A Tale of Two Countries: Comparing the US and Chinese Housing Markets

47 Pages Posted: 4 Aug 2018

See all articles by Rose Neng Lai

Rose Neng Lai

University of Macau

Robert A. Van Order

George Washington University

Date Written: July 15, 2018

Abstract

The recent surge in property values in China has been similar to the surge in the U.S before the crash in 2007. This raises concerns about whether China is destined to have a crash as well. We estimate similar models of property values for the two countries, in order to compare price dynamics side by side. We find little in common between them. In the U.S. the adjustment process appears prone to “bubbles” in the sense of strong momentum, but Chinese prices have been generally mean reverting, without momentum. This suggests that the recent price rise in China has had more to do with scarcity than with irrational exuberance.

Keywords: Chinese Housing Market, US Housing Market, Bubbles, Momentum, (Pooled) Mean Group Estimation

JEL Classification: C23, R21, R31, R38

Suggested Citation

Lai, Rose Neng and Van Order, Robert A., A Tale of Two Countries: Comparing the US and Chinese Housing Markets (July 15, 2018). Journal of Real Estate Finance and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3214044

Rose Neng Lai (Contact Author)

University of Macau ( email )

Av. Da Universidade, Taipa
Macau, Nil
Macau

Robert A. Van Order

George Washington University ( email )

2121 I Street NW
Washington, DC 20052
United States

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