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Karl W. Smith

The Next Housing Bubble Could Come From Technology

The ability to buy or sell a home with the click of a mouse could also make housing more affordable.

Selling the old-fashioned way.

Selling the old-fashioned way.

Photographer: Bloomberg/Bloomberg

A decade after the housing crash, it is now possible to buy or sell a house with the click of a mouse. If the practice catches on, it could lead to a far more efficient and affordable housing market — or another devastating bubble.

So-called iBuying (for instant buying) involves firms using algorithms to provide sellers with fixed-price offers on their homes. While housing is a good long-term investment, it is bedeviled by multiple instances of market failure. The most fundamental is that the seller has a lot more information about the condition of the property than the potential buyer. Buyers and investors are therefore cautious. Disclosure requirements help, but they are often lengthy and confusing.