4 ms·

It doesn't make much economic sense that these houses are empty. Why not rent them out or sell them for whatever the market will bear?

seppin 8y ago
If 1/5 are empty, the surely is no rental market
mchannon 8y ago
First three rules of real estate: location, location, location. Would you be interested in renting a 400 sf dilapidated teardown shack in western Kansas, no utilities, five hours from the nearest big city, no local jobs, and not near anything of consequence? As young Chinese flock to the large cities, they might have grown up in something similar to the above, but just because they're leaving it behind doesn't take it out of the housing stock. That's perhaps a bit of an oversimplification, but a good number of that double digit percent is abandoning the rural lifestyle held over from the cultural revolution.
- OscarCunningham 8y ago
  The article says these are urban homes, not rural ones.
  - gowld 8y ago
    Would you want to live at 8 Mile, or Compton?
- james_s_tayler 8y ago
  What's the Fourth rule?
  - deleted 8y ago
    [deleted]
randyrand 8y ago
I always found “bear” a weird way of phrasing pricing in a competitive market. For monopolies yes. But for commodities, you have to go with the market rate - best value product wins the sale.
thaumasiotes 8y ago
Why do car dealerships not rent out their new cars until a purchaser comes along? You've probably heard that your new car loses most of its value (that is, most of the value it will ever lose) the minute you drive it out of the dealership. The label "new" is worth much more than the functionality. This can also be true of apartments. I have seen it written that it is true of Chinese apartments, though I can't personally attest one way or the other.
- chii 8y ago
  A car loses value when used because the components degrade (presumably, a new car not being driven, but stored doesn't degrade). An apartment or house could degrade when being lived in - but that's the internal furnishings, which is "easily" replaced. The concrete, walls and other structural features degrade regardless of whether an occupant is in it or not!
  - thaumasiotes 8y ago
    A car that you bought 20 minutes ago has suffered no measurable degradation of the physical components, but has lost a very large portion of its "new" value. The lost value is purely from the "new" label which the car no longer qualifies for. That is why people will tell you never to buy a car new.
    - gruez 8y ago
      That's deprecation, and it's super fast in things like cars and consumer electronics. However, as far as I know, homes do not deprecate rapidly (ie. a "brand new" house doesn't command a significant premium over a comparable 1 year old house)
      - james_s_tayler 8y ago
        Homes depreciate rapidly in Japan. It's a cultural thing. They value newness.
denimnerd42 8y ago
there are no such thing as houses in urban china. these homes are apartments you basically get on a 40 year lease. when the lease is up the govt pays you to move out. also, when you buy an apartment in china, it's not finished. there's no flooring, paint, appliances, etc. the price of a finished one is the same or less as an unfinished since the new owner will usually redo the interior. so a lot of these new apartments are left unfinished in anticipation of the next 10x payday as has historically and repeatedly happened in urban cities.
- epynonymous 8y ago
  several corrections, apartments are typically leased for 70 years, 40 is for commercial property which are sometimes inhabitable. some apartments are finished, these days it’s more likely you’ll find a fully finished apartment, ready for move in, but they do have the unfinished apartments, but it’s too much trouble and trending down lately. you’re right about the investment aspect, i believe in early < 2012, there was no limit to the number of houses you could own or mortgages you could take so the extremely weathly purchased apartments in batch as investment, never considered living or renting these out, many of these back then were unfinished, so you pay off the downpayment, get a mortgage, and leave it as an investment to sell later without having to deal with the complications of outfiting the apartment with drywall, hardwood floors, appliances, fixtures, paint, etc, and having to deal with rental hassles. basically what they purchased were these concrete enclosures with basic plumbing and electricity in place. i used to rent an apartment in downtown shanghai, 2 bedroom, 1 bathroom, roughly 100 sq m (1000 square foot) new apartment, fully furnished with 60 inch led tv, furniture, etc, that cost me about 6k rmb a month (1000 usd a month), to buy would have cost me about 4m rmb (670k usd), i had pretty good relationship with the landlord, her father owned about 20 similar apartments in the complex, they were from a small town.
  - baybal2 8y ago
    >i used to rent an apartment in downtown shanghai, 2 bedroom, 1 bathroom, roughly 100 sq m (1000 square foot) new apartment, fully furnished with 60 inch led tv, furniture, etc, that cost me about 6k rmb a month (1000 usd a month), to buy would have cost me about 4m rmb (670k usd), i had pretty good relationship with the landlord, her father owned about 20 similar apartments in the complex, they were from a small town. Hahaha, things are even more crazier in Shenzhen. You can rent a 1.5 million buck apparent for $500

seppin 8y ago

If 1/5 are empty, the surely is no rental market

mchannon 8y ago

First three rules of real estate: location, location, location. Would you be interested in renting a 400 sf dilapidated teardown shack in western Kansas, no utilities, five hours from the nearest big city, no local jobs, and not near anything of consequence? As young Chinese flock to the large cities, they might have grown up in something similar to the above, but just because they're leaving it behind doesn't take it out of the housing stock. That's perhaps a bit of an oversimplification, but a good number of that double digit percent is abandoning the rural lifestyle held over from the cultural revolution.

OscarCunningham 8y ago
The article says these are urban homes, not rural ones.
- gowld 8y ago
  Would you want to live at 8 Mile, or Compton?
james_s_tayler 8y ago
What's the Fourth rule?
- deleted 8y ago
  [deleted]

randyrand 8y ago

I always found “bear” a weird way of phrasing pricing in a competitive market. For monopolies yes. But for commodities, you have to go with the market rate - best value product wins the sale.

thaumasiotes 8y ago

Why do car dealerships not rent out their new cars until a purchaser comes along? You've probably heard that your new car loses most of its value (that is, most of the value it will ever lose) the minute you drive it out of the dealership. The label "new" is worth much more than the functionality. This can also be true of apartments. I have seen it written that it is true of Chinese apartments, though I can't personally attest one way or the other.

chii 8y ago
A car loses value when used because the components degrade (presumably, a new car not being driven, but stored doesn't degrade). An apartment or house could degrade when being lived in - but that's the internal furnishings, which is "easily" replaced. The concrete, walls and other structural features degrade regardless of whether an occupant is in it or not!
- thaumasiotes 8y ago
  A car that you bought 20 minutes ago has suffered no measurable degradation of the physical components, but has lost a very large portion of its "new" value. The lost value is purely from the "new" label which the car no longer qualifies for. That is why people will tell you never to buy a car new.
  - gruez 8y ago
    That's deprecation, and it's super fast in things like cars and consumer electronics. However, as far as I know, homes do not deprecate rapidly (ie. a "brand new" house doesn't command a significant premium over a comparable 1 year old house)
    - james_s_tayler 8y ago
      Homes depreciate rapidly in Japan. It's a cultural thing. They value newness.

denimnerd42 8y ago

there are no such thing as houses in urban china. these homes are apartments you basically get on a 40 year lease. when the lease is up the govt pays you to move out. also, when you buy an apartment in china, it's not finished. there's no flooring, paint, appliances, etc. the price of a finished one is the same or less as an unfinished since the new owner will usually redo the interior. so a lot of these new apartments are left unfinished in anticipation of the next 10x payday as has historically and repeatedly happened in urban cities.

epynonymous 8y ago
several corrections, apartments are typically leased for 70 years, 40 is for commercial property which are sometimes inhabitable. some apartments are finished, these days it’s more likely you’ll find a fully finished apartment, ready for move in, but they do have the unfinished apartments, but it’s too much trouble and trending down lately. you’re right about the investment aspect, i believe in early < 2012, there was no limit to the number of houses you could own or mortgages you could take so the extremely weathly purchased apartments in batch as investment, never considered living or renting these out, many of these back then were unfinished, so you pay off the downpayment, get a mortgage, and leave it as an investment to sell later without having to deal with the complications of outfiting the apartment with drywall, hardwood floors, appliances, fixtures, paint, etc, and having to deal with rental hassles. basically what they purchased were these concrete enclosures with basic plumbing and electricity in place. i used to rent an apartment in downtown shanghai, 2 bedroom, 1 bathroom, roughly 100 sq m (1000 square foot) new apartment, fully furnished with 60 inch led tv, furniture, etc, that cost me about 6k rmb a month (1000 usd a month), to buy would have cost me about 4m rmb (670k usd), i had pretty good relationship with the landlord, her father owned about 20 similar apartments in the complex, they were from a small town.
- baybal2 8y ago
  >i used to rent an apartment in downtown shanghai, 2 bedroom, 1 bathroom, roughly 100 sq m (1000 square foot) new apartment, fully furnished with 60 inch led tv, furniture, etc, that cost me about 6k rmb a month (1000 usd a month), to buy would have cost me about 4m rmb (670k usd), i had pretty good relationship with the landlord, her father owned about 20 similar apartments in the complex, they were from a small town. Hahaha, things are even more crazier in Shenzhen. You can rent a 1.5 million buck apparent for $500