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Housing Market in U.S. and China The Rise and Fall of a Middle Class By Michael Sessa
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Overview Background information on U.S. and China Discuss Culture and Subcultures Review what scholars are saying Methods used Results and Data Analysis & Discussion
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Background – China Rapid Growth 2000-2008 – Low interest rates 121% price increase from 2003-2008 2013 -13% surge Government policies Income - 2000-2012 – 4%- 68% – $9,000 to $34,000
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Background - U.S. Overall 6.46 % increase Very Volatile – Housing crisis Household mean income - stagnant
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What Scholars are saying.. Jie Chen and Xuehui – Fastest growing housing market – Bubble or Burst ? Christian Dreger and Yanqun Zhang – Inflation in Chinese market – 35% Barth, lea, Li – This number doesn’t reflect real income growth
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What Scholars are Saying cont.. Adam J. Levitin and Susan M. Wachter – Multiple factors – Some parallel to China Inelastic housing supply Excessive supply of housing finance – Lead to over production of homes Ashkok – Argues restriction may be Chinas saving grace Houku system Limits on # of homes purchased
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Methods used Consumer and Market Sentiment? Survey – 30 Chinese and U.S. post-grads – 30 Chinese and U.S. real-estate agents Interview – 4 Chinese and U.S. post grads – 4 Chinese and U.S. real-estate agents
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Survey Example – U.S. Survey United States In what year were you born __________ What industry would you consider your profession to fall under (select one) Finance Education Healthcare Tourism Entertainment Retail Self-employed Service Industry student What is your education Level (select one) High School Undergraduate Graduate Study What is you average Yearly income (select one) 0-30,000 31,000-50,000 51,000-75,000 75,000-100,000 250,000 and above On a scale from 1-5 how do you feel the overall economy is doing (5 being the highest) 1 2345 On a scale fro 1-5 do you feel housing prices are fairly priced (1 being unfairly priced, 5 being justly priced) 1 2345 In the next 5 years do you feel the economy will be better or worse (1 being worse, 5 being better off) 1 2345 Do you feel home ownership is important? YES/No Will you need to buy or have you purchased a home inn the past 5 years? YES/No How where you able to purchase a home (select all that apply) Personal SalaryAid from parents Spouse’s moneyGov. Subsidy Other In your personal opinion how do you feel about the current housing market?
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United States Survey Results High School or Undergraduate Salary ranged 0-70K per year Economy is stagnant Housing prices scored 2.7 Economy Scored roughly 3 Most said – No need to buy
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China Survey Results Mostly undergraduate 0-17,000 per month Economy scored high Housing prices scored between 3 and 4 Economic growth in next 5 years scored extremely high Almost all said home ownership was important
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Interviews China Realtors – Consumer Base- Male, Married, 30+, First house – Housing prices will continue to grow – Heavy Restriction – Non residents Post Graduate/ Professionals – Single, 27, 28, Male, Finance industry – Help From parents, Owned a home, Have money set aside to buy a home – Both currently rent, possible job relocation – No concern for housing bubble, price will go up, demand is high Bubble outside of the major cities
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Interviews United States Post Graduates/ Professionals – 24, 26 Finance, Law enforcement NY/FL – Very little help/ No Help, Both Rent – Feel a bubble may be happening, Both said no plans to purchase – Very low out look on homeownership Realtors -TBA
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Analysis High Consumer Confidence in China Lower Consumer confidence in United States – Renting culture Rising Real estate prices in both Chinese Place High value on Home Ownership
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Discussion
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