Tuesday, July 5, 2011

Has our Dream of Home Ownership Died?

Remember when your Dad said "Always buy Real Estate! It never goes down"

Well, This is the second generation in North American that is observing the endless slide of their equity from their homes and potentially retirement funds. I know that in Canada, from the statistics that I have read, most people of retirement age have no addition income nest eggs other than their primary residence.

So what changed? What changed the dynamic about buying a house and living debt free in North America? Have our houses become chequing accounts for revolving Home Equity Lines of Credit [HELOC]?

This post from Seth Godin set me to thinking about how our economies are intertwined and how we have moved from a manufacturing to information technology business models. [Seth calls them Attention Business]

Paying attention to the attention economy

Most of us are happily obsessed with the economy of money. We earn it and we spend it and we generally pay attention to what things cost.

Certainly, salespeople and marketers are truly focused on the price of things, on commissions and shelving allowances and net margin and the cost of goods sold.

With all of these easily measured activity, it's easy to overlook the fast-growing and ever more important economy based around attention.

"If I alert my entire customer base, how much will this cost me in permission?"

"How much time do we save our customers with a better written manual?"

"When we fail to ask for (and reward) the privilege of following up, are we wasting permission?"

"Does launching this product to an audience of stangers waste the attention we're going to have to buy?"

Attention is a bit like real estate, in that they're not making any more of it. Unlike real estate, though, it keeps going up in value.

What did [Seth] say at the end? Unlike real estate, attention keeps going up in value.

This is a dynamic shift in economic thinking. I was always taught; own real estate and you will gain equity. Now we have a model [albeit currently in the United States ] where values have been sliding for the last 5 years.

Economists and Statisticians are on both sides of the real estate bubble and housing crisis. Some say the bubble does not exist. Others are screaming about the cliff we are running towards. Yet Toronto has not had the same double digit annual growth in prices seen in many North American cities; we continue as a [Toronto GTA] destination for immigration, education and employment. We are a safe haven from politics and debt mismanagement compared to other world governments.

But can we be truly immune?

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