If real estate fails, what should we rely on in the future?

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Source WeChat official account: Jiubian has been authorized to reprint

Continuing with the stream of consciousness, I would like to share my thoughts with everyone.

As for the decision to buy a house, please don’t listen to my own words. Look at the opinions of all parties and analyze the specific issues in detail. And a situation that has occurred around the world before is that in some countries, the real estate of the entire country is no longer good, but some regions are still rising against the trend, so don’t try to cover it all.

First of all, we need to tell everyone what would happen if the real estate industry failed.

Perhaps some friends immediately come up with an apocalyptic scene, where houses are given for nothing and no one wants them, real estate companies go bankrupt, and the market is in a slump.

In reality, it is almost impossible for this situation to occur. In reality, the general situation is that real estate companies offer discounts and promotions, and the more marginal cities are, the greater the discount intensity, until the profit-making industry gradually turns into a low-profit industry. Due to the fact that real estate companies cannot make much money, a large number of practitioners are starting to switch careers.

Everyone may have to say, isn’t this what’s happening in recent years?

Yes, in recent years, the country has been implementing the policy of “abandoning quantity and ensuring price”, which means that in many cities, such as Huizhou, the government, in order to maintain land prices and prevent real estate developers from selling at lower prices, inevitably leads to a decline in transaction volume.

Superimposed by the “three red lines”, real estate companies have already gone bankrupt in large numbers. In this sense, real estate has been on a downward trend for several years.

Now we have only reached a critical point, which is whether the government agrees with real estate companies to engage in floating housing prices.

I estimate that the final result will definitely be a floating housing price, because if we insist on housing prices not falling, there will be a problem with transaction volume. Without transaction volume, we will end up with a dead end. So it can only be deregulated, allowing real estate developers to adjust prices according to the actual situation, just like selling watermelons.

Once dynamic price adjustments are initiated, they do not immediately fall out of shape. In the real world, the operating pattern often looks like a “K-line”. First, lower the price by a certain amount, and everyone will rush in to buy. The first tier housing prices have initially formed.

But for many places, young people are becoming fewer and fewer. After a while, new houses will be sold again, but purchasing power is insufficient and continues to decline, similar to stocks, which have been declining for a long time.

And over time, the people have also accepted this change, just like buying a computer or a car and not expecting it to rise again when you want to sell it in a few years.

You’re not right, some cars can indeed go up. Yes, but that kind of car often represents scarcity and is very expensive. That is to say, a very few houses can indeed maintain their prices, but these types of houses themselves are very expensive and have nothing to do with most people, just like the appreciation prospects of houses in the Xicheng District of Beijing are good, but the vast majority of people do not have much to do with them.

If nothing unexpected happens, people will gradually accept the reality that the vast majority of real estate will lose its financial attributes and cannot appreciate further. Buying a house is like buying a car, and once you buy it, it depreciates. In this situation, everyone is no longer hoarding. Have you ever seen anyone who can turn on TV?

Of course, not hoarding doesn’t mean it won’t improve, after all, the TV will change to a bigger one after a few years. In this sense, real estate will continue to weaken, but it cannot die.

Some people also pursue those very expensive properties that can maintain their value, but the cost is that the houses are extremely expensive, and the key is that the maintenance costs are very high. Property management may have higher salaries than many ordinary people. This is not nonsense. There are many flat floors in Beijing that are not particularly outrageous luxury houses. One year, there are property management fees, parking lot management fees, and energy costs (many good residential areas have constant temperature systems, which do not require air conditioning in the summer and no heating in the winter, but have a constant temperature throughout the year). The annual cost is 70000 to 80000 yuan, and the green space in the residential area is like a park, trying to attract other wealthy people to buy. Everything is good, but the only problem is that it is exorbitant expensive.

That is to say, the real estate industry will no longer be viable in the future. It is not that this industry has completely disappeared, and people will also buy houses, but it is not as crazy as in previous years. After a significant shrinkage in the real estate industry, it has become similar to the color TV industry, with a large scale, but it will not become the sole core of the entire socio-economic system.

Now think about it, the saying ‘living in a house without speculation’ is very reasonable.

In reality, most people who “speculate” in real estate do not really want to speculate, but rather the unilateral growth of real estate in the past few decades, which has led many people to have the obsession of “housing prices rising forever”. So if you have money, you buy a house. In this situation, many wealthy people hoard houses on a large scale. When those people hoard, they don’t even think about what these houses will do in the future. Anyway, they just want to keep them, buy them with money, and buy collateral to continue buying.

So houses have been in short supply, and if there is a shortage, the price will rise, further proving that houses are indeed the most valuable investment.

But why have people started to doubt the value preservation of houses in recent years? Since 2017, the government has been vigorously suppressing housing prices from the perspective of loans, and in the vast majority of regions, housing prices have not only not increased, but even decreased, which has shaken this concept.

To put it another way, real estate is mainly a “credit” issue. If the bank gets stuck and doesn’t lend freely, real estate will not work immediately. This is also why all previous real estate regulation measures have mainly started from banks, such as the “housing and loan recognition” policy, which immediately took effect.

In the future, if houses become normal consumer goods like cars, the vast majority of people will no longer buy them. In reality, the same is true. In the past two years, the prices of houses in Beijing have been declining, leading to a surge in the number of listings this year.

Not only has the number of listings in Beijing skyrocketed, but now it’s similar across the country. People who used to buy many sets finally feel that it’s too late if they don’t do it again.

Why should the country suppress it? It is also obvious that if it continues to rise, it will send the wrong signal to the market. Everyone will not consume anything and strive to buy a house. The scale of the real estate related industry is becoming larger and larger, and other industries will do whatever they want. The key is that the real estate industry is getting more and more loans, and the risks are going against the weather. Until one day when the real estate industry cannot bear the economic law and turns downwards, the wealth of the entire society will explode into a brilliant fireworks display, and banks will also collapse.

That is to say, in the past six years, the government has been exerting great pressure on housing prices, which has disheartened many hoarders and started to sell their houses. Their behavior has further led to prices in various regions not dying in recent years. However, objectively speaking, banks are now much safer, and the loans they have made in recent years are all repayable. Of course, this kind of repayment ability refers to their serious work, and if their work is gone, their repayment ability is also sufficient.

In this sense, it is not necessarily a question of whether the country does not want to save housing prices, but rather whether it can. If people continue to use leverage to save real estate, the risk will be transferred to banks, and then both real estate and banks may not be able to save it. So I tend to be like this in the future, and the country will continue to implement the policy of “housing without speculation”, neither suppressing nor rescuing real estate, let it be.

Speaking of this, some people have asked, if Chinese people don’t buy a house, where will the people’s money go?

I’ve always been curious. Are these people really lacking in common sense of life? The common people have money and don’t know where to spend it? How many times do you go to a restaurant every month? How many times do you take your child out to play every year? Do you have a switch? Have you bought various branded clothes yet? What about PS5? Why not give an adult child a car like American parents do? Have you tried a five-star hotel? Have you taken the plane yet?

Anyway, before I graduated from college, except for going to a restaurant, I never did anything else.

And as you all know, there may only be a saying in the world about “cut steak” in China. Because most people say that steak is just steak, why is there a saying ‘cut or not cut’? Indeed, many merchants have mixed duck meat and silicone to create a combination steak. Why is there such a thing? It’s cheap. Everyone, take a look. Those that are cheap and obviously abnormal are often the best-selling ones, and there is a high probability that this is the case.

Why did I say this? Because last year the company hired a new employee, he received his salary and went to the expensive Western restaurant outside the company to eat steak, only to find out that what he had been eating had always been patchwork.

His condition is not very good, but it is definitely not bad in China. Think about how many people in China actually haven’t eaten real steak at all.

So when it comes to ‘where do Chinese people spend their money’, the question becomes very clear. Spend it, improve their living standards, raise the standards of their families, and experience the world. Don’t realize that you came to this world in vain before you die, and have never experienced anything.

Moreover, money is actually a vote.

Every penny you spend is a vote on this world. A few years ago, Chinese people made great efforts to buy houses, which gave birth to the world’s largest real estate industry.

The efforts of otaku men around the world to vote with money have given birth to Nvidia’s market value of trillions. I know that NVIDIA’s recent trillion yuan increase is due to AI, but its initial research and development investment is almost entirely based on games.

Before the training industry was hammered, parents spent money recklessly and created a huge shadow education system outside of schools. To put it another way, many people have some criticisms about the off campus training of national hammer rot. I don’t think there is any problem at all. In the future, I will write a special article to explain it to everyone.

In the future, you can completely spend your money on other things, such as investing in the catering industry and eating more good food.

Or play fun games and support our gaming industry. When it comes to games, many people’s first reaction is that they are discouraged by playing games, but in fact, they are not.

A trend in social development is that “working hours are decreasing, gaming and social time is increasing”, and a larger trend is that “staying in the real world is getting shorter, and staying in the virtual world is getting longer.

In fact, “playing virtual” has always been a noble behavior. In ancient times, only nobles and wealthy people played useless entertainment activities such as “playing piano, chess, calligraphy, and painting”. The entertainment of the poor was that they could only watch the theatrical troupe a few times a year, and even if someone died, it was an opportunity for entertainment for the villagers. Everyone put down their work and went to see it.

As it develops, the threshold for this type of entertainment activity becomes lower and open to the lower classes.

Similarly, it is possible to vote for tourism, as more and more cities like Zibo will emerge in the future. Everyone goes out to play, and there’s no need to worry about slaughtering guests or anything else.

We always talk about industrial upgrading, upgrading is not just about chips, there are more areas. For example, spending a small amount of money can experience high-quality tourism. Or never massage, now go once a week. If money is invested in these fields, more jobs will naturally be created.

Finally, there is the topic that has been discussed so much. When you buy a house, it is a one-time consumption, after all, no one will go on researching and developing cement or anything else. But if you buy a car or camera, these manufacturers can continue to develop and hire more people with the profits. These industries are all evolving, and the more people spend in these industries, the more labor they absorb and can provide more job opportunities.

Nowadays, most local governments in China are accustomed to making fast money like real estate and are too lazy to carefully study other ways of making money. With the decline of real estate, these issues will have to be studied in the future. Perhaps, like the Zibo government, they will take some practical actions to develop their own characteristics, or at least completely ban the exploitation of customers and various unscrupulous merchants in various regions. This is also a form of industrial upgrading.

End:

If any other industry cannot compare with real estate, the biggest problem is that the printing capacity of real estate is really too strong. You will borrow money for thirty years to buy a house, you can’t borrow money for thirty years to travel, right? The bank cannot lend it to you either.

But there is nothing we can do. The high leverage frenzy model cannot last for a long time, and no matter how much we miss that model, it cannot continue.

Just like you infinitely miss your college years, you cannot stay on campus all the time without coming out. The real estate boom is a one-way street for all countries, and when it reaches a certain level of development, real estate acts like a booster, pushing the national economy forward for a period of time, and then it stops moving. On the one hand, there are all those who should have houses, and on the other hand, high housing prices continue to increase leverage risk, which is outrageous.

Alternatively, to put it another way of thinking, the essence of real estate is mining. With some money in their hands and the desire to live in modern housing, tapping into these people’s needs to buy a house is like mining. Once everyone has bought a house and is almost done, the mines will be almost empty.

I’m probably not feeling well next. Because the essence of real estate is debt, residents used six wallets as a down payment and borrowed 30 years of debt from the future, which contributed to the prosperity of the previous years. But when it comes to debt repayment, those with some basic life knowledge will know that borrowing money to spend is enjoyable, and frugality in paying back money can be painful. But the solution to this pain should not be to borrow more money, right?

In the future, we can only give up our dependence on real estate. It’s not a matter of whether we want it or not. No one wants it, but we really can’t dig it out. What’s the use of not wanting it?

Then deeply cultivate the practical needs of residents. Cities that have the conditions to develop high technology should develop high technology well, and see if they can engage in tourism without conditions. If they cannot even engage in tourism, they should make less efforts. Cities, like people, have mature abilities and make less efforts. If you don’t lose, you will earn money.

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