give it to you) Then look at zillow or any other site that tracks historical home prices. You will see the supply leads price, usually by months/years not days or weeks.
How can this the be possible?
1. Realtors, on average, are wildly misinformed and much more interested in making a sale than doing market research.
2. It does not pay for large investors to buy individual properties so you do not have savvy investors correcting market errors. (this does not apply to commercial property)
A couple issues with this though. Realtor commissions (possible to avoid if you have enough knowledge), and/or loan fees, closing costs, title insurance, etc. Also in the US, capital gains taxes if you don't live in it for at least 2 years. So the appreciation or difference in price would have to be significantly large.
The housing market does not have the same liquidity that other markets have and this creates opportunities where a spread exists between actual and perceived value. There is always someone who needs to sell now and always someone who is willing to wait as long as it takes to get a specific price.
Also keep in mind that on the "housing ladder" it's always easier for someone with a big property to down size than it is for someone to move up. Mid to low end housing will have a completely different market dynamic than 2 million dollar estates.
