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).
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?