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

bloomberg.com

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

#91

Post by spyckie2 »

pascalxus wrote: post #83
spyckie2 wrote: post #80

Earlier quoted context omitted.

Articles about ghost cities are a fascinating read - sometimes exploring un-intuitive facts, like having 50m empty homes in China, yields a surprising discovery of the underlying systems. In this case, I think the system perfectly justifies having 50m homes empty. If you look at it another way, if San Francisco (arguably another booming localized economy) had the same initiative to build a 20% buffer for housing, it…

SF residents are nowhere near rich enough to afford the struggles. Even people in the top 2-5% struggle desperately to afford housing, renting out every bedroom in the house just to afford to stay there.

SF is not going to implode any time soon though, which is why I say it can 'afford' it. China is a different story.

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

#92

Post by seanmcdirmid »

Arn_Thor wrote: post #85
mdasen wrote: post #64

Earlier quoted context omitted.

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://w…

It's not even speculation. Urbanization is an ongoing process. Those properties will be filled. Whether or not the developer is liquid enough to hang in there until they do is irrelevant from a societal point of view. That's all numbers and loans. People will inhabit those homes in a few years and the local communities will thrive and generate economic growth

That is naive. Many of those properties are built in places where they won’t fill up: coal mining towns that are on the decline, 3rd and 4th tier cities that barely qualify as urban, 40 miles away from the nearest job in a second tier city.

Yes, you can buy way outside the sixth ring road, but they have no buses or subway, what will you do, drive?

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

#93

Post by Animats »

The actual study would be more useful. Bloomberg gives us no idea where the vacant homes are. From the article: "China's vacant properties include empty homes of migrants seeking work elsewhere." China's hukou system[1] limits where Chinese can live and work within China, and what benefits, like schooling for their kids and medical care, they are eligible for. The other side of that is that with a rural hukou, someone who can't make it in the big city can go back to their village and have a peasant-level job and a place to live. So some people want to keep their right to go home again, and their village residence may be vacant some or all of the time.

There's nothing wrong with housing not being a scarce resource.

[1] https://en.wikipedia.org/wiki/Hukou_system

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

#94

Post by adrianratnapala »

seanmcdirmid wrote: post #90
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…

2. There are empty homes in 10 year old complexes in Beijing and Shanghai. 3. Many of the ghost districts never fill up before they are torn down as eye sores. Kangbashi will only fill up if coal makes a big come back, which is highly unlikely. Tianjin financial district is mostly a bust so far, but a derelict building or two for a decade is not abnormal. The problem is really simple: China lacks a property tax, so h…

Why is it seen as a better speculative investment than other opportunities. After all, someone is left holding the bag when the investment is found to be unused -- which is a cost just as much as a tax would be. What other considerations are outweighing that cost?

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

#95

Post by onlyrealcuzzo »

seanmcdirmid wrote: post #90
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…

2. There are empty homes in 10 year old complexes in Beijing and Shanghai. 3. Many of the ghost districts never fill up before they are torn down as eye sores. Kangbashi will only fill up if coal makes a big come back, which is highly unlikely. Tianjin financial district is mostly a bust so far, but a derelict building or two for a decade is not abnormal. The problem is really simple: China lacks a property tax, so h…

Houses are seen as speculative investments for the vast majority of US home owners also.

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

#96

Post by lph »

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…

There are a few more factors that are unique to China's situation:

- New construction condos are a better investment proposition than in the West because (1) there's no property tax, and (2) other types of investments are less reliable (e.g., stock market is rigged) - There's a cultural aversion to 'used' things, which explains why an investor might prefer to let a condo sit empty instead of rent it out. - Because they're seen as an investment, some new construction is actually built with the intention of selling directly to investors.

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

#97

Post by james_s_tayler »

spyckie2 wrote: post #81
james_s_tayler wrote: post #73

Earlier quoted context omitted.

America is also a developing country. It's not like anywhere is ever finished developing.

"developing country" is a term used in economic discourse to mean something rather specific -> https://en.wikipedia.org/wiki/Developing_country . It has pretty specific criteria what qualifies, and America (the richest country in the world) does not.

Yes. And I think it's dumb. The article linked to states it in alternative words "low and middle income country LMIC". I think that's an order of magnitude better.

I know I'm nitpicking and being an asshole about this point, but I think words matter. How we talk about things feeds in to how we conceptualize things and our mental models are like low quality, compressed, cartoon versions of reality and getting them more accurate at a fundamental level goes a long way towards improving the end results of our cognition.

It also used to be called First World, Second World, Third World. It's not anymore. Discourse changes because people stop agreeing on terms being useful, accurate, or good.

I liked Hans Rosling's level 1,2,3,4 stratified model a little better.

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

#99

Post by lph »

adrianratnapala wrote: post #94
seanmcdirmid wrote: post #90

Earlier quoted context omitted.

2. There are empty homes in 10 year old complexes in Beijing and Shanghai. 3. Many of the ghost districts never fill up before they are torn down as eye sores. Kangbashi will only fill up if coal makes a big come back, which is highly unlikely. Tianjin financial district is mostly a bust so far, but a derelict building or two for a decade is not abnormal. The problem is really simple: China lacks a property tax, so h…

Why is it seen as a better speculative investment than other opportunities. After all, someone is left holding the bag when the investment is found to be unused -- which is a cost just as much as a tax would be. What other considerations are outweighing that cost?

Because property values have skyrocketed in big cities. Of course, that's no guarantee that they'll continue to rise, but, this history looms large in media and culture. Everybody knows somebody who became rich this way: "My classmate's parents bought him a condo in Beijing in 2008 and now it's worth millions!"

There is also the continued migration from rural to urban, ensuring that demand will continue to increase for a while yet.

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

#100

Post by Arn_Thor »

seanmcdirmid wrote: post #92
Arn_Thor wrote: post #85

Earlier quoted context omitted.

It's not even speculation. Urbanization is an ongoing process. Those properties will be filled. Whether or not the developer is liquid enough to hang in there until they do is irrelevant from a societal point of view. That's all numbers and loans. People will inhabit those homes in a few years and the local communities will thrive and generate economic growth

That is naive. Many of those properties are built in places where they won’t fill up: coal mining towns that are on the decline, 3rd and 4th tier cities that barely qualify as urban, 40 miles away from the nearest job in a second tier city. Yes, you can buy way outside the sixth ring road, but they have no buses or subway, what will you do, drive?

Sure, not every single project is going to succeed. But the government is executing a long term strategy. Rather than a few extremely large megacities, the plan is to boost mid-tier cities and the small towns that connect them. So a lot of these small towns that don't have anything going for them right now will be connected in time. Spending on building out infrastructure continues. Remember the photos from a few years ago of subway entrances in the middle of a field? Now they're in the middle of dense neighborhoods.
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