Housing bubbles typically take years to deflate completely. In today’s LA Times, however, an article on the burst of the Shanghai housing bubble demonstrates that even real estate is not immune to dramatic turns to the downside. After a period of rampant speculation and overbuilding that drove Shanghai home prices to double in three years (not terribly far, I would note, from the 5 years it took Southern California real estate to do the same), the market has rapidly taken a turn for the worse, with some condo prices having dropped 50% since March. That’s not a mistake—prices have dropped 50%. Don’t the Chinese realize that real estate only goes up? Perhaps we should send someone from NAR over to let them know.
Professor!–I detect a note
Professor!–I detect a note of journalistic sarcasm. I saw the same article. Notably, the Chinese are not taking this lying down. There are a lot of very angry people in South Florida too and I suspect Vegas is next.
A large percentage of their
A large percentage of their market (similar to that reported in our downtown condo market) included speculators and amateur investors. Of the non-investor types there were a lot of people who were scared into pulling the trigger with the idea that if they didn’t act now they might get priced out. I see a lot of parallels. Their collapse is probably going to be worse as a result of their inexperience with real estate cycles.
Don’t the Chinese realize
Don’t the Chinese realize that real estate only goes up? Perhaps we should send someone from NAR over to let them know.
Too funny!