Watchhttp://www.cbsnews.com/8301-18560_162-57572185/chinas-real-estate-bubble/
If trouble comes in threes, then what'll be the next global market to melt down after the U.S. and Europe? Some are looking nervously at China. China has been nothing short of a financial miracle. In just 30 years, this state-controlled economy became the world's second largest, deftly managed by government policies and decrees. One sector the authorities concentrated on was real estate and construction. But that may have created the largest housing bubble in human history. If you go to China, it's easy to see why there's all the talk of a bubble. We discovered that the most populated...
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yes.. the 60 minute piece was pretty good... but once again it shows how ordinary people are just pissing away their savings into overpriced RE. Prices per earnings.. 45-50x and sometimes higher.. its will certainly correct.
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Brooklyn, NY
http://www.time.com/time/photogallery/0,29307,1975397_2094492,00.html
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Brooklyn, NY
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A Chinese labor (house builder) made $20 a month in 1993.
Now he makes $600 a month.
30 times in 20 years.
He should make $18000 a month in 2033.
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In 1935, an average worker in Shanghai made about $8 silver dollars a month, equivalent to about $200 in today's US Dollar.
By 1975, his child or grand child in the same city would be slaving away for less than $8 a month in today's dollars.
What happened to cause the more than 95% drop in real income in those 40 years? War against Japan and Communist rule. Both sound familiar?
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Mountain View, CA
I think it was IWOG, E-Man or one of the other RE speculation fanboys who claimed that the Chinese were brilliantly anticipating massive urbanization and an explosion in jobs, that's why all these cities were "built."
After looking at that picture above, do you have ANY IOTA of confidence in any non-electronic products (food, housing materials, cars) made in China??
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That particular toppled over building actually held up really well after the fall, without crumbling into pieces or breaking up at all as one would expect for such a high rise falling on its side.
IIRC, according to the CNN report a couple years ago when it happened, the fall was due to some moron excavating on one side of the building while building embankment on the other side, causing the ground underneath the building to tilt. The building itself actually looks like well prepared for earth quake.
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44 male
Egg Harbor City, NJ
Well I'll have to say this much, the Chinese really know how to make a proper real estate bubble. We are rank amateurs compared to these guys. The process has been vastly improved, when this thing pops the repercussions will be far larger and farther reaching. This could very well delay claiming the number one spot in the world's largest economies, perhaps even lose the #2 spot.
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Laguna Beach, CA
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Did anyone die in that toppled over building? I've had nightmares over things like that.
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Egg Harbor City, NJ
Reality says
I read some more details on the building collapse, they were digging under the building to install an underground garage. Now I'm no expert in building construction, but I would think you would want to build the garage first when your building the foundation, then build the building on top, not the other way around.
Also the fountain was just hollow cement pilings into the ground, even if it didn't collapse, I'd be someone concerned parking under the building when a good part of the earth holding the piling in place was removed.
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44 male
Egg Harbor City, NJ
Goran_K says
One death, no details, but the building was still under contraction and unoccupied. I would think it was someone working around the outside of the building with earth moving equipment. So he probably got crushed by the falling building. If they were finishing the inside there would have been a lot more people working inside at the time. You don't send in one guy to sheet rock a 12 story building.
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Half Moon Bay, CA
I recently purchased a Prius and was asked to do several surveys. One of the questions was if I would consider buying a car made in China.
My answer was no, because I didn't want to get cancer from the toxic metal the car was made from, or from the seat material, etc.
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TechGromit says
This being China, maybe they sent in 1,000 to drywall the building, but the drywall turned out to be toxic, so the guy was the only survivor, then the building toppled and killed him.
Reality says
Here we are again, thinking slightly differently. I agree the structure held together quite impressively, the internal steel did an excellent job, but in tall buildings earthquake resistance requires caissons going down to bedrock, not short anchors in soil. The ground floors of these buildings are at the same level as the adjacent stream, so it's foreseeable that flooding might have softened or washed away the soil even if someone hadn't dug it out for a garage. Structural engineers in a location like that prepare for the possibility of soil liquefaction, which is effectively similar to removal. The original design may have specified caissons, and a corrupt contractor may have skimped thinking no one would notice; the people digging the garage may have assumed the caissons were in place.
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Deregulation and lack of anti-trust enforcement in markets don't always lead to good results for workers:
http://www.pbs.org/now/shows/250/meat-packing.html
What is the average wage for meat packers these days?
http://work.chron.com/average-pay-meat-packing-worker-6437.html
http://www.laborers.org/Rural_Meatpacker_10-95.htm
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The best thing for these workers would be government mandating they have to be paid $1trillion an hour, and nobody else is allowed to be meat packers. Everyone else can go gouge on dead animals directly, or run meat like drugs.
Now if you have the government kill everyone else in the society, the average worker wage would be $1T an hour! Why, they don't even need to pack meat anymore!
Now setting that fantasy aside, in real life, human meat packers may soon be outlawed by the minimum wage laws because the computer controlled meat packing lines cost less than the equivalent of $9 per hour labor productivity.
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China's govt putting on the brakes again.
http://online.wsj.com/article/SB10001424127887324178904578339643109572734.html
My wife says there's a lot of buzz already about this new tax on real estate. Guess they are figuring out the govt was serious about trying to flatten real estate values.
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Madison, WI
Not really a bubble until it deflates, this has been all the talk for the last 5 years, I'm not buying it. Corrections are normal and China knows what it's doing, they'll let it run away a little bit, then reign it in. They understand the importance of people who let their grievances be known. We blew our bubble in less than ten years when the derivatives market took it's money and ran. But, with monetary expansion they should be talking about the new RE bubble in the U.S., and not worry so much about China. Build them cheaper today than tomorrow, sure speculation is rampant, but like I said, they will reign it in. Property taxes is a good idea, to get the properties developed and rented, creating further jobs and making more actual livable spaces. Never underestimate the power of consumerism.
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Facebooksux says
Too bad you couldn't even remember who made the claim. I'm anti Chinese products. I don't buy anything made in China. I also don't buy anything that made in France.
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E-man says
What on earth do you have against France?!?
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Mountain View, CA
I don't remember who said it cause it was too idiotic to dwell on.
A lot of excellent foodstuffs come from France. Also fine leather goods and clothing. Although I suspect your enmity stems from some sort of colonial relationship vis-a-vis France and your home country. If so, I don't blame you.
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curious2 says
Because of their anti American attitude. This is my home. This is my country.
I LOVE THIS COUNTRY.
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Facebooksux says
I'll settle for stuff made in Belgium, Italy and Germany. :)
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Simi Valley, CA
Oxygen says
too many American guests staying at that hotel it seems.
maybe they should limit the weight to like 300lbs per person next time.
too much weight.
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Brooklyn, NY
uncanny
http://www.washingtonpost.com/blogs/arts-post/post/see-chinas-wonderland-an-abandoned-fake-disneyland-photos/2011/12/13/gIQA5vDAsO_b
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Brooklyn, NY
another unmentioned factor that increases the RE bubble in China
In China, a young man may struggle to find a wife unless he has property to offer. It is something that is "deeply ingrained in the culture"
http://www.thenational.ae/news/world/home-prices-ruin-dreams-of-marriage-for-young-chinese
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Simi Valley, CA
European superior architecture:
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San Jose, CA
Reality says
If that be Manhattan (WTC) you will see dust only. LOL
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San Jose, CA
E-man says
There is no way to escape Chines products. I bet you buy it unknown. Other country products contain Chines components as well.
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Mountain View, CA
You're correct. For example, almost all vitamins are made in China so try to get all the supplementation you need from fruits/vegetables.
God knows WTF they put in there.
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Beverly Hills, CA
WillyWanker's website
I just spent a month traveling through China, mostly Beijing, Shanghai and Xian. Traveled via trains through miles of highrises in the middle of nowhere. A sea of cranes, which appeared to be out of a scene from War Of The Worlds~~~all stopped, nothing moving...maybe a few people here and there but mostly emptiness. True, Beijing and Shanghai are thriving, but Xian is filled with empty malls and empty buildings.
If anyone thinks the Chinese are going to be able to reign in their real~estate bubble, then you must have believed in the 'soft landing' reassurances vis~a~vis the developers and flippers in '06 and '07.
And just wait for one of China's big earthquakes, ala '70s...these highrises will topple like dominoes.
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San Jose, CA
WillyWanker says
Which suggest…-buyers are disappearing.
Next step: discounted sales, while others will find out, that they overpaid.
I was in China about 15 years ago, when everything just started.
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Mountain View, CA
PAGING ROBERTA:
Here is your chance for a shot at being an International Slum-Lord Millionaire.
Phoenix has been good to you, so why not take things to the next level and use some of your CASH MONEY $$$$$ to scoop up some townhomes in Xian or whereverthefuck these ghost cities are? Oh that's right, all your money is tied up in your shitboxes.
OK, no problem, just get E-Man to take out his 15th HELOC and use that.
You'll be ballin' outta control in no time, with Chinese honeys all over you, fawning over your real-estate money making prowess.
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Facebooksux says
Better to be a slum-lord than to be a slum dweller. Why can't you stick to the facts and stop the name calling?
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Mountain View, CA
lostand confused says
What exactly are you talking about? You really think those ghost cities are an investment opportunity?
I don't consider myself better than anyone who puts in an honest day's work.
Slum lords don't fall in that category. I'm not saying Roberta is a slum lord and I do kinda like him, but he's so fucking full of himself and his investment prowess that he makes himself an easy target. I'm happy to measure my e-penis with his any time.
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Half Moon Bay, CA
The funny thing about Roberto is that he has all his money invested in one place and his 'big mathmatical brain' can't figure out that this is not a good idea.
If anything should happen to water supply in Pheonix, Roberto actually thinks that Arizona would win water rights over California. After all, Arizona has so many more people than California. What? That isn't true? It doesn't matter, because Roberto said Arizona would win in any kind of water supply shortage...even though a water shortage situation is never going to happen...so he doesn't have to bend his big math brain to that topic. Water wars is fictional and will never happen.
But if there ever was a severe drought in Phoenix, Roberto will just cover his swimming pool and drink that water. Personally, I wouldn't want to drink water someone bathed in, but that's just me.
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Boca Raton, FL
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Yeah, this is mind boggling. The Chinese government pays to build these awesome modern cities with the highest quality of life accommodations just to keep the GDP figures high. But then no Chinese citizen can afford the prices so the entire city is left vacant and unmaintained. (Letting a city rot doesn't count as a GDP loss because economists and accountants don't know how to subtract except for tax deductions.)
China should lower the prices so that its citizens can live in these magnificent cities, but that probably won't happen. Instead, the cities will decay from lack of maintenance and the illusion of paper wealth will disappear as the real wealth created is lost.
I can't even imagine the global economic crisis this could cause. China won't be able to buy U.S. treasuries and the dollar will plunge in value. Meanwhile, Chinese goods prices will climb, and since everything we buy comes from China, the cost of living in the U.S. will rise sharply. Oh, things could get very bad because of this nonsense.