Despite the global pandemic, real estate prices across the country have been ripping higher and higher for over a year now, and just about every expert in the field agrees that this explosion in price can’t be sustainable.

Knowing if or when this bubble will burst is really anyone’s guess, but there are still plenty of things that any prospective homeowner can be doing to protect themselves from that downside risk so that we don’t end up with the type of problems that happened in 2008.

So whether you are a first-time home buyer, a homeowner looking to upgrade, or someone looking to downsize, there is plenty that you can be doing right now to protect yourself.

Don’t Leave Yourself Exposed

Anyone who is actively buying real estate at these elevated prices should already understand that they are taking on an elevated level of risk, much like we saw around the country prior to the 2008 market collapse.

One of the best ways to protect yourself from falling into a similar trap is to make sure that you aren’t leaving yourself exposed to rising interest rates increasing your mortgage payment.

Lock in a fixed rate at these historically low numbers so that you are guaranteed to have the same payment moving forward regardless of what happens to the overall market.

Avoid the FOMO

Another fantastic option that can remove a ton of the risk of buying and selling right now is to simply choose to stay on the sidelines until things cool down a bit.

While you might have some FOMO (fear of missing out) with respect to selling any current holdings at these elevated prices, it is important to remember that getting a high price on the home you sell doesn’t mean much if you then have to pay an equally elevated price to buy a new home.

Don’t Expect Too Much Resale Value

Another mistake that was incredibly common back in 2007-2008 was buying homes at historically high prices and assuming that the values would continue going up no matter what happened with the economy.

We know now that this isn’t always the case, so make sure that you aren’t banking your financial future on whatever real estate holdings you have going up consistently without ever experiencing any type of price corrections.

Check Out the Real Estate ETFs

If you want to take a shot at turning a profit on rising prices without actually having to buy or sell any real estate, there are plenty of real estate exchange traded funds (ETF) that you can trade with just about any brokerage account.

ETFs like the Vanguard Real Estate Index Fund (VNQ) are designed to track the price of real estate like office buildings and hotels, which allows you to buy a piece without having to commit to anything long-term.

Hedge Your Bets

If the real estate market does start to struggle, investors will likely move a significant portion of their assets into gold to protect against inflation. If you aren’t optimistic about the future of real estate prices and want to try to put a bet down a little ahead of the curve, you might want to consider moving some of your assets into gold as well.

Like any price-based market, there is no way to know for sure where real estate prices are going to be at any specific time in the future, but there are things that you can do to make sure that the downside isn’t going to burn you if that’s where we are heading.

Take some time to review your financial plan, and make sure you are doing everything in your power to protect your assets from any problems that might be coming our way.