The Economy’s Gordian Knot

“For many events, roughly 80% of the effects come from 20% of the causes.”

–The 80-20 Rule, also known as the Pareto Principle

My corollary to the 80-20 Rule in today’s housing market:¬†

Twenty percent of prospective home Buyers can get financing on a home of their choice, on terrific terms.

In fact, they can¬†borrow far more than they’re comfortable with.

The other 80% are seemingly frozen out, either because they have poor credit, a lousy balance sheet — or both (often in connection with their current housing situation).

Conundrum

The solution for the foregoing isn’t easier or cheaper credit — you can’t get much lower than zero — it’s stronger borrowers.

In turn, stronger borrowers requires a stronger economy.

What would make the economy stronger?

For the housing market to stop being a drag.

How’s that for a Gordian Knot?

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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