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Check out this article from the New York Times about how China has created its own housing bubble. The essence of the article is that men find it hard to date if they don't own property.
What I find incredibly sad is how they mentioned that companies that develop real estate buy old style neighborhoods and cause the dispossessed people to self immolate. That means the older people who just got kicked out of their houses for a fancy new apartment high rise burn themselves to death. !Yikes!
Perhaps we should start importing all the college educated Chinese couples who want property? We could have an awesome marketing campaign aimed at Chinese men. After all we have a lot of houses that are vacant and I think if we could get them they would pay on time as well. :)
After all the Chinese don't even keep their money in the bank because they will lose money due to high inflation and low rates. Which struck me. Wow. When I took Macro economics with Yang Li she had mentioned that Chinese people save all their money under their mattress. And they didn't use banks very often but I didn't know that meant like never.
but then the question is: Is this a bubble? It does seem like properties to people is still in short supply. So is this a housing bubble? What do you think?
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Well, I dont think Chinese men are a commodity so importing them might be challenging. Do we just stack them on a boat or do they sail over on their money inflated mattresses?
ReplyDeleteThis is an interesting article as it shows how competitive China is and correlates it to economic situations. As for a housing bubble, there was a hedge fund 6 months ago that was betting wildly against China's economic stability and they used the Chinese housing market as support. I guess we will see if that bet pays off.
As for a bubble... I think there is definitely grounds for support.
I think that targeting immigrants to solve our housing crisis is a mistake. Due to the social implications of homeownership in China, I assume that just like Americans, many Chinese homeowners could not actually afford these homes. Regardless, it is not likely that many of these immigrants could actually afford a home (at least right away) in the US, either. Therefore, giving them incentives to homeownership that they cannot absolutely afford would make us as bad as the creditors handing out subprime mortgages to Americans and ultimately may lead us back to square one. There have got to be much better solutions for our vacant homes.
ReplyDeleteSelf immolation? Damn.
ReplyDeleteWith our current levels of unemployment, I don't think "insourcing" human capital is a viable solution.
The 65 million apartments that are speculative investments are key because their owners are predicting an appreciation in the value of these assets. This characteristic of the housing "shortage" shares certain qualities with a bubble, so I think Jennifer brings up a good point. But somebody in class (maybe Richard?) said that we still can't recognize a bubble when it is happening, and if the professionals don't know, I surely don't.
I agree with Jared. While Jennifer does make a valid point that this sounds like the makings of China's very own housing bubble, it is still anyone's guess as to whether it will or will not be.
ReplyDeleteAs for these dating standards of Chinese women, I find them a little steep. In the US, it's considering a breaking point if the boy still lives in his parent's basement when he's past college age, but the difference between owning and renting your own place at this point in our lives has little effect on what women think of men. One of the men interviewed had a very valid point, that it's just not practical to buy a house/apartment at this stage in their lives. Until they have a grasp on what they will be doing in their semi-long term futures, (at least here in the US) owning property is not necessarily the best idea.
I am also not sure how to import Chinese people. I agree that it is very difficult to spot a bubble without the aid of hindsight. People always point out the low success rates of forecasters in almost every field and I do wonder, if these people have an extraordinary ability to predict any significant market events, why are they telling us about it instead of chilling on their island with their profits?
ReplyDeleteThe one child policy, was great at the time, but in hindsight left the ladies with the upper hand on marriage. Similar to how bubbles appear in hindsight.
ReplyDeleteNevertheless, the pressure Chinese men feel to own property is not unique. We have it here too, the pressure to go to college in order to be successful.
The Chinese government is taking steps in preventing high housing prices from fueling social unrest. The government has already promised to spend billions of dollars over the next few years on affordable housing. I am going to agree that I am skeptical in how we could "import" college educated Chinese couples to the US. I have to agree with Beth that we could try to provide incentives, but they could be ultimately fruitless. Also, as Becky points our, the idea of owning a house isn't exactly first priority for many of these young males, so I don't exactly see why they would actually want to buy a home in the US.
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