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A Fifth of China’s Homes Are Empty (2018)
51–60 of 191 posts
Re: A Fifth of China’s Homes Are Empty (2018)
#52A lot of $$$ was stored away in housing assets in China. When I was in Chongqing in 2014 it was clear -- building for building's sake with the expectation that these empty properties would ultimately accrue in value and demand would exist at some point... I think much of this open housing is in new urban cities -- the 10M person cities that are mostly west and on the Silk Road built to support trade (but not quite bu…
I don't think so, according to what I read/learned it had to do with defaulted loans. In a "us knows us" world, the big loans are given to people approving the regime. The loan is 10 million for example, the collateral is the property. The loan is 50% used and defaults. 5 million profit. Some articles around shadow banking, if you want to look it up
Yeah that's interesting. What I've also read is that property was one of the only private assets not taxed at the same rate in China so is a good place to store capital (or that was the expectation). Secondly, a huge initiative of the Chinese Government beginning in 2008 was to "go west" and they started providing a significant amount of funding for major infrastructure and development projects with the "if you build it they will come" mentality. Still possible that type of migration west could happen -- particularly as China expands trade relationships with the countries to their west as well...
Re: A Fifth of China’s Homes Are Empty (2018)
#53I’ve heard the best housing “hack” for the Bay Area is to live in a houseboat. Anyone doing this or calculated how much you’d save?
Re: A Fifth of China’s Homes Are Empty (2018)
#54It 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?
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.
Re: A Fifth of China’s Homes Are Empty (2018)
#55Earlier quoted context omitted.
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 persona…
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!
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.
Re: A Fifth of China’s Homes Are Empty (2018)
#56I’ve heard the best housing “hack” for the Bay Area is to live in a houseboat. Anyone doing this or calculated how much you’d save?
I have a friend who explored it very seriously. According to him, it’s not as advantageous as you might trying when it’s all said and done.
Re: A Fifth of China’s Homes Are Empty (2018)
#57I’ve heard the best housing “hack” for the Bay Area is to live in a houseboat. Anyone doing this or calculated how much you’d save?
Wait list for a berthing that allows house boats is at least 9 months when I looked into this several years back. IIRC there's a restriction that no more than 10% of any marina's berthing can allow live-aboard tenants.
Re: A Fifth of China’s Homes Are Empty (2018)
#58Earlier quoted context omitted.
I don't think so, according to what I read/learned it had to do with defaulted loans. In a "us knows us" world, the big loans are given to people approving the regime. The loan is 10 million for example, the collateral is the property. The loan is 50% used and defaults. 5 million profit. Some articles around shadow banking, if you want to look it up
Yeah that's interesting. What I've also read is that property was one of the only private assets not taxed at the same rate in China so is a good place to store capital (or that was the expectation). Secondly, a huge initiative of the Chinese Government beginning in 2008 was to "go west" and they started providing a significant amount of funding for major infrastructure and development projects with the "if you build…
The explanation I heard was more about capital controls. A fairly well-off middle class Chinese citizen cannot plan for retirement by buying into an S&P 500 fund and waiting three decades. Chinese bonds have negative real rates. And the fate of the stock prices of domestic Chinese companies are subject to the vagarities of the shifting whims of the Chinese government. Where else are they going to put their money? An apartment that sits there empty for two decades and then gets sold looks quite attractive in that context.
Re: A Fifth of China’s Homes Are Empty (2018)
#59I’ve heard the best housing “hack” for the Bay Area is to live in a houseboat. Anyone doing this or calculated how much you’d save?
I have a close family member who did this in Auckland, NZ and it certainly didn't save them any money. The main issue was that boats are expensive to keep afloat and maintain, and depreciate in value over time (unlike a house).
Maybe the Bay Area is so absurdly expensive that a boat is a good investment, but I would be highly dubious about it myself.
Re: A Fifth of China’s Homes Are Empty (2018)
#60The government should make a law saying that houseowners shouldn't keep a house empty if there's someone offering even a single rupee or yuan a year, plus paying the insurance premium to protect the homeowner from any damage done by the tenant, plus deep cleaning to restore the house to a rentable condition when the tenant leaves. A landlord cannot keep the house empty if there's at least one person offering the above, say prepaid for the next one year to protect the landlord from having to chase down non-payers. As long as someone is willing to do the above, the landlord can't keep the house empty. The landlord can, at any time, ask the tenant to move out, refunding the prorated amount that he already prepaid, provided the landlord isn't going to keep the house empty.
With this, millions of people who're homeless will suddenly find a home. Investments that have already been made will be useful to society, which should be the case to begin with.
If this policy deters investment in housing, rents will eventually rise till it again becomes sensible to invest in building houses. The market takes care of itself.
Instead of a ban, perhaps a high annual tax, say 30% of the value of the house, if it's left empty for more than a month a year.