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A Fifth of China’s Homes Are Empty (2018)

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Re: A Fifth of China’s Homes Are Empty (2018)

#61

Post by mikerg87 »

thaumasiotes wrote: post #43
OscarCunningham wrote: post #24

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?

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…

not to mention these properties need to be occupied and maintained - look at the homes abandoned during the bubble - all manner of ills happened that resulted in all kinds of tear downs...

Re: A Fifth of China’s Homes Are Empty (2018)

#62

Post by gruez »

thaumasiotes wrote: post #55
chii wrote: post #49

Earlier quoted context omitted.

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.

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)

Re: A Fifth of China’s Homes Are Empty (2018)

#63

Post by thedudeabides5 »

Let's say 1,000 sq ft a home

and $100 a sq ft

That's $100k a house.

Multiplied by 50m homes

is $5 Trillion dollars of inventory.

US GDP is ~$20Tr, for context.

Monetary policy matters. A pause in the Fed tightening instantly flows through to impact the market price for $5tr USD of speculative real estate, a half a world away.

Re: A Fifth of China’s Homes Are Empty (2018)

#64

Post by mdasen »

50656E6973 wrote: post #17

For context, it's been estimated that there are around 18M vacant homes in the US, though it's difficult to find a reliable source for this information. https://www.google.com/search?q=how+many+vacant+homes+are+th...

I think a crucial piece of information missing (maybe you have it) is the age/condition of those homes. The US has a lot of vacant homes in low-opportunity areas that are reaching the end of their first usable life and need a lot of money out into them to bring them up to standards. I’ve heard that China has been building a lot of new property that isn’t being inhabited. Those two cases are a bit different.

https://www.theamericanconservative.com/urbs/what-it-actuall...

As that notes, there are significant deficiencies in a lot of the cheap housing stock in lower-opportunity areas that need money to fix. Those properties going unoccupied can still be an issue, but it’s different from speculation on new property. Vacancy rates in high-opportunity US cities are very low.

From what I’ve heard, the situation in China sounds like speculation on new properties, rather than aging housing stock that requires significant reinvestment.

Re: A Fifth of China’s Homes Are Empty (2018)

#65

Post by rmrm »

kartickv wrote: post #60

The 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 abov…

This would certainly eliminate the rental market altogether, if that was your goal.

Re: A Fifth of China’s Homes Are Empty (2018)

#66

Post by ksec »

To put things into context.

1. These are Urban Homes.

2. There are roughly 20M people jumping to new cities and Urban areas every year. For years China has keep a roughly two years buffer zone, I think the rate of new housing is the same and rate of people going into Urban has declined, so a slight increase in terms of buffer ( closer to three years now ).

3. Most of the "Ghost Cities" do get fill up quickly, once the policy are in place for their turn.

These so called Home vacancies and ticking time bomb has been cycling through media every year. And it isn't happening ( yet ). There are 500M+ still living in rural areas ( Yes I know the number is a little hard to believe ) At least another 300M to go from rural areas to Urban, with 200M likely not going to get their turn as they age.

So from that perspective ( As much as I hate to admit it ) China really is still a developing country.

Re: A Fifth of China’s Homes Are Empty (2018)

#68

Post by sonnyblarney »

ksec wrote: post #66

To put things into context. 1. These are Urban Homes. 2. There are roughly 20M people jumping to new cities and Urban areas every year. For years China has keep a roughly two years buffer zone, I think the rate of new housing is the same and rate of people going into Urban has declined, so a slight increase in terms of buffer ( closer to three years now ). 3. Most of the "Ghost Cities" do get fill up quickly, once th…

The central authorities control the central bank, the banks, and perhaps importantly: the press. And of course policy/taxation.

So they can stop a lot of rampant speculation through a variety of measures, meaning hopefully, they can kill any bubble-like blowups.

As you say, there's a lot of poor folks and a lot of empty homes, maybe that does mean a haircut for home owners, but it might possibly be done in a way that doesn't cause any bursting bubbles.

So long as there is something to underpin reality (like ex-poor people wanting homes) they can make a soft landing for all of this.

The more existential concern is: 'what then'?

The path has never been so uncertain.

Re: A Fifth of China’s Homes Are Empty (2018)

#70

Post by thisisweirdok »

randomacct3847 wrote: post #53

I’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?

Might not be as much as you expect. Boats are notoriously expensive to maintain. Not to mention docking fees, etc. In other parts of the country owning a houseboat will definitely cost you more than owning a house. At that point, why not move?

You can probably save some considering how expensive the bay area is, but you're also living in cramped quarters with downsized appliances (which I guess is normal for the bay area :P). Also, boat showers really suck.

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