Housing Bubble May Pop in China
In the United States, we’re living through the fallout of the apocalypse popped housing-bubble. Across the country, people are upside down in their home mortgages – that is they owe far more on their home loan than the house is actually worth. Plus, jingle mail, short sales, and foreclosures have decimated not only neighborhoods, but entire cities. For example, Stockton, California has earned the nickname Foreclosureville and the tag “The Most Miserable City in the Country” because 1 in 10 houses have been foreclosed according to MSNBC.com,
At the height of it, about 1 in 10 houses fell to foreclosure. Houses that sold for more than $500,000 before the crash now go for $200,000. In some neighborhoods, fixer-uppers cost less than a new Honda Fit — under $20,000.
We should have known the housing bubble was coming. We were warned about it. And now in China, officials are fearful of the same thing happening there. The signs are there:
- Property prices soaring
- Easy access to home loans
- Low down payments
- Declared income loans
However, some economists disagree that China will have the same problems as the U.S. or Japan. For example, in China people don’t carry as much debt as in the U.S. According to a Washington Post article published on MSNBC.com,
The bigger real estate problem in China now is access to housing. For many people — especially the young or people moving to the cities from rural areas — the dream of owning a home is more and more difficult to attain. The Xinhua news agency quoted Goldman Sachs as saying that housing price increases had outpaced wage hikes by 30 percent in Shanghai and 80 percent in Beijing in recent years.
My thoughts are isn’t this exactly the same thing? When housing prices rapidly increased in 2003-2007, it was the start of the housing crash. I’m hoping China will heed that this could be a warning sign and hold the feet of appraisers – whatever form they take – to the fire so they don’t disproportionately build values.
Photo by Andrew ?’s photostream via Flickr Creative Commons.







