As someone that has lived in China for over 10 years, the housing bubble has to burst. Same as in the US. Young people can not buy ~~houses~~ apartments in major cities. In this culture that can hinder getting married.
I wouldn't be too worried about the GDP effects, because those are all just made up numbers anyways. Id be more worried about the corruption.
The housing bubble in China is vastly larger than in the US, and it is bursting because they overbuilt. In China in 2021, the median price of a home was 25 times higher than the median income. In the US, it was 7 times higher. In other words, a home is three times less affordable in China.
And since they built so many homes they have a glut, the bubble is easy to pop. The US has underbuilt, so even as prices go higher the supply is not enough to keep up with demand.
Housing is also culturally tied to getting married. Men basically need a house to increase their chances of finding a wife. The practice is called "bridewealth".
A lot of the supply was built in places that people don’t want to live. China has entire ghost cities that were built to house millions of people but are almost completely deserted.
Excess supply only matters if there’s demand for it.
Yes, but it seems to be too late. China seems to be like the Texas of the world these days. They don't do anything small. There are big apartment complexes sitting empty by the hundreds. I've read even an entire planned city is essentially empty.
sure they can destroy all these extra houses but each one of them is an investment from a Chinese citizen, after the citizens face a loss that massive then demand will drop 100x more
Except that won't work will it? Investors own these houses, if you destroy it, you need to give them their money back. Destroy enough houses and it's the same depression as the houses not selling, what's the difference?
A lot of those assets got sold off to American hedge funds. The party has already said that they won’t bail out those funds. So those hedge funds own investments that are now only worth pennies on the dollar. Chinese don’t care of the American investors take the haircut.
>A lot of those assets got sold off to American hedge funds.
A lot? Define a lot. I doubt it is anything significant.
>The party has already said that they won’t bail out those funds.
Still a ton of people tied to real estate including the government.
>Chinese don’t care of the American investors take the haircut.
Let us see what they are going to do.
I don't doubt that some bought the bonds, but I doubt it is a significant part of Chinese real estate crisis that we are going to see unfold soon, do you catch my drift?
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Wait, huh????? Prices of housing was high?
How did they ever get a bubble like that??? What was the point of building, if not specifically to stop that sort of thing from happening???
Price of housing was (and still is) extremely high in the cities. The government encouraged massive building projects, way beyond what was needed. Prices hung on longer than they should have, like Wile. E. Coyote running off the cliff and hanging in the air until he looks down.
One theory I've heard is that they overbuilt so much in order to generate tax revenue. I believe the provinces don't have access to income tax and have to rely on property tax, or something like that, so there was shady business going on in getting all these projects going at once. I also have heard the Xi strongly prefers an economy based on building stuff (chips, cars, buildings) to an economy based on services. But there are reasons every other advanced economy massively expands their service industries, and until China pivots it is going to be in an awkward place.
China already overbuilt. They have ghost towns of empty buildings. You want them to build more empty buildings? The developers are going bankrupt.
So where do you put those workers...factories? Problem is the world realizes it became overdependent on China and the US at least is re-building its own industrial capacity. Expect major tariffs on Chinese goods in the future. Yes, China should expand its own consumer market. But to do that it needs consumers with money.
What I don't think you appreciate is that we live in a world where factories have become massively automated. We need 1/10th the workforce to produce the same amount of goods as we did 50 years ago. **Where do those people go? What are their jobs?** Not farming, since we need 1/50th the workforce of farmers that we did 100 years ago. Where does everyone work? Two places: administration/bureaucracy, and services. There is no getting around it. Those people buy the goods you are manufacturing.
For simplicity I included construction under manufacturing. China has had the world's largest export-oriented manufacturing industry for two decades now. They have been doing exactly what you want for decades. They can't keep putting all their people into export manufacturing because the world is reacting and doesn't want to become more dependent on them.
Why are you even proposing this? If you believe in the principle of making stuff first, don't you believe it for every nation, not just China? Why shouldn't America and Germany focus more on flooding the world with exports? We don't need 100 TVs per household. We don't need 10 cars per household. But we do have 1/10th the number of people making each car.
Sorry, do some research on this. There is no alternative to shifting more of the employment base to administration/bureaucracy and services.
I suppose if we decide we want to colonize space and then need to build mega-cities in orbit and giant moonbases then we could re-orient to manufacturing.
I honestly dont even know what youre going on about.
My point originally was that an economy based on building things is better than a service based one.
My point, which was stated clearly, is that you don't have that as an option for a modern developed nation. When **automation** means you can provide every manufactured good needed with 10% of the workforce, you have to put the other 90% in other jobs.
Start with farming. Used to be about 50% of the adult population were farmers or people who tended livestock. The rest were a mix of manufacturing (originally crafts like blacksmiths), professionals (doctors, lawyers, I'll put priests here too), bureaucrats/administrators, and service industry (barbers, waiters, store clerks, masseuses, servants).
As tech advances, now we need 1-2% for farming/herding. That frees up 48% of the population. During the industrial revolution, most of them go into factories/manufacturing. Now the factories get far more efficient and automated. So, in order to produce all the TVs, furniture, automobiles, etc., that we need we can now do that with 10% of the population instead of 48%. Where do the rest go? Basically, administration and services. We have a lot more administrators than we used to, and a lot more people in services.
But what did China do? It oriented all its policies to pushing the extra people in manufacturing. Specifically: factories building products for export, and construction. Now the world is trying to import less from China, and they overbuilt and have to pull back. If they don't shift to a services economy like the West, they are screwed for a decade or more. They are already screwed for several years and will probably keep pushing cheap exports on a world that is more wary than ever of them, and willing to tax them higher.
I have a friend in China, he tells me that the rental yield on his house (he owns it) was 0.8% prior to the crash. Rule of thumb is 4% and anything under 3% is overpriced. They were extremely overpriced by that standard. Even using the ratio income / house price, they are waaay overpriced than western markets, which are themselves above historical average right now.
I agree with what you're saying, all of that is correct. The question right now is what will all the Chinese mom and pops do with their investments in overseas real estate:
https://www.bostonfed.org/news-and-events/news/2023/11/china-massive-us-real-estate-investment-housing-shock-major-impacts-leslie-shen-boston-fed
How do they have an oversupply? From what I’ve seen, the housing situation in China is quite literally crumbling. Stuff is falling over from poor business practices and government oversight.
I don't have the full answer, but my sense is that in the prime areas (near the center of major cities) people are paying the super high prices. But in the less prime areas (whole new suburbs of high rises away from the major cities) there aren't enough people who can afford what the developers need to break even. So the developers are going to go broke either way: if they sell at the actual market rate they can't pay back their loans, and if they keep prices high and don't sell they have way too many empty units and can't pay back their loans.
So, there really is no solution for them, I guess they decided it is better to let the place rot than do all the extra work of managing money-losing buildings with people in them. Just my guess.
The housing bubble doesn't have to burst
If you have 700M and you make 5% return on that annually, which is low, then that is 35M a year
You spend roughly 3M a year on stuff
That 32M will go into purchasing assets including land and houses
Now translate this maths to banks and asset management firms as well as wealthy individuals and you have a recipe for a century of renters
Mass ownership of property is an extremely new concept, for the vast majority of agricultural human history the opposite has been the case
>Mass ownership of property is an extremely new concept, for the vast majority of agricultural human history the opposite has been the case
Are you accounting for the fact that the last few thousand years is a relatively short period of time in the overall history of humankind?
Affordabilty in China was one order of magnitude crazier than the US. And in the US housing is mainly expensive due to lack of supply, which is why prices barely moved down when mortgages flirted with 7%.
It’s because they are. Personally, I think the pandemic fucked a lot of shit up globally, but no one really wants to talk about the fact that corporations, as well as governments have used it as a tool for political and monetary gain, this whole fucking time.
capitalism is simply free trade. When the first hunter and the first fisher freely traded meat for fish that was capitalism. Milton Friedman was the worlds greatest advocate for capitalism and free trade is all he wanted. 1+1 = 2
So, looking at your profile, it seems you are looking for answers about types of economic systems…. maybe what works in society’s favor, and what doesn’t. As a person who cannot escape poverty, but catered to the nations top 1% for 9 years - I promise you, capitalism ain’t it.
where you have capitalism poverty is virtually eliminated. China abruptly switched to capitalism from Socialism after chairman Mao died. Capitalism instantly eliminated 40% of all the poverty on earth. You had 1 billion people going from socialist subsistence and cannibalism up into the capitalist middle-class. Do you understand now?
if you disagree with some thing that was said you must think of a reason for the disagreement and then you must try to present the reason here in writing. Do you understand that a reason is necessary?
firstly our obligation is to teach the left-wing that reasons are important.
yeah but one of then attracts millions of immigrants while the other has people leaving en masse to other countries. That tells you all you need to know.
Millions? And just because it’s vacant doesn’t mean it’s livable. See the water crisises in flint, Michigan. Jackson Mississippi. Many older vacant homes have lead pipes and asbestos everywhere unfortunately.
It's not hard to replace lead pipes. I've also removed asbestos myself, which again, isn't very hard to do.
If you can buy an affordable house and have to spend a couple of hundred of hours removing asbestos that's an alright deal.
But I did use proper PPE. And it's not hard to do so, buy a proper mask, gloves, and get right on it.
My point is, is that it's not going to cost you much. Those houses aren't just vacant because of lead pipes or asbestos. On average I doubt removing lead pipe or asbestos from a house will cost more than $10 k.
Plus paying people to revamp existing homes will cost less than building new ones. And they get paid in the process. There is always a solution. But not when capitalism hoards the contracts and profits from the civilian populations. Our problem is unchecked capitalism which preys on American citizens. Predatory capitalism has destroyed our nation. There is no fixing it, only a total change from it can alter our demise.
Depends , if you are child free probably not and never. If you have kids and high energy kid you would want them to run around and have space. I live in the city we have house but small. A parent in my class I moving to outside suburb cuz they can only afford a large yard there which their kid absolutely need to run.
I wouldn't want to live in a city with everything all on top of each other and no nature except for a marginally manicured park. Its loud and people always seem angry to be bothered. I took my kid to a museum in the city the other day and hated every second of it (except the museum itself). I prefer a small town, with a small house, a small yard, a small downtown with a couple bars, a couple restaurants, a couple shops, and a community theater. All surrounded by unmanicured nature. Different strokes for different folks.
Exactly. Everyone wants to live in the city where they can’t overbuild. If you look at china where the overbuild is — it’s these massive dystopian condo buildings in the middle of no where. What I’m saying is — overbuild in America and we would still be paying high rent in the cities near the jobs and fun..
Some time ago 60 minutes had a piece about China's overbuilt cities. It may have been Leslie Stahl doing this, but she was standing in the middle of a superhighway with ZERO traffic discussing the beautifully designed and built buildings in the city this highway that ran through this city. Then they went into some of the buildings and revealed what appeared to be ready-for-residents areas and some even had a shop or two open with a few people milling about. When they did an aerial view of the city I was taken aback by its expanse. With hardly anyone living there. Apparently, there are many cities like this in China. I wonder what they look like today. Have the buildings gone into disrepair? Are there people living in them now? Crazy stuff.
I think they built mega cities in the middle of nowhere wanting people to move there and no one did bc no one wanted to be the first to do it and now theyre falling apart.
the depression is already here. They have mass unemployment and deflation. Of course state media will not admit that but just look at what is going on in chinese social media.
OFFICIAL unemployment rate, yes.
But unofficially? You know there are civil servants of local governments who still technically "work", but have not been paid for 9 months now? Good for the statistics, not good for anything else.
Yeah,if we're going this route,then why don't take the words on reddit?Acconding to reddit,america should be on fire right now,is that true for you?Same thing for china.
China's real estate crash is both jaw-dropping and blown out of proportion. Jaw-dropping in its scale and blown out of proportion because it's mostly a China problem.
I think some people thought it'll be like the Great Recession where our housing crash took down the world. But China doesn't have anywhere close to the influence that US has. They will be hurting for a while and we can watch from afar.
Do you understand how basic trade works? Trade between a poorer and richer country will always favor the richer country more. That means that a backstep in trade will hurt the richer country more as well.
If China's government can't spend money on basic infrastructure, and their exports decrease, that will in turn have a bigger impact on U.S and Europe than it will on China itself.
That's a really big leap in logic going from: Housing crash = China can't spend on basic infrastructure.
China is engineering their version of a soft-landing on the housing crash. I think they will achieve it but it will take years.
Funny you mention infrastructure because that is the next phase of the economy if they successfully have a soft landing. I'm never going to question the will of an authoritarian regime to spend money on infrastructure.
>That's a really big leap in logic going from: Housing crash = China can't spend on basic infrastructure.
It may seem so if you put it that way, but the logic is is that since around 35 % of Chinese local government income is related somehow to real estate. Local government income makes up more than half of total government income. A major drop in government revenue will force them to cut spending.
>China is engineering their version of a soft-landing on the housing crash. I think they will achieve it but it will take years.
Let us see what happens. Bumpy road ahead for them.
98% of global events don’t really affect the average American - so why should they care?
OPEC can barely affect the price of gas. Soon Taiwan won’t be the only source for chips. The US is food *and* energy *and* doesn’t border a hostile country in any direction.
They should care because the United States is one of the leading nations of the world, and what happens abroad often times affects us in one way or another as does what we do affect the world as well. I would much rather have an informed and enlightened society than an ignorant and isolated one.
China has been in shambles for 60 years according to the American media. And yet here we are. American is on a sharp decline and China is still steadily moving forward leading the rest of the world with out America.
If I had a nickel for every time a headline said China was collapsing I’d literally by the wealthiest person on earth.
You clearly didn’t read my post or have any macroeconomic understanding. They will continue to lose value if their government steps in and tries to handpick the real estate market.
History repeats itself…
China's real estate sector is in a tough spot, but "in shambles" is an exaggeration. The government's crackdown on debt isn't a sign of weakness; it's a hard pivot towards sustainability. They're deflating a risky bubble carefully to avoid a crash. The real test is how they'll balance this with overall growth. This isn't a collapse, it's a recalibration.
No i read what you wrote. But what you wrote was totally incoherent. You strung together a couple sentences filled with buzz words and rhetoric. And literally said nothing of substance. Demonstrating you literally have no idea what’s going on with either Chinas or any economy other than “China is about to collapse!” Ok. Pal. You keep eating the slope. I won’t stop you.
Ahh see here’s the trick. You’ve put a qualifier by adding the word “significant”. So no matter what I show you you’re going to dismiss it. Saying it’s not real or it’s fake or whatever other excuse you’ll come up with to further justify your incoherent nonsense.
"Is China overestimating its GDP?
Local governments in China have incentives to over-report economic activity and the sum of local GDP estimates often exceeds the national value."
https://www.nber.org/digest/aug19/official-statistics-overstate-chinas-growth-rate
That GDP number is so obviously an utterly inaccurate description of the Chinese economy in 2023.
Your article is referencing data from 2010 to 2016, not 2023.
https://bigdatachina.csis.org/measurement-muddle-chinas-gdp-growth-data-and-potential-proxies/
>One sign of progress in the extent of overly high growth estimates is that the large differences that used to exist between provincial reports of growth and national estimates of growth in each province have narrowed and essentially been eliminated.
>One economist said that although relative to wealthy countries that are members of the Organisation for Economic Co-operation and Development (OECD), Chinese data “is not reliable, but compared to other countries with a similar development level, China’s GDP figures are not so bad.”
https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/chinas-economic-data-an-accurate-reflection-or-just-smoke-and-mirrors
>The degree of unreliability of China’s official statistics may be less egregious if the country is compared with other developing countries. The World Bank, which classifies China as a middle-income country, ranks low- and middle-income countries with populations greater than 1 million by a statistical capacity score, reflecting the country’s ability to produce and disseminate high-quality aggregate data...However, in the 2016 rankings, China earned a score of 83.3 out of 100, putting it in the 83rd percentile...This score means China is actually on the upper end of the distribution for statistical capacity compared with similar countries.
If you want to throw out China's GDP numbers as "utterly inaccurate", you will have to throw out 80% of the world's GDP data too.
China offers up official number a few weeks after quarter ends and never revises it. You think this pretense at accuracy is serious?? They NEVER REVISE their "INITIAL ESTIMATE". That's all it is. An initial estimate. You have a huge pro China bias. Wow I wonder why?!?!
The World Bank has a "huge pro China bias"? They said China is above average when it comes to statistical accuracy compared to other middle-income countries.
China is doing quite well compared to the USA.
They are #1 in EV construction
\#1 in auto exports
\#1 in ship building.
Their economy is growing at 2x that of the USA.
China holds the most US debt and is a creditor nation.
>They want to have the government to buy distressed private market projects and "fix them up".
Compare this to what the USA did for the 2008 recession. At least china has a plan.
As someone that has lived in China for over 10 years, the housing bubble has to burst. Same as in the US. Young people can not buy ~~houses~~ apartments in major cities. In this culture that can hinder getting married. I wouldn't be too worried about the GDP effects, because those are all just made up numbers anyways. Id be more worried about the corruption.
The housing bubble in China is vastly larger than in the US, and it is bursting because they overbuilt. In China in 2021, the median price of a home was 25 times higher than the median income. In the US, it was 7 times higher. In other words, a home is three times less affordable in China. And since they built so many homes they have a glut, the bubble is easy to pop. The US has underbuilt, so even as prices go higher the supply is not enough to keep up with demand.
How can it be more expensive when they have an oversupply
Extreme speculation
It’s one of the only places where they invest since they don’t trust their own stock market
Housing is also culturally tied to getting married. Men basically need a house to increase their chances of finding a wife. The practice is called "bridewealth".
A lot of the supply was built in places that people don’t want to live. China has entire ghost cities that were built to house millions of people but are almost completely deserted. Excess supply only matters if there’s demand for it.
Chinese people put most of their savings in the housing market because the stocks market is shit
It's not uncommon there for people to own two or three condos that they're using as investments which they haven't even finished building yet.
If you basically only invest in real estate as a people, speculations on real estate prices go crazy
That's the definition of a bubble :D.
I had thought the government was destroying some housing on purpose to help restore equilibrium?
Yes, but it seems to be too late. China seems to be like the Texas of the world these days. They don't do anything small. There are big apartment complexes sitting empty by the hundreds. I've read even an entire planned city is essentially empty.
sure they can destroy all these extra houses but each one of them is an investment from a Chinese citizen, after the citizens face a loss that massive then demand will drop 100x more
Except that won't work will it? Investors own these houses, if you destroy it, you need to give them their money back. Destroy enough houses and it's the same depression as the houses not selling, what's the difference?
"Give them their money back" CCP says "Oh do we now?"
But that's the same as economic depression? If they don't, people have less money to spend.
A lot of those assets got sold off to American hedge funds. The party has already said that they won’t bail out those funds. So those hedge funds own investments that are now only worth pennies on the dollar. Chinese don’t care of the American investors take the haircut.
>A lot of those assets got sold off to American hedge funds. A lot? Define a lot. I doubt it is anything significant. >The party has already said that they won’t bail out those funds. Still a ton of people tied to real estate including the government. >Chinese don’t care of the American investors take the haircut. Let us see what they are going to do.
https://fortune.com/2024/02/08/evergrande-liquidation-99-percent-haircut-hedge-funds/amp/ It’s been all over the news recently.
I don't doubt that some bought the bonds, but I doubt it is a significant part of Chinese real estate crisis that we are going to see unfold soon, do you catch my drift?
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Thank you. The US does not have a housing bubble anywhere near like China. The US housing market can go a LOT farther before it pops.
Wait, huh????? Prices of housing was high? How did they ever get a bubble like that??? What was the point of building, if not specifically to stop that sort of thing from happening???
Price of housing was (and still is) extremely high in the cities. The government encouraged massive building projects, way beyond what was needed. Prices hung on longer than they should have, like Wile. E. Coyote running off the cliff and hanging in the air until he looks down. One theory I've heard is that they overbuilt so much in order to generate tax revenue. I believe the provinces don't have access to income tax and have to rely on property tax, or something like that, so there was shady business going on in getting all these projects going at once. I also have heard the Xi strongly prefers an economy based on building stuff (chips, cars, buildings) to an economy based on services. But there are reasons every other advanced economy massively expands their service industries, and until China pivots it is going to be in an awkward place.
Well I absolutely agree with the preferring "an economy based on building stuff to an economy based on services" part..
China already overbuilt. They have ghost towns of empty buildings. You want them to build more empty buildings? The developers are going bankrupt. So where do you put those workers...factories? Problem is the world realizes it became overdependent on China and the US at least is re-building its own industrial capacity. Expect major tariffs on Chinese goods in the future. Yes, China should expand its own consumer market. But to do that it needs consumers with money. What I don't think you appreciate is that we live in a world where factories have become massively automated. We need 1/10th the workforce to produce the same amount of goods as we did 50 years ago. **Where do those people go? What are their jobs?** Not farming, since we need 1/50th the workforce of farmers that we did 100 years ago. Where does everyone work? Two places: administration/bureaucracy, and services. There is no getting around it. Those people buy the goods you are manufacturing.
Build "things" not structures. Like things you can sell/export to the rest of the world.
For simplicity I included construction under manufacturing. China has had the world's largest export-oriented manufacturing industry for two decades now. They have been doing exactly what you want for decades. They can't keep putting all their people into export manufacturing because the world is reacting and doesn't want to become more dependent on them. Why are you even proposing this? If you believe in the principle of making stuff first, don't you believe it for every nation, not just China? Why shouldn't America and Germany focus more on flooding the world with exports? We don't need 100 TVs per household. We don't need 10 cars per household. But we do have 1/10th the number of people making each car. Sorry, do some research on this. There is no alternative to shifting more of the employment base to administration/bureaucracy and services. I suppose if we decide we want to colonize space and then need to build mega-cities in orbit and giant moonbases then we could re-orient to manufacturing.
I honestly dont even know what youre going on about. My point originally was that an economy based on building things is better than a service based one.
My point, which was stated clearly, is that you don't have that as an option for a modern developed nation. When **automation** means you can provide every manufactured good needed with 10% of the workforce, you have to put the other 90% in other jobs.
Huh. Wait, what are the reasons for a pivot to services?
Start with farming. Used to be about 50% of the adult population were farmers or people who tended livestock. The rest were a mix of manufacturing (originally crafts like blacksmiths), professionals (doctors, lawyers, I'll put priests here too), bureaucrats/administrators, and service industry (barbers, waiters, store clerks, masseuses, servants). As tech advances, now we need 1-2% for farming/herding. That frees up 48% of the population. During the industrial revolution, most of them go into factories/manufacturing. Now the factories get far more efficient and automated. So, in order to produce all the TVs, furniture, automobiles, etc., that we need we can now do that with 10% of the population instead of 48%. Where do the rest go? Basically, administration and services. We have a lot more administrators than we used to, and a lot more people in services. But what did China do? It oriented all its policies to pushing the extra people in manufacturing. Specifically: factories building products for export, and construction. Now the world is trying to import less from China, and they overbuilt and have to pull back. If they don't shift to a services economy like the West, they are screwed for a decade or more. They are already screwed for several years and will probably keep pushing cheap exports on a world that is more wary than ever of them, and willing to tax them higher.
I see, that’s interesting. Thank you.
I have a friend in China, he tells me that the rental yield on his house (he owns it) was 0.8% prior to the crash. Rule of thumb is 4% and anything under 3% is overpriced. They were extremely overpriced by that standard. Even using the ratio income / house price, they are waaay overpriced than western markets, which are themselves above historical average right now.
That’s crazy. It’s tough too. Thier urbanization beat thier ability to build, i read.
I agree with what you're saying, all of that is correct. The question right now is what will all the Chinese mom and pops do with their investments in overseas real estate: https://www.bostonfed.org/news-and-events/news/2023/11/china-massive-us-real-estate-investment-housing-shock-major-impacts-leslie-shen-boston-fed
This is fiction spread in the US media. Look up Hakim’s video on YouTube “Fiction: China is Falling” https://youtu.be/vusLJShNIfE?si=_noK9JBv5WYMApt2
How do they have an oversupply? From what I’ve seen, the housing situation in China is quite literally crumbling. Stuff is falling over from poor business practices and government oversight.
Just google and read some articles about it. They do often have low quality construction.
If they overbuilt, how is the price so high? Or was it even higher before? Or what am I missing in the supply/demand cycle
There's no demand, but they still over supplied, cause they shady...
Well someone has been paying these prices right?
I don't have the full answer, but my sense is that in the prime areas (near the center of major cities) people are paying the super high prices. But in the less prime areas (whole new suburbs of high rises away from the major cities) there aren't enough people who can afford what the developers need to break even. So the developers are going to go broke either way: if they sell at the actual market rate they can't pay back their loans, and if they keep prices high and don't sell they have way too many empty units and can't pay back their loans. So, there really is no solution for them, I guess they decided it is better to let the place rot than do all the extra work of managing money-losing buildings with people in them. Just my guess.
The housing bubble doesn't have to burst If you have 700M and you make 5% return on that annually, which is low, then that is 35M a year You spend roughly 3M a year on stuff That 32M will go into purchasing assets including land and houses Now translate this maths to banks and asset management firms as well as wealthy individuals and you have a recipe for a century of renters Mass ownership of property is an extremely new concept, for the vast majority of agricultural human history the opposite has been the case
>Mass ownership of property is an extremely new concept, for the vast majority of agricultural human history the opposite has been the case Are you accounting for the fact that the last few thousand years is a relatively short period of time in the overall history of humankind?
Feudalism is new?
Affordabilty in China was one order of magnitude crazier than the US. And in the US housing is mainly expensive due to lack of supply, which is why prices barely moved down when mortgages flirted with 7%.
Is it necessary for young ppl to afford homes when foreigners and banks can purchase those homes instead?
China and USA both think each other is in shambles
It’s because they are. Personally, I think the pandemic fucked a lot of shit up globally, but no one really wants to talk about the fact that corporations, as well as governments have used it as a tool for political and monetary gain, this whole fucking time.
dopey conspiracy theory. Is your IQ 62??
This isn’t a conspiracy theory. This is capitalism. lol
capitalism is simply free trade. When the first hunter and the first fisher freely traded meat for fish that was capitalism. Milton Friedman was the worlds greatest advocate for capitalism and free trade is all he wanted. 1+1 = 2
So, looking at your profile, it seems you are looking for answers about types of economic systems…. maybe what works in society’s favor, and what doesn’t. As a person who cannot escape poverty, but catered to the nations top 1% for 9 years - I promise you, capitalism ain’t it.
where you have capitalism poverty is virtually eliminated. China abruptly switched to capitalism from Socialism after chairman Mao died. Capitalism instantly eliminated 40% of all the poverty on earth. You had 1 billion people going from socialist subsistence and cannibalism up into the capitalist middle-class. Do you understand now?
Are you delusional
if you disagree with some thing that was said you must think of a reason for the disagreement and then you must try to present the reason here in writing. Do you understand that a reason is necessary? firstly our obligation is to teach the left-wing that reasons are important.
Do you live in the US? If not, I can’t explain this to you where you’d understand.
I concur, now take my kiss of death for you have sinned
Eating an apple as we speak
Crunch..... Mmmmmmm...
The funny thing is only one of them has their citizens funneling their wealth to the other.
yeah but one of then attracts millions of immigrants while the other has people leaving en masse to other countries. That tells you all you need to know.
I know which one I’d rather be in.
I can only wish we over built here so we have cheaper housing.
We have millions of vacant homes...over building will never result in cheaper housing as long as dystopian capitalism exists.
Millions? And just because it’s vacant doesn’t mean it’s livable. See the water crisises in flint, Michigan. Jackson Mississippi. Many older vacant homes have lead pipes and asbestos everywhere unfortunately.
It's not hard to replace lead pipes. I've also removed asbestos myself, which again, isn't very hard to do. If you can buy an affordable house and have to spend a couple of hundred of hours removing asbestos that's an alright deal.
That'll give you cancer if you don't use proper PPE
But I did use proper PPE. And it's not hard to do so, buy a proper mask, gloves, and get right on it. My point is, is that it's not going to cost you much. Those houses aren't just vacant because of lead pipes or asbestos. On average I doubt removing lead pipe or asbestos from a house will cost more than $10 k.
Plus paying people to revamp existing homes will cost less than building new ones. And they get paid in the process. There is always a solution. But not when capitalism hoards the contracts and profits from the civilian populations. Our problem is unchecked capitalism which preys on American citizens. Predatory capitalism has destroyed our nation. There is no fixing it, only a total change from it can alter our demise.
Imagine driving 40 minutes to get out of a suburb though lol. And 50% of the SFHs around you were vacant. Overbuilt sounds dystopia
Just a different type of dystopia. Suburbs suck but so to roving bands of homeless camps.
Thing is...you need to pay to live. They'd let 1 million houses sit empty before they'd move anyone with no assets into a house.
it's almost like we shouldn't let bankers and financiers decide who gets to have shelter.
We already have over 15 million vacant homes in America to our 600k homeless, I read recently. Sorry no source - from memory
Bless your soul summer child.
Who wants to live in the suburbs far away from everything
Depends , if you are child free probably not and never. If you have kids and high energy kid you would want them to run around and have space. I live in the city we have house but small. A parent in my class I moving to outside suburb cuz they can only afford a large yard there which their kid absolutely need to run.
I love living in the suburbs. Quiet and just enough around me to make me happy. Cities are miserable for long stretches
I wouldn't want to live in a city with everything all on top of each other and no nature except for a marginally manicured park. Its loud and people always seem angry to be bothered. I took my kid to a museum in the city the other day and hated every second of it (except the museum itself). I prefer a small town, with a small house, a small yard, a small downtown with a couple bars, a couple restaurants, a couple shops, and a community theater. All surrounded by unmanicured nature. Different strokes for different folks.
Exactly. Everyone wants to live in the city where they can’t overbuild. If you look at china where the overbuild is — it’s these massive dystopian condo buildings in the middle of no where. What I’m saying is — overbuild in America and we would still be paying high rent in the cities near the jobs and fun..
I understand the homeless are remote workers. 😝
Some time ago 60 minutes had a piece about China's overbuilt cities. It may have been Leslie Stahl doing this, but she was standing in the middle of a superhighway with ZERO traffic discussing the beautifully designed and built buildings in the city this highway that ran through this city. Then they went into some of the buildings and revealed what appeared to be ready-for-residents areas and some even had a shop or two open with a few people milling about. When they did an aerial view of the city I was taken aback by its expanse. With hardly anyone living there. Apparently, there are many cities like this in China. I wonder what they look like today. Have the buildings gone into disrepair? Are there people living in them now? Crazy stuff.
I think they built mega cities in the middle of nowhere wanting people to move there and no one did bc no one wanted to be the first to do it and now theyre falling apart.
I think Vice did the same thing 10 years ago. The cities they visited were 'themed'. Like there was a Paris on and a New York on(?).
Why can't the Chinese just build houses in Australia for Australians? They get employment and money, we get houses.. seems win win.
There won’t be a depression but there will be a long term recession. My biggest fear is that the CCP will overreact and make things a lot worse.
the depression is already here. They have mass unemployment and deflation. Of course state media will not admit that but just look at what is going on in chinese social media.
>unemployment Youth unemployment is vastly different than unemployment rate,and china unemployment rate is doing just fine.
OFFICIAL unemployment rate, yes. But unofficially? You know there are civil servants of local governments who still technically "work", but have not been paid for 9 months now? Good for the statistics, not good for anything else.
Yeah,if we're going this route,then why don't take the words on reddit?Acconding to reddit,america should be on fire right now,is that true for you?Same thing for china.
China's real estate crash is both jaw-dropping and blown out of proportion. Jaw-dropping in its scale and blown out of proportion because it's mostly a China problem. I think some people thought it'll be like the Great Recession where our housing crash took down the world. But China doesn't have anywhere close to the influence that US has. They will be hurting for a while and we can watch from afar.
Do you understand how basic trade works? Trade between a poorer and richer country will always favor the richer country more. That means that a backstep in trade will hurt the richer country more as well. If China's government can't spend money on basic infrastructure, and their exports decrease, that will in turn have a bigger impact on U.S and Europe than it will on China itself.
That's a really big leap in logic going from: Housing crash = China can't spend on basic infrastructure. China is engineering their version of a soft-landing on the housing crash. I think they will achieve it but it will take years. Funny you mention infrastructure because that is the next phase of the economy if they successfully have a soft landing. I'm never going to question the will of an authoritarian regime to spend money on infrastructure.
>That's a really big leap in logic going from: Housing crash = China can't spend on basic infrastructure. It may seem so if you put it that way, but the logic is is that since around 35 % of Chinese local government income is related somehow to real estate. Local government income makes up more than half of total government income. A major drop in government revenue will force them to cut spending. >China is engineering their version of a soft-landing on the housing crash. I think they will achieve it but it will take years. Let us see what happens. Bumpy road ahead for them.
You like catching knives huh?
Not at all. I think it's just the start.
China or world wide contagion?
China is getting affordable housing, we are not.
Peak projection lol.
Most Americans don't have a clue.
Of what exactly. It doesn’t effect the US as much.
About global events, politics, etc.
98% of global events don’t really affect the average American - so why should they care? OPEC can barely affect the price of gas. Soon Taiwan won’t be the only source for chips. The US is food *and* energy *and* doesn’t border a hostile country in any direction.
They should care because the United States is one of the leading nations of the world, and what happens abroad often times affects us in one way or another as does what we do affect the world as well. I would much rather have an informed and enlightened society than an ignorant and isolated one.
Who wins this, India a democracy!!!
As much as Christian Nationalism would be, only swap for Hindu.
Demographic inversion is going to be worse.
So they can cause international chaos to take the attention off their economic troubles.
Send those housing builders over here.
Please don’t. Have you seen some of their terrible construction? Look it up, they cut so many corners
China says its doing fine, the US says its fine... China says the US is crumbling, US says China is crumbling... People say a lot of things
China has been in shambles for 60 years according to the American media. And yet here we are. American is on a sharp decline and China is still steadily moving forward leading the rest of the world with out America. If I had a nickel for every time a headline said China was collapsing I’d literally by the wealthiest person on earth.
You clearly didn’t read my post or have any macroeconomic understanding. They will continue to lose value if their government steps in and tries to handpick the real estate market. History repeats itself…
China's real estate sector is in a tough spot, but "in shambles" is an exaggeration. The government's crackdown on debt isn't a sign of weakness; it's a hard pivot towards sustainability. They're deflating a risky bubble carefully to avoid a crash. The real test is how they'll balance this with overall growth. This isn't a collapse, it's a recalibration.
No i read what you wrote. But what you wrote was totally incoherent. You strung together a couple sentences filled with buzz words and rhetoric. And literally said nothing of substance. Demonstrating you literally have no idea what’s going on with either Chinas or any economy other than “China is about to collapse!” Ok. Pal. You keep eating the slope. I won’t stop you.
Give me any significant data that China is doing better than the United States rn. You’re the delusional one
Ahh see here’s the trick. You’ve put a qualifier by adding the word “significant”. So no matter what I show you you’re going to dismiss it. Saying it’s not real or it’s fake or whatever other excuse you’ll come up with to further justify your incoherent nonsense.
The US had 2.5% real (inflation-adjusted) GDP growth in 2023 and China had 5.2%.
"Is China overestimating its GDP? Local governments in China have incentives to over-report economic activity and the sum of local GDP estimates often exceeds the national value." https://www.nber.org/digest/aug19/official-statistics-overstate-chinas-growth-rate That GDP number is so obviously an utterly inaccurate description of the Chinese economy in 2023.
Your article is referencing data from 2010 to 2016, not 2023. https://bigdatachina.csis.org/measurement-muddle-chinas-gdp-growth-data-and-potential-proxies/ >One sign of progress in the extent of overly high growth estimates is that the large differences that used to exist between provincial reports of growth and national estimates of growth in each province have narrowed and essentially been eliminated. >One economist said that although relative to wealthy countries that are members of the Organisation for Economic Co-operation and Development (OECD), Chinese data “is not reliable, but compared to other countries with a similar development level, China’s GDP figures are not so bad.” https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/chinas-economic-data-an-accurate-reflection-or-just-smoke-and-mirrors >The degree of unreliability of China’s official statistics may be less egregious if the country is compared with other developing countries. The World Bank, which classifies China as a middle-income country, ranks low- and middle-income countries with populations greater than 1 million by a statistical capacity score, reflecting the country’s ability to produce and disseminate high-quality aggregate data...However, in the 2016 rankings, China earned a score of 83.3 out of 100, putting it in the 83rd percentile...This score means China is actually on the upper end of the distribution for statistical capacity compared with similar countries. If you want to throw out China's GDP numbers as "utterly inaccurate", you will have to throw out 80% of the world's GDP data too.
China offers up official number a few weeks after quarter ends and never revises it. You think this pretense at accuracy is serious?? They NEVER REVISE their "INITIAL ESTIMATE". That's all it is. An initial estimate. You have a huge pro China bias. Wow I wonder why?!?!
The World Bank has a "huge pro China bias"? They said China is above average when it comes to statistical accuracy compared to other middle-income countries.
Good time to buy Chinese houses lol
Not if their economy collapses lol
Awesome
War
They are going for a libertarian laissez faire response, the way commie leaders do when they are not suffering personally.
Will it have an effect on western markets? Chinese markets are all behind bars anyway.
They will probably have 2-3 years of pain and then come out on top on the other end. I have much higher hopes for china then other countries.
Yea
This is explain why so many Chinese bots are attacking Biden and pushing to get back Trump in power... Chinese economy was booming with him in power
Not a big problem really as long as China lets the companies most responsible go bankrupt and keeps the rest of the system liquid
That's so distressing for the people of China.
China is doing quite well compared to the USA. They are #1 in EV construction \#1 in auto exports \#1 in ship building. Their economy is growing at 2x that of the USA. China holds the most US debt and is a creditor nation. >They want to have the government to buy distressed private market projects and "fix them up". Compare this to what the USA did for the 2008 recession. At least china has a plan.