Residential real estate observers know that the U.S. housing market has been red hot.
You may have heard the stories of eager home buyers “signing on the bottom line” without even doing a walk through.
Yet, the U.S. is not the only nation where prices have gone through the roof.
Here’s a Nov. 25 CNBC headline:
German central bank warns of overblown property prices with the problem spreading
Interestingly, a high-ranking official at the Bundesbank says fully 90% of households expect prices to keep increasing.
This elevated housing-market optimism in Germany may be a sign that the upward price trend is on the verge of reversing.
An even bigger day of reckoning may be ahead for China. This is from Elliott Wave International’s November Global Market Perspective:
China’s exposure to the housing market is far greater than that of any other country. At $52 trillion (as of 2019), the total value of Chinese homes and developer’s inventory is twice the size of the U.S. residential market, “outstripping the entire U.S. bond market.” In the 12-months that ended in June, $1.4 trillion was invested in Chinese housing. According to the Journal, at the peak of the U.S. boom in 2006, $900 billion a year was invested in housing. At the end of 2020, 96% of China’s urban households owned at least one home. In the U.S., the homeownership rate is 65.4%. In 2017, 21% of China’s homes were unoccupied and, in 2018, 87% of “home purchases were by buyers who already had at least one dwelling.” Given the continuation of real estate’s boom through the middle of 2021, these last two figures are probably even more extreme now. …
As China enters what many economists say is the final stage of one of the largest real estate booms in history, it is confronting a staggering bill: more than $5 trillion in debt that developers took on when times were good. That debt is more than double what it was at the end of 2016 and is more than the entire economic output of Japan.