Inflation-adjusted home prices in China have fallen below where they started two decades ago, and the fiscal fallout is hitting local governments even harder than developers.
It fits somewhat with American sunbelt cities where there is significant growth and large developers building new houses. One issue which is common across borders is that real estate was a common way for people to invest their retirement savings; wiping out a lot of the savings of people near or at retirement isn’t healthy. One issue that is more local to China is that Chinese provinces and municipalities have little ability to raise taxes, so they’ve been using development as a way to raise money; a lot of these governments have a lot of debt and few good ways to pay it back.
It’s great for people who want to buy a house, great for ultra rich that want to buy out more property, but absolutely fucking people who just bought a house not too long ago.
If you just bought (assuming standard 30 yr mortgage), all you have to do is hold through it. Refinance if that becomes favorable.
The only losers are those who are free and clear or toward the end of their mortgage AND looking to utilize the equity they built up, OR anyone looking to sell. The solution is time, which can kinda suck, but it’s vastly preferable to not having a place to live.
I feel like people forget that a significant portion of America lives in a place where the cost-of-living isn’t ridiculously high. A housing crash might make houses slightly more affordable in San Francisco, but it would be economically devastating to the interior of the country.
Honestly it probably wouldn’t even be that great for people who wanted to buy a house. Banks aren’t likely to start handing out mortgages to people who couldn’t afford the house a couple weeks ago in what is now a volatile market, and you would still be competing with companies who could pay cash.
That is how supply and demand works, though. If the prices drop, and suddenly cash buyers start pouring out of the woodwork, that will drive prices back up.
When you see prices fall, it necessarily means the cash buyers are not just swooping in and grabbing everything.
I promise I understand what you’re saying. I’m saying the fault in your logic is misunderstanding the upward pressure of cash buyers.
When prices fall, it isn’t chum in the water for corporate cash buyers. What it means is that those same buyers were ALWAYS there, and are now leaving. The absence of thier buy pressure is the cause of the prices falling.
I didn’t realize San Francisco is the only city in the US. Rent in every single urban area is out of control. A two bedroom apartment that I rented in Lexington, KY from 1996-2011 for $500 a month is now $1,800.
A studio apartment that I rented in Altoona, PA from 2011- 2013 for $700 a month is now $1200.
I could keep looking, as I have rented places in 38 states.
No where that isn’t rural is cheap in the US anymore. Even the most “affordable” cities are boasting about 1 br apartments that are $1,000+ a month.
I hate to break it to you but those prices are barely more than inflation. $700 in 2011 is $1065 today. And I didn’t say anything about San Francisco being the only city in the US now you’re just reaching.
Building and renting out should be profitable. Else nothing is built for renters. Problem is companies buying homes (not building) and try to bribe local politics to upgrade zoning laws for more profitable housing (more flats per m2 land, less living quality). There are cases where lots should be merged for upgrading zonings but this should come from the communities needs not companies’ greeds.
Building and renting out should be non-profit based. It should cover it’s cost, but not be attractive to investors - that keeps the prices from rising. Doesn’t mean that the people doing this work shouldn’t be able to live a decent life, but non-profits can pay normal salaries too.
The result is property developers buying up swathes of land and leaving it vacant until the market reaches a frenzy and they can charge an unholy price for their crappy tract homes built by subcontractors under extreme cost reduction pressures. It doesn’t meet market demand, not remotely.
Zoning and local councils are certainly complicit.
Good. The way it should be. Housing is not wealth storage, it’s a place to live.
Let’s hop this fall spreads out of China.
The problem is that a lot of Chinese elderly used housing as a storage of wealth.
The kiwis in New Zealand have seen the prices fall by a third iirc
That does assume the Chinese housing market is the same as in many western countries though. But if so, bring it on.
It fits somewhat with American sunbelt cities where there is significant growth and large developers building new houses. One issue which is common across borders is that real estate was a common way for people to invest their retirement savings; wiping out a lot of the savings of people near or at retirement isn’t healthy. One issue that is more local to China is that Chinese provinces and municipalities have little ability to raise taxes, so they’ve been using development as a way to raise money; a lot of these governments have a lot of debt and few good ways to pay it back.
It’s great for people who want to buy a house, great for ultra rich that want to buy out more property, but absolutely fucking people who just bought a house not too long ago.
If you just bought (assuming standard 30 yr mortgage), all you have to do is hold through it. Refinance if that becomes favorable.
The only losers are those who are free and clear or toward the end of their mortgage AND looking to utilize the equity they built up, OR anyone looking to sell. The solution is time, which can kinda suck, but it’s vastly preferable to not having a place to live.
I feel like people forget that a significant portion of America lives in a place where the cost-of-living isn’t ridiculously high. A housing crash might make houses slightly more affordable in San Francisco, but it would be economically devastating to the interior of the country.
Honestly it probably wouldn’t even be that great for people who wanted to buy a house. Banks aren’t likely to start handing out mortgages to people who couldn’t afford the house a couple weeks ago in what is now a volatile market, and you would still be competing with companies who could pay cash.
Actually when things are less expensive they are easier to buy.
For everyone… not just poor people who need a loan, but people who can pay cash too… which is what I said.
That is how supply and demand works, though. If the prices drop, and suddenly cash buyers start pouring out of the woodwork, that will drive prices back up.
When you see prices fall, it necessarily means the cash buyers are not just swooping in and grabbing everything.
Yes which would mean that the cash buyers would have all the houses and the people who needed loans wouldn’t. Which was my point.
That is not what that means.
I promise I understand what you’re saying. I’m saying the fault in your logic is misunderstanding the upward pressure of cash buyers.
When prices fall, it isn’t chum in the water for corporate cash buyers. What it means is that those same buyers were ALWAYS there, and are now leaving. The absence of thier buy pressure is the cause of the prices falling.
The fault in your logic is thinking there won’t be more cash buyers if prices dropped.
Less than 20% is significant?
https://www.census.gov/newsroom/press-releases/2022/urban-rural-populations.html
I didn’t realize only rural areas had a lower cost of living than San Francisco…
I didn’t realize San Francisco is the only city in the US. Rent in every single urban area is out of control. A two bedroom apartment that I rented in Lexington, KY from 1996-2011 for $500 a month is now $1,800.
A studio apartment that I rented in Altoona, PA from 2011- 2013 for $700 a month is now $1200.
I could keep looking, as I have rented places in 38 states.
No where that isn’t rural is cheap in the US anymore. Even the most “affordable” cities are boasting about 1 br apartments that are $1,000+ a month.
I hate to break it to you but those prices are barely more than inflation. $700 in 2011 is $1065 today. And I didn’t say anything about San Francisco being the only city in the US now you’re just reaching.
Not reaching, just using your own hyperbole in reverse.
I hate to break it to you, but inflation hasn’t done a thing to minimum wage, or wages in general.
In what way was pointing out that there are places in America with a lower cost of living than San Francisco that aren’t rural hyperbole?
I never said it did, in fact that has absolutely nothing to do with what I’m talking about.
Building and renting out should be profitable. Else nothing is built for renters. Problem is companies buying homes (not building) and try to bribe local politics to upgrade zoning laws for more profitable housing (more flats per m2 land, less living quality). There are cases where lots should be merged for upgrading zonings but this should come from the communities needs not companies’ greeds.
Building and renting out should be non-profit based. It should cover it’s cost, but not be attractive to investors - that keeps the prices from rising. Doesn’t mean that the people doing this work shouldn’t be able to live a decent life, but non-profits can pay normal salaries too.
The result is property developers buying up swathes of land and leaving it vacant until the market reaches a frenzy and they can charge an unholy price for their crappy tract homes built by subcontractors under extreme cost reduction pressures. It doesn’t meet market demand, not remotely.
Zoning and local councils are certainly complicit.