Brokerage Models, Editorial, REALonomics
E=re² – Real Estate’s Relativity Issues
July 20, 2007 by REALonomics · Leave a Comment
Albert Einstein is credited with creating the dual theories of Special and General Relativity. We know this from Science 101 where we recited E=MC², perhaps not knowing or appreciating what it actually means. Well, we at REALonomics won’t be conducting any relativity experiments in this post except to say that Einstein’s theory has to do, in part, with the movement of a mass in the midst of different environments, sort of…ARGHH!
Examples: A clock that is moving will tick slower than one that is not moving…hmm. When someone watches an object moving toward them, it appears smaller than it really is…uhh huh. Two events that seem to be happening simultaneously to “John” will not appear to be simultaneous to Jane, if Jane is moving in a direction in any respect to John…this is why I failed physics, folks. Time moves slower with lower gravity…so, astronauts actually return to earth younger than they would have been had they stayed on terra firma for the same time period. Finally, at least for now, the universe is expanding with the parts of it that are at its core; the farthest fringe away moving faster than light can travel…okay, got it!
The long and short of E=MC² is that matter and energy are somehow interrelating all the time. The old “Energy is equivalent to Mass times the Speed of Light, squared” formula. This Ensteinian thing has something to do with objects, movement, light, speed, things bending and being warped and so forth.
RE is Facing Relativity Issues
Let’s nominate Albert for the keynote address at NAR this year or, if you prefer Inman Real Estate Connect. He, better than anyone, can explain the movement of real estate as a MASS in the midst of a rapidly changing environment.
We are facing E=re² as perhaps our perpetual model for decades to come. The stability we have previously known has now been thrown “out the window” of relevance. Our former stable model clock is now going to have to compete with a new shiny rapidly moving timepiece that has more energy (ticks slower) than its stationary competitor.
Events Measured Differently
Factions within our industry, although engaged in the same set of economic and business development events are seeing them differently. Why can’t we connect the dots with degree of uniformity? Traditional real estate business models, heals dug-in, are like Jane because Jane is moving in directions antithetical to John’s perspective. Think with me…I need help, anyway!
The antiquated clock referenced above, uses more energy as it sits mired in the muck of ambiguity and traditionalism, seemingly unable to gain momentum within its environment. Those RE models that move, although appearing to use additional energy, will use less energy than stagnant models. Do anything but don’t stand still.
The Gravity of the Situation
Our heavy, clunky, high overhead, retail business and operating schemas are like gravitational lead. Albert told us that removal of gravity or at least a movement in the direction of weightlessness would reduce aging. The real estate industry must create its own weightless models and thus reduce the drag, wear, tear and breakdown of its antiquated, low ROI, intense labor business practices.
USA Today carried a piece in its July 17, 2007 publication regarding the survey of top economists asking them, in part, when the housing market would hit bottom. Approximately 58% of the economists surveyed believed the bottom would come in either 4th quarter 2007 or, 1st quarter 2008. Another growing group of thinkers puts the housing bottom into late 2008. Inventories in Las Vegas, Nevada are growing at approximately three times the absorption rate. This is the gravity of the situation.
Albert told us, “gravity will age you faster than weightlessness in a given time period.” He’s right and not just in the world of physics.
Bright Side – Our Universe is Expanding
There exists in this soup bowl of relativity the molecular variant for opportunity. The outer fringes of Einstein’s universe, he postulated, are moving faster than we can calculate.
Our industry’s is being stretched to its maximum and the centrifugal force is pushing the fringe edges away from traditional inner core toward new, streamlined, light weight models that move, it seems, at the speed of light. These new clocks tick slower and do not age as fast.
It’s a tall order when we are called upon to reinvent our universe. But that is exactly what we must do. Those who hesitate much longer may find themselves unable to cope with the management of change hitting us from all sides. It’s an insane situation, but one filled with golden opportunities…man I love this industry!
Out of clutter, find simplicity. From discord, find harmony. In the middle of difficulty lies opportunity.”
Albert Einstein
Related posts: