Comment by elamje | Hacker News Reader

Comment by elamje | Hacker News Reader

This is anecdotal, but I'm sure anyone who has traveled around China can confirm: housing is not normal there. On one 5 hour high speed train ride between Shanghai and Beijing, I saw no less than 2,000 apartment high rises scattered throughout the countryside, most of which, clearly didn't have tenants - no cars, no laundry hanging out windows, nothing. These are only the apartments I could see from the train too! At some points there were hundreds of identical, 20+ story apartments scattered all over the horizon with very little activity around them. I hadn't seen anything like it in my life. The strangest things I saw were 20+ story highrises just chilling in the middle of crops - no roads leading to them, just standalone in a big field of some crop.

At the time I was weirded out, and upon further research it seemed like there was and is something more systemic going on that we can't wrap our heads around.

I know this is very anecdotal, but I was hoping to get some comments from others that have travelled around China to see if they have noticed similar things.

I spent ~2 years in mainland China (Zhengzhou, where iPhones are assembled). The number of 15+ story apartment buildings along major freeways was astounding -- all of them seemingly empty.

When in China I was told this is driven by a combination of two things:

1. The average person in China does not believe in investing in intangible assets. This means the stock market is not appealing, so they all pile into the best physical investment around -- housing.

2. Owning your home and a car before marriage is considered 'mandatory' in traditional Chinese culture (for men). If you forego this you have what's known as a 'naked wedding' -- not good. Renting doesn't count.

Excess housing means the average rental yield (rent / property cost) is so low that it's not worth finding tenants. Examples include $300k condos renting for ~200 USD / month.

The Chinese stock market is not incredibly appealing given the constant whiplash and regular confidence crises in listed companies. But it is difficult, if not impossible, for your average Chinese person to invest outside of the country.

Housing is used as an investment vehicle in the US, but the amount of capital sloshing within China looking for a return makes the effect much worse over there.

That probably means the actual value of those condo units is $50,000, assuming the income holds up and the population keeps increasing. The big question to me is if the properties can even be maintained.

I have noticed that chinese owned apartment buildings in other countries tend to stay empty for very long periods of time and renting at too high prices. Instead of lowering prices and getting some income, they frequently just sit empty and not serving the communities they're in.

China is definitely a cautionary tale that just building extra housing, even absolutely absurd amounts of extra housing to the tune of tens of millions of extra unused units, isn't enough to address the affordability in housing crises.

The problem in China, like pretty much everywhere else, is treating housing as a "surefire" speculative investment that is always increasing in price.

Sure. You also need high enough property tax rates that it’s not attractive as a speculative investment.

But in China’s case, it seems like it’s a glut of money seeking a place to sit that doesn’t have other safe places to go. I’m guessing the values will crater, as the housing supply glut eventually does its job.

I mean, it sounds like there's a glut of unused housing kind of in the middle of nowhere, not in desirable cities like Beijing and Shanghai.

Building massive amounts of housing in the central valley wouldn't help the housing problem in the bay area.

But making the Central Valley as desirable as the Bay Area to live in would help the housing problem. Do this by building not only housing, but better infrastructure (roads, rail, schools) and create incentives for Bay Area businesses to relocate there (including the stick for those that don't).

Forcing companies to spread out doesn't make sense - they get value from being close together. The network effect is much more important than infrastructure.

Exactly. The Central valley is already cheaper than the bay area. The fact that tech companies aren't relocating out there tells you something.

What's the point in doing this? The bay area isn't dense at all, building up would be easy, and better for the environment to boot.

Couldn't you live in the mountains? Where will we grow food? Already, the Bay Area development ruined some of the world's best farmland. There was no better place to grow apricots than San Jose, and now that is gone forever. Central Valley farmers feed the nation and beyond.

We'll grow food where it makes more sense. California has to pipe in water for those crops, and because migrant labor is getting hard to come by, the produce rots on the plant. The Colorado river is drying up south of the border because so much of it is being used. That farmland is gone. There is plenty of farmland that doesn't have to be in the state. The crops can be grown else where and shipped in like bananas. If there is enough demand. We always have bananas in season because they are grown around the world and shipped in. The US is also a net exporter of food, we grow plenty enough to feed ourselves either way.

I can attest seeing the same thing on the same train ride 6 years ago. You could see the sun go thru the buildings, and i was obvious they were empty. I did the same ride 1 month ago, and I did see tons of big buildings, but this time they did not seem empty, might be a visibility thing tho.

Here is video from serpentza/cmilk (2016) https://www.youtube.com/watch?v=BcyYyyaPz84 talking a bit about it.

Basically this is investment, with money often coming from the whole family. No one really lives there. In majority of cases even finishing touches on properties would be unwelcome as it will lower resale value. They are being built everywhere (helps with GDP too). And plenty of developers are struggling with sales of new stock.

Yes I witnessed the same thing while visiting 2 years ago, riding the high speed rail from guangzhou to Guilin. Being from California, the experience of riding HSR and seeing too much housing seemed like the polar opposite of California. The documentary, The Chinese Mayor is an interesting watch on the topic: https://m.youtube.com/watch?v=u06a9Nb2GsU

Not that I disagree, but those could also be farmer or fisherman housing, or remote compounds (think remote military or university campuses). The ones around Beijing are usually inhabited in some form or another, even though they are in the middle of farmland or abutting mountains.

My wife has an aunt who lives in an apartment complex in the middle of nowhere near leiyang Hunan. This was because it was what the Energy SOE her aunt was working for required them to live.

How long can an apartment/building sit un/under utilized before it's value decreases significantly? Does the future of China's economy depend on the countries ability to help people earn a living that allows them to move into those apartments?

Maybe they're preparing for a huge influx of migrants driven from coastal cities by sea level rise.

Maybe. It could also be housing for the reincarnated souls when Christ returns.

Chinese aren't Christian.

I find this anti-religious bias (in the form of downvotes) distributing.

Sea level rise is not a concern for the vast majority of countries for at least a century even in the most cynical climate change scenario.

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