The US Federal government vacillates between encouraging home ownership (housing boom) and renting (post boom). The pendulum has swung toward the Federal government encouraging (subsidizing) multifamily housing. Even though the home ownership subsidies are still in place (such as the mortgage interest reduction and favorable capital gains tax treatment), credit from the Federal government mortgage giants remains tight and banks have been encouraged by regulators not to make “risky” mortgage loans. But the multifamily housing market is flourishing (again).
Here is an excellent video about China’s housing problems. The “Nail House” is an interesting phenomenon that rarely surfaces in the USA. Here is a Chinese “Nail House” sticking out like a nail in the middle of a highway.
Then there is the infamous apartment building in China that fell over. Notice the pilings are hollow!
Perhaps they were following these crystal-clear instructions.
My favorite is the “ghost arcade” which looks like a failed Epcot village in Orlando Florida. So when people like Vice President Biden hold up China as an example of what the US should be doing, I suggest he think again.
China has a central government that desires to stimulate/manipulate GDP growth through housing and commercial real estate projects that are … questionable.
The US, of course, had its own housing bubble generated, in part, by government housing policy. The government (Federal, State and Local) have experienced its share of failures in multifamily housing such as Chicago’s notorious Cabrini Green project. But on the whole, US housing projects and multifamily developments don’t topple over or have highways dangerously built around them.
The United States is becoming a more centralized economy like China, with all of it’s problems. Even the Gini coefficient (a measure of income distribution) for China and the US are quite similar. Even worse, China has an even worse income inequality problem that the USA!
Whether it is China or the USA, formulating and executing a sensible national housing policy is far more difficult than many imagine. By removing the free market for the most part, the remaining solutions are often unmanageable and fraught with inefficiencies and moral hazard problems.
Perhaps Kevin Costner from “Field of Dreams” should be the spokesman for government housing policy. “I have just created something totally illogical.” Costner could also be the spokesman for the UN’s Agenda 21, the comprehensive plan of action to be taken globally, nationally and locally by organizations of the United Nations System, Governments, and Major Groups in every area in which human impacts on the environment.
And if the Chinese government builds it, they won’t necessarily come.
Milton Friedman put is best: “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” The same applies to China. The same applies to government housing policies.