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Because of the war in Ukraine people in the US aren't hearing as much about what is going on with Chinese real estate these days. TLDR: There is enough vacant

Because of the war in Ukraine people in the US aren't hearing as much about what is going on with Chinese real estate these days. TLDR: There is enough vacant housing in China to house Spain. Prices are going to drop, probably. People have been saying there was a bubble in Chinese real estate for ten or twenty years and all that time prices have been going up in ways that are probably at least sustainable based on a growing economy. I think the biggest movements of overvaluation are like Chinese real estate where people over pay, but the underlying value is still going up so you can keep justifying overpaying for years. Probably GE was like that for a long time. Now I think Tesla has been over valued for a long time (maybe not-- just take it as an example) but it's hard to argue it is over valued because at the same time the price appreciates the value of the underlying thing is also growing.

gigaflop 5y ago
Haven't some new-construction apartment buildings in China been left mostly empty, while others start crumbling before they're finished? As for Tesla, the market can stay irrational longer than one can stay solvent. If not for EM's cultlike fanbase, I doubt it would be this overvalued.
- vardump 5y ago
  There's also anti-EM cult. I guess it balances it, shrug?
  - gigaflop 5y ago
    I feel like anti-cults are never as strong as the cult itself, and will rarely ever be. A cult is a portion of society following something or someone, and I feel like it encompasses people from suggestible fans to fanatics. An anticult can't contain people who have no interest, as those who lack interest will be on the sidelines not caring. I also think that there's a larger 'negative opinion threshold' that needs to be crossed for someone to migrate to the anticult, since anticult membership requires opposition and participation. In essence, cults can be passive, while anticults are active, and whenever you ask for activity, membership plummets, simply because the bar has gone above knee-height.
- filoleg 5y ago
  "EM's cultlike fanbase" has no power to drive up the stock price in any possible way other than ultra-short-term (and even then, it would be a really large stretch). Retail investors don't have such power in general, aside from when it comes to very low volume and low cap tickers (which Tesla is neither). There could be many potential ways of justifying why Tesla stock is overvalued (if you are inclined to believe so), but "retail is just being irrational and hypes it up, because they are superfans" is just one of the most off-base ones.
  - gigaflop 5y ago
    I think it's more than retail investors. I think it's the hype and noise that his followers make, plus whatever noise he himself makes. I think he's a bit like Trump in some ways. Trump was often said to represent an image of what a certain demographic of people thought was rich and successful. He made a lot of noise, threw around a lot of money, and his followers in turn made a lot of noise. EM(I write it as such because I'm sick of seeing the name everywhere I turn) seems to have the image of "tech guy who struck gold" and "can't stop making money". While some of his success is definitely attributable to himself, I feel like people give him too much credit and celebrity status. I think the biggest drivers of his success are a gigantic war chest of money, combined with a massive following, and enough ideas to spend the money on. There are hundreds or thousands of people in the US alone who are smarter, and have better ideas, and don't make asses of themselves in front of millions. What they lack is his money and fame, so we'll never see what potentially world-changing things those people are capable of. Unless they get hired at one of Musk's companies, in which case people will attribute someone else's genius to EM. It's like attributing innovation to a VC instead of a startup. A fun strawman, don't take it seriously: Musk is just the Silicon Valley version of Trump. And instead of starting his own Twitter, he flaunts the idea of just buying the regular Twitter. One other nit I pick is that I'm personally a bit salty over his $DOGE tweets. I had decided that I should accumulate some for some next "big wave", but that wave happened to be some rich guy who probably didn't own any $DOGE, and it had happened before I could get hold of anything. I "lost" potential thousands of dollars because some guy sent a tweet.
crate_barre 5y ago
There is enough vacant housing in China to house Spain. Prices are going to drop, probably. It’s better to look at this from China’s vantage point. Truly, enough housing to house Spain is not enough. Perhaps for Spain it is, but we’re talking about housing China - 1bn people. As for tech, I don’t think we’re even close to saturating the globe with technology. We’re in such an infancy that we literally need something like Starlink to get everyone connected. We’re nowhere close to it.
goodoldneon 5y ago
> There is enough vacant housing in China to house Spain. This sounds bad off-hand but you have to consider the scale of China. Spain's population is roughly 3% of China. 3% of the US population is 10 million, which is less than the 16 million vacant homes in the US (https://www.nytimes.com/2022/03/10/realestate/vacancy-rate-by-state.html https://www.nytimes.com/2022/03/10/realestate/vacancy-rate-b...). And that's still a generous comparison since more than 1 person lives in a home.
- onlyrealcuzzo 5y ago
  ~90% of people in China are homeowners [1]. China's investments are extremely disproportionately R/E compared to other countries (70% vs 35% for the US) [2]. The CCP has immense pressure to prop this bubble up, and they have many options: * Lower lending standards (you need to put 25% down to buy a house in China, but only 3.5% in the US) * Lower interest rates (mortgage rates are negative in some parts of Europe, but ~5%+ in China) * Mortgage interest deduction [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7546956/#:~:text=Today%20China%20is%20a%20country,et%20al.%2C%202020 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7546956/#:~:tex...). [2] https://fortune.com/2021/12/02/chinese-real-estate-investing-home-ownership-evergrande/#:~:text=China%20is%20a%20nation%20of,%2C%20that%20share%20is%2035%25 https://fortune.com/2021/12/02/chinese-real-estate-investing....
FollowingTheDao 5y ago
There is an idea floating around the econosphere that China helped build all this housing while raw materials were cheap. You will note as well that China also ended their one child policy in 2016. So it is possible that they were building houses for a population they knew they would need to house in the future. Not every country is a as stupid as the united states.
- azemetre 5y ago
  Isn't it kind of dangerous to make these types of plans regarding humans well into the future? We're talking two to three decades of potential leeway time until a new generation from birth to workforce will occupy these homes. A lot can change in 30 years. 30 years ago China was an extremely poor country, 30 years from now it can easily go the way of Japan with births crawling to a near halt. It's one thing to plan infrastructure (building railways, ports, and energy), but another to hopefully assume the human element will be consistent. It reminds me of the of when Romania in the late 1970s banned abortion and contraceptives [1]. [1] https://en.wikipedia.org/wiki/Decree_770 https://en.wikipedia.org/wiki/Decree_770
  - pphysch 5y ago
    It is also dangerous to not make these sort of plans for the future.
    - azemetre 5y ago
      That's fair, but should the lead time for housing projects be several decades? I'd think it'd be easier to zone the potential land first and worry about building when you can anticipate demand.
- georgeecollins 5y ago
  This is so weird, I wasn't saying Chinese government was stupid. All I said was that prices may go down. I don't know how you could look at their economic progress in the last thirty years and not think they are doing something right. And if you think the US is stupid, well I hope you don't live there.

gigaflop 5y ago

Haven't some new-construction apartment buildings in China been left mostly empty, while others start crumbling before they're finished? As for Tesla, the market can stay irrational longer than one can stay solvent. If not for EM's cultlike fanbase, I doubt it would be this overvalued.

vardump 5y ago
There's also anti-EM cult. I guess it balances it, shrug?
- gigaflop 5y ago
  I feel like anti-cults are never as strong as the cult itself, and will rarely ever be. A cult is a portion of society following something or someone, and I feel like it encompasses people from suggestible fans to fanatics. An anticult can't contain people who have no interest, as those who lack interest will be on the sidelines not caring. I also think that there's a larger 'negative opinion threshold' that needs to be crossed for someone to migrate to the anticult, since anticult membership requires opposition and participation. In essence, cults can be passive, while anticults are active, and whenever you ask for activity, membership plummets, simply because the bar has gone above knee-height.
filoleg 5y ago
"EM's cultlike fanbase" has no power to drive up the stock price in any possible way other than ultra-short-term (and even then, it would be a really large stretch). Retail investors don't have such power in general, aside from when it comes to very low volume and low cap tickers (which Tesla is neither). There could be many potential ways of justifying why Tesla stock is overvalued (if you are inclined to believe so), but "retail is just being irrational and hypes it up, because they are superfans" is just one of the most off-base ones.
- gigaflop 5y ago
  I think it's more than retail investors. I think it's the hype and noise that his followers make, plus whatever noise he himself makes. I think he's a bit like Trump in some ways. Trump was often said to represent an image of what a certain demographic of people thought was rich and successful. He made a lot of noise, threw around a lot of money, and his followers in turn made a lot of noise. EM(I write it as such because I'm sick of seeing the name everywhere I turn) seems to have the image of "tech guy who struck gold" and "can't stop making money". While some of his success is definitely attributable to himself, I feel like people give him too much credit and celebrity status. I think the biggest drivers of his success are a gigantic war chest of money, combined with a massive following, and enough ideas to spend the money on. There are hundreds or thousands of people in the US alone who are smarter, and have better ideas, and don't make asses of themselves in front of millions. What they lack is his money and fame, so we'll never see what potentially world-changing things those people are capable of. Unless they get hired at one of Musk's companies, in which case people will attribute someone else's genius to EM. It's like attributing innovation to a VC instead of a startup. A fun strawman, don't take it seriously: Musk is just the Silicon Valley version of Trump. And instead of starting his own Twitter, he flaunts the idea of just buying the regular Twitter. One other nit I pick is that I'm personally a bit salty over his $DOGE tweets. I had decided that I should accumulate some for some next "big wave", but that wave happened to be some rich guy who probably didn't own any $DOGE, and it had happened before I could get hold of anything. I "lost" potential thousands of dollars because some guy sent a tweet.

crate_barre 5y ago

There is enough vacant housing in China to house Spain. Prices are going to drop, probably. It’s better to look at this from China’s vantage point. Truly, enough housing to house Spain is not enough. Perhaps for Spain it is, but we’re talking about housing China - 1bn people. As for tech, I don’t think we’re even close to saturating the globe with technology. We’re in such an infancy that we literally need something like Starlink to get everyone connected. We’re nowhere close to it.

goodoldneon 5y ago

> There is enough vacant housing in China to house Spain. This sounds bad off-hand but you have to consider the scale of China. Spain's population is roughly 3% of China. 3% of the US population is 10 million, which is less than the 16 million vacant homes in the US (https://www.nytimes.com/2022/03/10/realestate/vacancy-rate-by-state.html https://www.nytimes.com/2022/03/10/realestate/vacancy-rate-b...). And that's still a generous comparison since more than 1 person lives in a home.

onlyrealcuzzo 5y ago
~90% of people in China are homeowners [1]. China's investments are extremely disproportionately R/E compared to other countries (70% vs 35% for the US) [2]. The CCP has immense pressure to prop this bubble up, and they have many options: * Lower lending standards (you need to put 25% down to buy a house in China, but only 3.5% in the US) * Lower interest rates (mortgage rates are negative in some parts of Europe, but ~5%+ in China) * Mortgage interest deduction [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7546956/#:~:text=Today%20China%20is%20a%20country,et%20al.%2C%202020 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7546956/#:~:tex...). [2] https://fortune.com/2021/12/02/chinese-real-estate-investing-home-ownership-evergrande/#:~:text=China%20is%20a%20nation%20of,%2C%20that%20share%20is%2035%25 https://fortune.com/2021/12/02/chinese-real-estate-investing....

FollowingTheDao 5y ago

There is an idea floating around the econosphere that China helped build all this housing while raw materials were cheap. You will note as well that China also ended their one child policy in 2016. So it is possible that they were building houses for a population they knew they would need to house in the future. Not every country is a as stupid as the united states.

azemetre 5y ago
Isn't it kind of dangerous to make these types of plans regarding humans well into the future? We're talking two to three decades of potential leeway time until a new generation from birth to workforce will occupy these homes. A lot can change in 30 years. 30 years ago China was an extremely poor country, 30 years from now it can easily go the way of Japan with births crawling to a near halt. It's one thing to plan infrastructure (building railways, ports, and energy), but another to hopefully assume the human element will be consistent. It reminds me of the of when Romania in the late 1970s banned abortion and contraceptives [1]. [1] https://en.wikipedia.org/wiki/Decree_770 https://en.wikipedia.org/wiki/Decree_770
- pphysch 5y ago
  It is also dangerous to not make these sort of plans for the future.
  - azemetre 5y ago
    That's fair, but should the lead time for housing projects be several decades? I'd think it'd be easier to zone the potential land first and worry about building when you can anticipate demand.
georgeecollins 5y ago
This is so weird, I wasn't saying Chinese government was stupid. All I said was that prices may go down. I don't know how you could look at their economic progress in the last thirty years and not think they are doing something right. And if you think the US is stupid, well I hope you don't live there.