{"id":1163,"date":"2012-12-19T10:35:12","date_gmt":"2012-12-19T14:35:12","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=1163"},"modified":"2020-12-02T07:40:54","modified_gmt":"2020-12-02T12:40:54","slug":"this-is-chaos-anything-can-happen","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2012\/12\/19\/this-is-chaos-anything-can-happen\/","title":{"rendered":"This is Chaos – anything can happen"},"content":{"rendered":"

by Dan Krell
\nDanKrell.com<\/a>
\n\u00a9 2012<\/h3>\n

\"housing<\/a>There has been a lot that has been written about chaos theory, and some have even tried to apply it to real estate. More specifically, many have discussed the application of chaos theory to real estate investing. And even more recently there have been attempts to applying chaos theory in figuring out where housing is headed; or to be succinct \u2013 when will housing once again begin to realize consistent appreciation?<\/h1>\n

I\u2019m not one to disappoint, but I can\u2019t predict the future. However, my attempt to explain chaos theory may reveal how its application to the housing market is difficult at best (at least in today\u2019s environment), yet while simultaneously is an exceptional exercise in understanding the underlying dynamics.<\/p>\n

Chaos theory is somewhat of a misnomer; a more apt name might have been \u201cpattern to equilibrium theory\u201d as it\u2019s not so much about chaos as it is about predicting natural patterns that seek equilibrium; or put another way \u2013 predicting results by looking at dynamic patterns. Equilibrium could be what we typically think it is \u2013 a pattern of a self sustaining system; or it could also mean a pattern of inertia to the system\u2019s inevitable demise.<\/h2>\n

Simplified, chaos theory investigates the relationships and patterns of a system\u2019s trend toward stability. The theory delves into the natural patterns of subsystems so as to predict how patterns develop and unfold to manifest themselves.<\/h3>\n

\"housing<\/a>Although mathematicians have been investigating the precursors for chaos theory for many years, one of its first practical applications was in trying to predict the natural patterns of the weather. So it makes sense that you might want to apply the theory to the housing market so you could figure out the best time to buy and sell. The problem in the theory\u2019s application to the housing market is that unlike the weather, housing is not an \u201corganic\u201d system; housing does not follow the natural unfettered patterns of market forces. Rather, decades of intervention and policy have influenced the expressed patterns of the housing market.<\/p>\n

But don\u2019t get discouraged, an aspect of chaos theory termed \u201cthe butterfly effect\u201d explains that any action, no matter how small and insignificant, can influence a larger system. So, although the housing market is not an organic system, you could theoretically investigate its related influences to work out a market trajectory. So, rather than solely considering supply and demand, you might take into account more wide ranging and complex influences, such as Greek economic policies, German parliamentary elections, EU monetary policy, etc.<\/p>\n

By looking at observable influences on the housing market, housing contrarians have been muttering their mantra of \u201cthe sky is falling\u201d for years. And when the housing bubble burst, they of course claimed they had it right all along, and many are still waiting for the worst. Was it a coincidence? Of course, in the early 2000\u2019s there were influences on housing and the economy that were inconceivable (such as mortgage CDO schemes).<\/p>\n

Chaos theory is as complex as the systems involved. We can also apply it to come up with alternate trajectories and think about what could have been. If for not some small event, someone\u2019s seemingly insignificant decision in the past, there might not have been a housing bubble burst or great recession. But as they say hindsight is 20\/20 \u2013 but that\u2019s an entirely different theory.<\/h3>\n

More news and articles on \u201cthe Blog\u201d<\/a>
\n\"Protected<\/a>
\nThis article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright \u00a9 2012 Dan Krell.<\/p>\n","protected":false},"excerpt":{"rendered":"

by Dan Krell DanKrell.com \u00a9 2012 There has been a lot that has been written about chaos theory, and some have even tried to apply it to real estate. More specifically, many have discussed the application of chaos theory to real estate investing. And even more recently there have been attempts to applying chaos theory … <\/p>\n

Continue reading “This is Chaos – anything can happen”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[567,234,339,288,13],"tags":[653,966,893,906,466,797],"class_list":["post-1163","post","type-post","status-publish","format-standard","hentry","category-economics","category-economy","category-housing-bubble","category-housing-market","category-real-estate","tag-chaos-theory","tag-economics","tag-economy","tag-housing-bubble","tag-housing-market-2","tag-real-estate"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-iL","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/1163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=1163"}],"version-history":[{"count":5,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/1163\/revisions"}],"predecessor-version":[{"id":6099,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/1163\/revisions\/6099"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=1163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=1163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=1163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}