|By Peter Atwater | Excerpted from the August 2011 Socionomist
Originally published under the title “Post-Crash Reality: Gimme Shelter”
[Ed: In this article, financial commentator Peter Atwater explains that as a deflationary mindset grows, the American housing market metamorphoses from “investment” to “good.” Here is an excerpt of Atwater’s August 2011 article.]
In their landmark 2007 paper, “The Financial/Economic Dichotomy in Social Behavioral Dynamics: The Socionomic Perspective,” Robert Prechter and Wayne Parker noted that some economic goods can come to be viewed as investments. They cited as examples tulips in Holland in the 1630s and Beanie Babies in the 1990s. They also noted that at the time they wrote their paper, homes in the U.S. and elsewhere had “metamorphosed from economic goods into vehicles for speculation as people buy them to ‘flip’ and trade options on their purchase.” Prechter and Parker wrote:
When an item is generally viewed as a good to be used, it has a certain value because individuals know how to value it over time for their own purposes. When an item is generally viewed as an investment, it has an uncertain value because individuals do not know how it will be valued over time by others. … [In the first case, it] is an economic good to any person who buys it to use or enjoy. … [In the second case, it] is a financial asset to a person who buys it with the expectation of re-selling later it at a higher price; he does not know its future value to other people [who likewise will be speculating on it], and he pays a price that may or may not turn out to be useful in the financial context of uncertain value.1
TV shows such as “Flip That House” helped prove that at its peak in 2006/2007, the U.S. housing market had moved beyond providing utility to become a full-fledged speculative bubble. A house was not so much a home as a key to future financial rewards.
More recently, a friend in the high-end home-building industry observed that fancy woodworking has been pushed aside for “instant” hot water and variable-speed furnace fans. His point was that ostentatious luxury, or boundless aspiration, is being replaced by cost-conscious utility—even at the upper end of the market. As Prechter and Parker’s paper alluded, the housing market is changing from an investment market back to a market for a utilitarian good. …
Read this two-page article to discover what Atwater has to say regarding emerging trends in the rental and new single-family housing markets once mood turns negative at smaller degrees.
Want more content like this?
The Socionomist is the only monthly publication that offers you practical insights on the relationship between social mood, financial markets and cultural trends. Each issue warns you about big societal changes before they can harm you and reveals breakthrough opportunities emerging from trends in society.
(Socionomics Members: Log in for the full article and your complete, exclusive archive.)
Socionomist is a monthly online magazine designed to help
readers see and capitalize on the waves of social mood that contantly occur
throughout the world. It is published by the Socionomics
Institute, Robert R. Prechter, president; Matt Lampert, editor-in-chief;
Alyssa Hayden, editor; Alan Hall and Chuck Thompson, staff writers; Dave Allman
and Pete Kendall, editorial direction; Chuck Thompson, production; Ben Hall,
For subscription matters, contact Customer Care: Call 770-536-0309 (internationally) or 800-336-1618 (within the U.S.). Or email email@example.com.
We are always interested in guest submissions. Please email manuscripts and proposals to Chuck Thompson via firstname.lastname@example.org. Mailing address: P.O. Box 1618, Gainesville, Georgia, 30503, U.S.A. Phone 770-536-0309. Please consult the submission guidelines located at http://www.socionomics.net/PDF/Socionomist_Submission_Guidelines.pdf.
For our latest offerings: Visit our website, www.socionomics.net, listing BOOKS, DVDs and more.
Correspondence is welcome, but volume of mail often precludes a reply. Whether it is a general inquiry, socionomics commentary or a research idea, you can email us at email@example.com.
Most economists, historians and sociologists
presume that events determine society’s mood. But socionomics hypothesizes
the opposite: that social mood regulates the character of social events. The
events of history—such as investment booms and busts, political events,
macroeconomic trends and even peace and war—are the products of a naturally
occurring pattern of social-mood fluctuation. Such events, therefore, are not
randomly distributed, as is commonly believed, but are in fact probabilistically
predictable. Socionomics also posits that the stock market is the best available
meter of a society’s aggregate mood, that news is irrelevant to social
mood, and that financial and economic decision-making are fundamentally different
in that financial decisions are motivated by the herding impulse while economic
choices are guided by supply and demand. For more information about socionomic
theory, see (1) the text, The
Wave Principle of Human Social Behavior © 1999, by Robert Prechter;
(2) the introductory documentary History's
Hidden Engine; (3) the video Toward
a New Science of Social Prediction, Prechter’s 2004 speech before
the London School of Economics in which he presents evidence to support his
socionomic hypothesis; and (4) the Socionomics Institute’s website, www.socionomics.net.
At no time will the Socionomics Institute make specific recommendations about
a course of action for any specific person, and at no time may a reader, caller
or viewer be justified in inferring that any such advice is intended.
All contents copyright © 2021 Socionomics Institute. All rights reserved. Feel free to quote, cite or review, giving full credit. Typos and other such errors may be corrected after initial posting.