Power of 10 Interface

Posted by admin on September 29th, 2010

Power of 10 Interface 463

Power of 10 Interface
Information at the speed of need
The distance between information and our brain is getting shorter.
Twenty years ago if you had access to a large information base, such as the Library of Congress, and someone asked you a series of questions, your task would have been to pour through the racks of books to come up with the answers. The time involved could have easily have been 10 hours per question.
Today, if we are faced with uncovering answers from a digital Library of Congress, using keyboards and computer screens, the time-to-answer process has been reduced to as little as 10 minutes.
The next iteration of interface design will give us the power to find answers in as little as 10 seconds.
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The ease and fluidity of our information-to-brain interface will have a profound effect on everything from education, to the way business is being conducted, to the way we function as a society.
Before we dive into the implications of what’s in store, it’s important to understand where we’ve come from.
Ten Years:  Before the time of recorded information, decisions we made from trial and error, best guesses, and stories passed down through the ages. New ideas took years to move from thought leader to thought leader, if it ever happened at all.
Ten Months:  When monks began transcribing the notions of prominent thinkers, information was placed in the few isolated storehouses of the day. The time between questions and answers was reduced from years to months, but still painfully slow.
Ten Days:  After the invention of the Gutenberg printing press, books became more available. Most major cities started creating information centers to store and preserve the wisdom of their leading thinkers.
Ten Hours:  With the invention of 20th century libraries, our access to information again went through a radical transformation. Elementary schools, high schools, and colleges all added libraries to their facilities, and the distance to information dropped from days to hours.
Ten Minutes:  Once information made the quantum leap from the traditional ink-on-paper to today’s digital format, our connection to information became far more personal. Today, because of the speed and convenience associated with information access, the volume of ideas that we are exposed to on a daily basis has increased exponentially.
Ten Seconds:  We are very close to making the next jump to the 10-second interface. This turbo-charged brain-to-web interaction will make today’s slow connection speeds look like ancient history. Every question will have an answer, every problem will have a full list of possible solutions.
Ten Milliseconds:  Once we get past the notion that “fast” can be made to go even faster, we will begin to enter an entirely new era where collaboration will happen instantly across all kinds of boundaries, with all kinds of people. The rulebook for the entire world will be rewritten around the “speed of need.”
Dispelling Myths
Venturing into new territory is a perfect opportunity for us to speculate, and since I’m not brain matter expert, this is the part that will probably get me in trouble. Some of my assumptions may indeed be erroneous. But science fiction has evolved into the ugly step-sister of the horror industry, leaving us with far too many crazy notions about mind control and the evil intent of people working in this field.
Increasing the speed with which we access information will not mean we are becoming “The Borg” on Star Trek. Our minds will not instantly become controllable or even accessible to others without our consent. Even if they were it would be a non-issue.
Every mind is different. The patterns and connection we make inside our own minds is uniquely our own. To someone peering in from the outside it will be like looking at a cryptic 3-dimensional document written in a foreign language.
To be sure, dangers still exist, but most will result from areas we don’t yet understand. Social reclusiveness, information additions, and destructive idea viruses may all be part of a much longer list of things that can go wrong.
Next-Generation Learning
As most good journalists and storytellers have learned, the basic components of every story deals with six elements – who, what, when, where, why, and how.
Four of these elements – who, what, when, and where – are factual. With a 10-second interface, it becomes far less important to commit factual information to memory because it is so easily accessible.
Many of today’s most scholarly people who have master the capacity to retain vast reservoirs of informational minutia will find themselves oddly staring toe to toe with average people who have mastered the exact same ability, albeit indirectly with the use of technology.
Schools will no longer focus on the factual information but on the indirect aspects like relational elements, pattern analysis, value statements, opinions, and basic questions like “why” and “how.”
Here are some examples of questions that are not easily answered with a 10-second interface:
• Explain the context within which those comments were made?
• How do animal behaviors vary from species to species?
• Was their underlying motivation behind that change detrimental to their cause?
• How did that kind of thinking relate to what other cultures were going through?
• Why do you think that happened?
• Based on your understanding of the situation, was that a good move?
The Fluid Flow of Ideas
Our access to information will continue to decrease in terms of time and distance until it reaches the point of becoming seamless and invisible to the end users.
The technology itself will begin to disappear, losing its “presence” as components shrink and become more biologically integrated. Much of the focus will begin to shift towards thinking strategies that support the most efficient flow of ideas.
Today’s reading processes requires the human brain to work through a rapid-fire micro-decision making procedure to convert characters on a page into mental concepts and images. Some people’s brain processes naturally work far faster than others and reading speeds vary tremendously.
The 10-second interface will cause us to rethink virtually every aspect of information flow.
• What will constitute information in the future?
• What will be the most efficient form of information?
• How will information be stored, accessed, transmitted, and retrieved?
• And, most importantly, who gets to decide?
Final Thoughts
Every piece of cutting edge technology ushers in an entirely new set of problems. Innovations become self-perpetuating because problems demand solutions, and all solutions create more problems.
Having lived for many years, I can attest first-hand to the changing nature of finding answers. For the impatient side of me, this has been a painfully slow evolution. To most, however, the changes seem like a blur with little recognition of the turning points along the way.
When the 10-second interface finally arrives, I will invite all of you to join me in a 10-second toast as we stop to celebrate the importance of this accomplishment.
Enjoy it while you can, the next celebration, perhaps only a few more years away, will only last 10-milliseconds.
By Thomas Frey

Information at the speed of need

The distance between information and our brain is getting shorter.

Twenty years ago if you had access to a large information base, such as the Library of Congress, and someone asked you a series of questions, your task would have been to pour through the racks of books to come up with the answers. The time involved could have easily have been 10 hours per question.

Today, if we are faced with uncovering answers from a digital Library of Congress, using keyboards and computer screens, the time-to-answer process has been reduced to as little as 10 minutes.

The next iteration of interface design will give us the power to find answers in as little as 10 seconds.

Read the rest of this entry »

business trends, new strategy, people making a difference, powerful idea, social trends, technology trends 8 Comments »

Interview with Ukraine’s InvestGazeta

Posted by admin on September 22nd, 2010

Futurist Thomas Frey Interview with InvestGazeta 2

What will cause the power to shift among nations between now and 2050?

I often get interview requests from newspaper and magazines as they probe for a better understanding of the world ahead. However, the request I received two days ago was a bit unusual.

On Monday, I received an email from Elena Snezhko, a journalist with the Ukrainian financial weekly magazine InvestGazeta, posing a series of question about which countries will rise to power 40 years from now, and why.

In 200 BC, the great Carthaginian General, Hannibal, used an army of elephants to symbolize power. In World War II the idea of power was symbolized by heavy artillery in the form of tanks and bombs. Tomorrow’s battles may be so strange that people will long for the days of guns and knives again.

Here is how I answered her questions.

Read the rest of this entry »

future scenario, historical perspective, prediction, scary future, social trends 8 Comments »

Prize Competition #1: The Race to the Core

Posted by admin on September 15th, 2010
Prize Competition #1:
The Race to the Core
Over the next year I will be proposing a series of eight major prize competitions, competitions designed to pit the countries of the world against each other in a series of extraordinary tests of skills and abilities.
Only countries will be allowed to compete; not companies, colleges, or any other kind of organization. Each country will be allowed to submit up to two teams, similar in some respects to an Olympic competition. However, in these contests, there will be no second or third place. Teams will compete until one country wins.
At stake will be a combination of national pride, personal legacies, and laying claim to unprecedented achievements in science and industry.
Behind this announcement is our team at the DaVinci Institute. To some, this may be nothing more than an intellectual exercise to postulate eight grand challenges for the future. Our hope is that we may somehow stir the imagination of people around the world and, bare minimum, incite a global conversation.
The reason we have chosen eight competitions is because of the eight dimensions of the Octagonist, a competition framework that I will explain at a later date. Each of these competitions will be the most challenging ever imagined. Some may not be completed in our lifetime. They are designed to stretch human thinking and push the envelope of understanding.
The first competition that I am announcing today, will be a race to send the first probe all the way to the center of the earth – 3,950 miles straight down.
————————————-
Background Information
In 1970, geologists in Russia launched into a major drilling project at the Kola Peninsula, near Finland, with the expressed intent to borough into the earth’s core. After 22 years working on the project, they had managed a hole the diameter of a small melon, extending 7.6 miles down.
The project ended when the crust turned mushy under the drill bit. They had bored into temperatures as high as 356 degrees Fahrenheit, much hotter than expected at that depth.
The Kola Peninsula borehole is by far the deepest hole ever dug, yet it stretched only 0.2 percent of the way to the core.
Today, the Earth’s interior remains as frustratingly out of our grasp as it was 300 years ago when the famous astronomer Edmond Halley postulated that the inside was hollow and filled with living creatures. We consider his ideas humorous today, but the fact remains, when it comes to understanding the center of the Earth, no one knows anything for sure.
The Need for Precision
Geological text books like to describe the Earth in terms of four primary layers – the crust, the mantle, the outer core, and the inner core.
The distance to the Earth core is roughly the same distance as between New York City and Stockholm, Sweden, or the distance between Warsaw, Poland and Calcutta, India. If we described the journey between these cities in terms of “four regions that you will go through,” the description would seem at best, primitive.
We have no maps of the center of the earth. We have no accurate diagrams, no understanding of motion, fluidity, or changes happening with any degree of accuracy.
While scientists are developing skills to work with nanoscale precision on the earth’s surface, the best we can muster below the surface is blindfolded guesswork done with 100 mile precision.
What’s happening below has a huge impact on what’s happening above. Earthquakes, volcanoes, tsunamis, and polar shifts are all happening because of changes happening below the surface.
As you can see from the chart below, many thousands of people die every year because of our own ignorance. Without any prediction systems, it’s impossible to move people out of harms way.
The Goal
The goal of this competition is to develop a technology that can more easily probe the inner workings of the earth, and do it with far greater precision.
The competition is not just about mitigating earthquake deaths, or knowing when the next volcano will erupt, or when the next shifting of the poles is about to occur. It’s all that, and much, much more.
New Technology Needed
When it comes to the technology needed to get to the center of the earth, that’s where it gets fuzzy because some new kind of technology will need to be developed. At this point we can only speculate.
Geophysicists have built models of the Earth’s core by studying seismic waves that ripple through the planet. Every year thousands of earthquakes are recorded at the various seismic stations, with some intense enough to be recorded all the way through the earth.
These waves flow through the earth at differing speeds depending on the types of materials they flow through. The faster the waves, the denser the material. Seismological data is then overlaid onto our existing models of the earth’s interior to add more evidence about what lies below.
Everything we know about the earth’s core has been developed through indirect evidence.
Geophysicists, at best, can only describe the topography of the inner Earth with a resolution of many miles, not inches. So any probe traveling into the earth will have to create its own maps along the way.
Some teams may consider using advanced boring technology. But that may not be the best approach when considering the distances involved. If an extremely fast boring technology enabled a probe to move at the blazing fast speed of 1 mile per day, it would still take nearly 11 years to reach the core.
One approach may be to use super thin nano-wires that worm their way along. Another may be to use high powered lasers or some sort of plasma drill.
In addition to all of the other obstacles, two other challenges will be to find a power source capable of driving the probe, and developing a through-the-earth communication system that works even through thousands of miles of molten rock.
Requirements
The basic requirements for this competition are that the probe needs to begin on the surface of the earth and travel all of the way to the center. As it moves along the way, it will need to be in constant communications, transmitting data to its team on the surface.
A series of sensors will be required for each probe. As the probe moves through the earth, it will be required to create a data trail along the way.
The exact kind of data capture mechanisms to be placed on board the probe will be determined in the coming months. However, at minimum, it will need to be recording and transmitting the temperature, geo-location, pressure, radiation levels, consistency, and makeup of the surrounding materials.
There will also be a requirement that the effort not cause irreparable harm to the earth. We don’t want to mess with the tectonic plates, interfere with magnetic fields, or inadvertently split the world in half. Undoubtedly some crazy ideas will be proposed. But in the end, this is an information-gathering exercise, not a win-at-any-cost competition.
Teams
Only countries will be allowed to enter teams, and each country will be limited to no more than two teams.
There will be no limit to the number of people on a single team. That will be governed more by the county’s own budget.
All teams will be required to maintain accurate records of their personnel, research data, and stages of their development.
The Prize
As in the Olympics, the winners will each receive a gold medal. However, the true value will come from the accomplishment.
In much the same way the Hubble Space Telescope has given us a never-ending stream of visual data about our universe, this technology will serve as a never ending stream of discovery, mapping region after region of inner-earth geology.
For the material science industry, it will be a technology capable of locating deep earth mineral deposits.
Most importantly, the team that wins will have carved out their own legacy with a permanent place in the history books.
Entrance Fee
The cost of managing a competition of this scale will be significant. For this reason the entrance fee for each team has been set at $1 million USD per team. The money will be used to fund an endowment to insure the long-term viability of this competition.
As the competition ramps up, an entirely new organization will be created. This organization will require a highly skilled management team and staffing with extraordinary technical expertise. This team will need to be in place for many years, perhaps even decades.
The amount also represents a tiny fraction of one percent of the amount each team will need to budget for their efforts. Team budgets will likely be in the billions of dollars.
Governing Body
The competition will also require its own governing body. Since it will be a venture into the unknown, pushing the limits of science and technology, there will need to be an international governing body responsible for oversight and dealing with unforeseeable circumstances.
The exact makeup and responsibilities of this governing body will be determined over the coming months. But minimally it will include one representative per team from the countries they represent.
Final Thoughts
The cost of doing nothing is far greater than the cost of doing something.
Each year billions of dollars are used to clean up after natural disasters occur, and much of that cost is being driven by our own lack of knowledge. Without any forewarning, we leave people in harm’s way. Without understanding the scope of possibilities, our thinking is flawed, and our policies and planning are equally flawed.
Humanity has a higher calling than that of being habitual victims. Nature causes far more casualties than any war. If we are willing to fight wars, we should be willing to fight a war against cruelest monster of them all, our own planet.
The future is not being created by the meek and the timid. The future is being created by those willing to make bold moves, take on impossible challenges, and put themselves at risk. As I have said many times, there is great value in the struggle and human nature has shown us that we only value the things we’ve had to struggle to achieve.
The future hates complacency, so much so that it has built-in self-sabotaging mechanisms to continually hold our feet to the fire. If we are not moving forward, we are instead moving backwards. There is no middle ground.
People are at their best when they are challenged. If we don’t challenge ourselves, nature has a way of giving us challenges anyway.
Humans are genetically hard-wired to compete. From early childhood we learn how to compete. We compete athletically in sports, academically in school, vocationally for our jobs, and socially for our friends.
But we have very few of the grand challenges capable of moving humanity to a whole new level. For us to compete effectively, we need to know there’s a finish line. And that’s what we are hoping to provide.
In the end, this is a competition where all of humanity can end up a winner.
By Thomas Frey

Earth's Core 871

Over the next year I will be proposing a series of eight major prize competitions, competitions designed to pit the countries of the world against each other in a series of extraordinary tests of skills and abilities.

Only countries will be allowed to compete; not companies, colleges, or any other kind of organization. Each country will be allowed to submit up to two teams, similar in some respects to an Olympic competition. However, in these contests, there will be no second or third place. Teams will compete until one country wins.

At stake will be a combination of national pride, personal legacies, and laying claim to unprecedented achievements in science and industry.

Behind this announcement is our team at the DaVinci Institute. To some, this may be nothing more than an intellectual exercise to postulate eight grand challenges for the future. Our hope is that we may somehow stir the imagination of people around the world and, bare minimum, incite a global conversation.

The reason we have chosen eight competitions is because of the eight dimensions of the Octagonist, a competition framework that I will explain at a later date. Each of these competitions will be the most challenging ever imagined. Some may not be completed in our lifetime. They are designed to stretch human thinking and push the envelope of understanding.

The first competition that I am announcing today, will be a race to send the first probe all the way to the center of the earth – 3,950 miles straight down.

Read the rest of this entry »

future scenario, historical perspective, new strategy, powerful idea, prize competition 9 Comments »

The Fall of Book Publishing: The Rise of New E-Book Business Models

Posted by admin on September 9th, 2010

E-book Readers of the Future 783

The Fall of Book Publishing:
The Rise of New E-Book Business Models
Experimenting Our Way to Success -
Reinventing Publishing Models
Amazon revolutionized book reading in 2007 when it introduced its Kindle book reader. Within the past three years, the explosive sale of book readers has caused a massive surge in the sale of e-books, already outpacing the sale of hardcover books, with a prediction by Amazon CEO Jeff Bezos that they will outsell paperbacks within the next year.
We are witnessing a major transformation of this industry. Within five years, the vast majority of all books sold will be e-books. Big box retailers like Barnes & Nobel and Borders will have shuttered most of their storefronts. The printing press industry, along with the craftsmen of ages past who have made a fine art of applying ink to paper, will be mothballing their machines. And the media, almost in unison, will begin writing the eulogy for this 500-year old industry.
But before we focus too much on what we’ve lost, we need to pay close attention to the other side of the equation. Digital book publishing will be an exciting new industry with truly amazing potential for growth.
Digital publishing does not mean fewer books or fewer readers. Rather, it paves the way for lower cost publishing, new forms of “books,” more authors, more titles, and a host of new opportunities. Most importantly, it will set the stage for experimentation as inventive young minds help redefine the form and nature of books.
In January, Deb and I attended the Consumer Electronics Show in Las Vegas where we saw no fewer than 20 new e-book readers being introduced into the marketplace. In addition to these, the number of other mobile devices such as tablets, laptops, and game consoles, with e-book reading capabilities, were something like 10-20 times as many.
These readers, along with the breakneck million-a-month pace being set by Apple’s iPad, are driving the ubiquity of digital reader access for every possible piece of written material that becomes available.
Competition will be fierce. So fierce, in fact, that the cost of book readers will begin to plummet. Within 5 years, some will reach prices as low as $20, maybe less. They will become as commonplace as calculators and virtually everyone will have one.
Two-Way Flow of Information
People today tend to resent the one-way flow of information. For most of history our technology has only allowed information to flow in one direction, and businesses have capitalized on this limitation.
For centuries people have used one-way information flows to establish themselves as the undisputed expert on a topic simply because there were so few options for voicing a dissenting opinion.
Today the rules are different. Information flows quickly and in many different directions. Anyone voicing their ideas can expect to have either direct or indirect feedback on it.
Most forums have comment sections. People now expect to be able to interact with the author. Their comments fuel other comments, and if some article does not have a comment section, opinions are stated on social media sites, with or without the author being aware of what’s going on.
Interested people want to immerse themselves with ideas, and they will to do this through comments, author interaction, wiki forums, and other forms of topical conversations.
Books have traditionally been the epitome of one-way information, but digital books are changing all that. Not only do they accommodate good interaction, some go out of their way to promote it.
Readers who become engaged with the information in an e-book will become evangelists for it. They will not only tell others, they will broadcast it to the world.
New Business Models
Interactive book forums are setting the stages for publishers to experiment with entirely new business models.
Rather than focusing on selling large numbers of books to become profitable, eBooks may very well become loss leaders, setting the stage for a series of other pricier products and services surrounding the author’s area of expertise.
Keeping in mind the time scarcity that most authors have, the cost of the services will increase along with the amount of time the author has to commit.
These types of services will vary greatly depending on the type of books, personality of the authors, and the timeliness of the topics.
In much the same way the music industry has shifted to selling concerts rather than records, the publishing industry will look for new ways to monetize the performances of its talent base.
Yes, people will still pay to purchase books, but they may be willing to pay far more for a variety of other ways to engage on the topic. Hosted mastermind sessions, subscription newsletters, interactive telepresence calls, one-on-one consulting, and paid appearances and speaking gigs are all options that next-gen publishers will consider as they calculate the value of a new unpublished work.
Much of this already goes on today, but continued experimentation will pave the way into virgin territory.
Some books will include ads, both in-text and display ads to help the bottom line. A few will experiment with product placement strategies, affiliate marketing, and other ideas for cross-promoting products.
Pushing Costs Back Onto the Authors
At the same time, as we move into an era of uncertainty, book publishers will invariably begin to shift many of the costs back onto the authors. The cost of reviewing manuscripts, content strategy sessions, layouts, and editing may be charged up front before any sale takes place. Along with shouldering more of the upfront costs, authors may also be presented with a cafeteria-style menu of promotional packages for every form of media to help improve awareness and increase the chances of landing a next-generation best-seller.
To compensate, publishers may opt for a smaller piece of sales initially. These pay-to-play models will virtually eliminate the industry’s upfront costs, so the big profits will come when “freemium” and premium services get added into the mix.
Rest assured, publishers will retain their role as the credentialing authority, to maintain the quality in their brand and control the exclusivity of their talent. In doing so, they will also command a premium price for their premium services.
Digital E-Book Readers are Only Phase One
When our only systems for creating books involves applying ink to paper, we are very limited in our capabilities. Adding color has been difficult and expensive. Images and photos have required special processes. Inserting a video has been impossible as were animations and any other form of movement.
Pages on a printed book are static. They don’t move. The progression of events has to be linear – one page after another – with no chance for hyperlinks, mouse-overs, informational pop-ups, or any other non-linear decision trees.
E-books, however, are opening the door to all that and much more.
Once we get past the notion that books have to be framed around a device that makes them look and feel like a traditional book, we can begin to experiment with some truly novel story-telling systems. Here are a few of the many possibilities:
• Non-Linear Thinking – Storytelling will no longer have to be sequential or even logical. Some stories may involve such things as treasure hunts, game interludes, or even intelligent systems that write the story on the fly.
• Movement – Rather than static characters and images on a page, a digital book may include animations, video clips, movable charts and graphs, touchable interactions, voice clips, note-taking modules and much more.
• Augmented Reality – In its current state, augmented reality can easily add three-dimensionality to any page, image, or idea through the use of a head-mounted or spatial display. We’ve only begun to scratch the surface on this type of technology.
• Holography – Stepping beyond augmented reality are other forms of holography, a science that so far has not lived up to its full potential. But new and better holographic systems will undoubtedly come, and they will unleash more than a little creativity into the storytelling process.
Books that tell a story will have an entirely new palette of options for bringing their masterpiece to life.
Some Final Thoughts
Much like transitioning from LPs to cassettes to CDs in the music industry, moving from printed books to digital books will alter the publishing industry and change the way money is made.
The key to this emerging business world will be agile minds and nimble leadership. Stiff competition will come from small players and consumers will undoubtedly become bewildered by all the options.
Attention spans will become an increasingly precious commodity.
As a rule of thumb, the decay rate for old content is increasing nearly as fast as the creation rate for new content. Since there are physical limits to how much the human brain can absorb in a day, the pool of active content can only grow as long as we develop faster absorption rates and grow the number of Internet users.
Eventually we will see old content stagnating as fast new content is being created. (Probably within the next 10 years.) For this reason, the economic lifecycle of books and information products will continue to shorten along with the ease of new content creation systems.
Yes, we will hear lots of grumbling from the publishing world and even see some bizarre legal and legislative attempts to slow the transition.
But this is an exciting time for both authors and readers alike, as storytelling and information products shift into an entirely different gear.
By Thomas Frey

Experimenting Our Way to Success - Reinventing Publishing Models

Amazon revolutionized book reading in 2007 when it introduced its Kindle book reader. Within the past three years, the explosive sale of book readers has caused a massive surge in the sale of e-books, already outpacing the sale of hardcover books, with a prediction by Amazon CEO Jeff Bezos that they will outsell paperbacks within the next year.

We are witnessing a major transformation of this industry. Within five years, the vast majority of all books sold will be e-books. Big box retailers like Barnes & Nobel and Borders will have shuttered most of their storefronts. The printing press industry, along with the craftsmen of ages past who have made a fine art of applying ink to paper, will be mothballing their machines. And the media, almost in unison, will begin writing the eulogy for this 500-year old industry.

But before we focus too much on what we’ve lost, we need to pay close attention to the other side of the equation. Digital book publishing will be an exciting new industry with truly amazing potential for growth.

Digital publishing does not mean fewer books or fewer readers. Rather, it paves the way for lower cost publishing, new forms of “books,” more authors, more titles, and a host of new opportunities. Most importantly, it will set the stage for experimentation as inventive young minds help redefine the form and nature of books.

Read the rest of this entry »

business trends, future scenario, new strategy, powerful idea, prediction, technology trends 7 Comments »

Turmoil Ahead for Housing

Posted by admin on September 1st, 2010

The Coming a Ban on
Real Estate Construction
Consider the following scenario. Over the next few years, several major cities in the U.S. will begin to impose a ban on all new residential and commercial construction. With populations declining in several metro areas, they will worry openly about becoming the next Detroit with abandoned neighborhoods signaling a rapid decline in property values.
In the past, many cities and counties invested in buying open space to insure there would be room for parks and open trails in the future. Now, with property values declining and funding in short supply, a new set of concerns has taken center stage.
Abandoned properties can quickly turn into a rapidly escalating blight that moves like an infestation from one community to the next. Poorly constructed houses and office buildings will see the economics of their existence shift from a net positive to a net negative with little forewarning. When property values decline and maintenance costs increase, more and more owners will decide to cut their losses, and let their property go into default.
As a way to counteract this trend, cities will place a ban on all new open-ground construction, forcing existing buildings to be torn down before new ones can be built. So the only way someone can build a brand new home will be to tear down an existing home.
In the 60s, 70s, and 80s there was a massive effort to create affordable housing, to insure that the vast majority of people could own their own home. Financial tools were tweaked to allow the greatest possible acceptance, and construction standards were lowered to increase affordability. This combination provided a great short-term fix, but disastrous long term consequences.
Until recently, the ever growing population base provided a steady demand for houses. Even poorly built older homes in various states of decay were worth repairing and reselling because the demand kept valuations relatively high.
Real estate, like most other commodities, retains its value as long as there is sufficient demand to match the supply.
Every time there is a change in a local population, the price of real estate becomes an early warning indicator.
Shifting Population Trends
Unbeknownst to most, the 8,000 pound gorilla hovering in the background of our economy is the shifting population base. Any fluctuation in the number of consumers changes the demand-side of the supply and demand equation.
The 1900s were a very fertile century where the earth’s population grew from 1.6 billion people to 6.4 billion within 100 years. Never before in history had the human population exploded like this, and we all became conditioned to think there would be a never-ending supply of young people, and a never-ending supply of demand for real estate.
But a strange thing happened along the way. As doom and gloom predictions started painting scary scenarios of an overpopulated earth where food shortages threatened the very existence of humanity, the full impact of birth control technology, invented in the 1960s, began to take effect.
Today, the population in the U.S. has begun to level off, while at the same time nearly all of Europe and major parts of Asia are in serious decline. Since people create the economy, the lack of people creates just the opposite. This drop in demand will manifest itself in many areas, including a drop in the demand for real estate.
As a rule of thumb, it’s best not to view this through the value-lens of being “good or bad”; it just signals a change in the way the world works.
Population Statistics – A Closer Look
Simply looking at U.S. population statistics can give us a false impression of what’s actually going on.
Source: U.S. Census Bureau
The primary reason why the population is still growing is because people are living longer. As baby boomers work their way into the retirement years, they will be shifting into more efficient lifestyles, shedding belongings, and downsizing their homes.
Another key factor in these statistics is the number of immigrants moving into the U.S. Even though the numbers are declining and there are some signs of a weakening demand, the U.S. continually attracts some of the best and the brightest from around the world.
Over the past three decades, the number of live births has remained relatively steady
Source: U.S. National Center for Health Statistics
Yes, it’s true that in 2007, more babies were born in the United States than any other year in the nation’s history. But as a percentage of the overall population it was far less than in the 50s and 60s.
To be sure, the U.S. birth rate is still higher than the birth rate in many countries in Europe and Asia where population declines are forcing the closure of schools, shuttering of factories, and a rethinking of economic strategies.
Falling below replacement levels of 2.1 has raised a number of red flags
Source: U.S. National Center for Health Statistics
For any population to maintain its current numbers, couples need to average 2.1 children. Any number below that will yield a population decline over the long run.
According to numbers released recently by the National Center for Health Statistics, births fell 2.7 percent last year even as the population grew.
As a percentage of the population, the U.S. sunk to 13.5 birth per 1,000 population
Source: U.S. National Center for Health Statistics
The most telling statistic is the decline in live births, now at the lowest point in recorded history.
This downward trend invites some troubling comparisons to Japan and its lost decade of stagnant growth in the 1990s and very low birth rates. Births in Japan fell 2 percent in 2009 after a slight rise in 2008.
Housing Markets and Opportunities
Number of new building permits (Shaded areas indicate U.S. recessions)
2010 research by the St Louis office of the U.S. Federal Reserve
Over the past four years, the housing market has experienced a devastating meltdown.
Whether you’re looking at new or existing homes, both prices and unit volumes have declined sharply since the peak in 2006. Foreclosed homes and empty subdivisions litter the landscape. In short, the housing market is in shambles.
Perhaps one of the big trends today is a shifting mindset about owning and investing in real estate. As the number of young people declines, and loan money becomes more difficult to come by, demand for property will continue to weaken.
In addition, as the baby boomers move into retirement, there is a big shift away from the uncertainties of real estate, towards a simpler, more affordable lifestyle.
One opportunity today is for someone to devise a new approach to home ownership. With credit ratings now at an all-time low, one option may be a lease-with-an-option-to-buy arrangement where someone who leases a house for two years and makes all of their payments on time can qualify for a loan in spite of a bad credit rating.
Since young people today like the idea of being mobile with fewer ties to a particular location, the idea of loan portability may make sense, where existing loans can be applied to the purchase of a new home.
In the area of construction, we have lots of existing houses, but it tends to be the wrong kind of inventory. Our vast supply of bi-level, tri-level, and quad-level homes are a poor fit for the baby boomers who no longer like to do steps. Growing numbers of telecommuters are finding most homes don’t work well as office space. And homeschoolers are having to turn their homes into a learning environment.
Homes today are being used in vastly different ways than homes 50 years ago when they were built. And these changing lifestyles create a wide array of new opportunities for repair, retrofit, and new construction along the way.
Some final thoughts…
Declining birth rates have a delayed effect. It will be many years before the full impact of these demographic changes is felt across society.
Some regional hotspots will find ways to avoid any effect altogether, while others will suffer significantly from stagnation and deflation as the population declines.
Big challenges create big opportunities. The people who can best assess the impact will be well poised to find the opportunities.
B Futurist Thomas Frey

Construction Site 442t

Consider the following scenario. Over the next few years, several major cities in the U.S. will begin to impose a ban on all new residential and commercial construction. With populations declining in numerous metro areas, they will worry openly about becoming the next Detroit with abandoned neighborhoods signaling a rapid decline in property values.

In the past, many cities and counties invested in open space to insure there would be room for parks and open trails in the future. Now, with property values declining and funding in short supply, a new set of concerns has taken center stage.

Abandoned properties can quickly turn into a rapidly escalating blight that moves like an infestation from one community to the next. Poorly constructed houses and office buildings will see the economics of their existence shift from a net positive to a net negative with little forewarning. When property values decline and maintenance costs increase, more and more owners will decide to cut their losses, and let their property go into default.

As a way to counteract this trend, cities will place a ban on all new open-ground construction, forcing existing buildings to be torn down before new ones can be built. So the only way someone can build a brand new home will be to tear down an existing home.

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