4 ms·

> prices could collapse 90% (they won't), and it would only affect speculators and people who bought their first home in the last 5 years How do you arrive at

> prices could collapse 90% (they won't), and it would only affect speculators and people who bought their first home in the last 5 years How do you arrive at that claim? ~78% of all household assets in urban China are held in residential housing ownership. A 90% housing price collapse would be beyond catastrophic to China's economy and household wealth across the board. In rural China, residential housing values represent ~65% of household wealth. China's household assets being so extremely concentrated to housing is unique among major economies. In the US, the residential real-estate market represents closer to 35% of household assets (in the UK it's around 50%). Financial assets are only 12% of urban Chinese household assets, compared to 43% in the US. China can't afford anything to go wrong in their residential housing market, much less a 90% price decline.

onlyrealcuzzo 8y ago
Look at Chinese imports / exports: https://globaledge.msu.edu/countries/china/tradestats https://globaledge.msu.edu/countries/china/tradestats . If the Yuan collapses, that's good for exports, which is good for jobs. If house prices collapse, it only matters if you're trying to sell your house. You won't need to sell your house if you have a job. It's only bad if you're leveraged on real estate and dependent on prices increasing -- a speculator. You know who is the most leveraged on Chinese real estate? Local governments and the mega rich. The vast majority of Chinese spending is on domestic goods and real estate. If those things become cheaper, that's good for the average Chinese person (and for importers or Chinese goods -- I.E. everyone else in the world). China's growing dependence on imported oil could be problematic. But they're being really smart about their unbelievably fast growing electric bus fleet. It is important to note that a huge portion of Chinese jobs are related to real estate / construction. If the market collapses, a lot of those jobs will go away. But these aren't particularly high paid or specialized jobs. The growth of factory jobs should absorb them. The only thing that would stop that is if the U.S. increases tariffs farther. I think it'd be more like Dot Com in the U.S. Stocks dropped like a rock, but the average person in the U.S. hardly noticed. I don't think it'd be like 07 -- even though it seems more related.
rconti 8y ago
Don't most homes have very large down payments, so the risk is lower? Or is this outdated thinking in the age of 3rd and 4th "investment" homes?

onlyrealcuzzo 8y ago

Look at Chinese imports / exports: https://globaledge.msu.edu/countries/china/tradestats https://globaledge.msu.edu/countries/china/tradestats . If the Yuan collapses, that's good for exports, which is good for jobs. If house prices collapse, it only matters if you're trying to sell your house. You won't need to sell your house if you have a job. It's only bad if you're leveraged on real estate and dependent on prices increasing -- a speculator. You know who is the most leveraged on Chinese real estate? Local governments and the mega rich. The vast majority of Chinese spending is on domestic goods and real estate. If those things become cheaper, that's good for the average Chinese person (and for importers or Chinese goods -- I.E. everyone else in the world). China's growing dependence on imported oil could be problematic. But they're being really smart about their unbelievably fast growing electric bus fleet. It is important to note that a huge portion of Chinese jobs are related to real estate / construction. If the market collapses, a lot of those jobs will go away. But these aren't particularly high paid or specialized jobs. The growth of factory jobs should absorb them. The only thing that would stop that is if the U.S. increases tariffs farther. I think it'd be more like Dot Com in the U.S. Stocks dropped like a rock, but the average person in the U.S. hardly noticed. I don't think it'd be like 07 -- even though it seems more related.

rconti 8y ago

Don't most homes have very large down payments, so the risk is lower? Or is this outdated thinking in the age of 3rd and 4th "investment" homes?