The Law of Supply and Demand is the foundation for all transactions. It is acted upon by factors that are unique to the environment that is is viewed in. This series has introduced at two of those: Capacity in Part 1 and Resistance in Part 2 , and will wrap it up with the third , Perspective.
The meaning of Perspective is captured clearly in this quote by the French author Anaïs Nin
We don't see things as they are, we see them as we are.
It is the way we view what is happening in the market and then only in the portion of the market that we see. Take note that the view we see and believe my not be accurate at all and that the inaccuracy of it is immaterial to rather or not we believe it when it comes to shaping out thoughts and thereafter our actions.(if it helps,pretend we are talking about someone else,rather then you and I who are more sophisticated.)
This is so powerful a force that it actually sustains the status quo and delays the inevitable shift that occurs when Supply exceeds Demand and vice versa. In America the push for Home Ownership is driven by the Perspective that ownership will provide stability and control in a world that is often unstable. This pushed the rate of home ownership to nearly 70% at the peak of the Real Estate Bubble.
The method by which this was accomplished was the lowering of the bars to entry to ownership, thru the use of easy, cheap credit and economic policies driven not by value but rather by idealogey. Today that market has moved towards the inevitable and returned us to the standard closer to 60%.
The process of making this coarse correction has resulted in the contents of the vehicle being thrown about a bit and we are left with 10 to 15 % of the population who have the perspective of an Owner but are being forced to rent , Many for the first time in years.
I believe that the market will respond to this unmet need based on perspective by rewarding those who answer with alternative methods of placing the displaced back on the path to ownership, such as the use of lease options , Rent to Owns and Contract Sales.
Fill the Need and the Market Will Reward You.
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