Archives: Gregory M. Stein

A loyal reader forwarded me a 43-page law journal article by Professor Gregory M. Stein and asked me what I thought.  The article is entitled “Is China’s Housing Market Heading Toward a US-Style Crash?” and it was last revised in late September 2012.  Stein is a very esteemed professor of law (mostly real estate) at University of Tennesse.

This abstract of the article summarizes it beautifully:

This article aims to determine whether China is heading toward a U.S.-style market crash in its housing market. Rather than attempting to maintain any suspense, I will disclose here that my conclusion is, “Who knows?” China and the United States have dramatically different histories, cultures, governments, economies, and legal systems. Anyone who claims to have a definitive answer to this question is overly confident.

My more modest goals in this article are to examine the available evidence and see which way it seems to point. The article begins by listing and describing several different ways in which the American housing market failed. It then evaluates the consequences of these failures for the U.S. housing market. Next, the article demonstrates some of the key respects in which the Chinese market differs from the market in the United States. This central portion of the article emphasizes just how difficult it is to make predictions about what might happen in one nation’s housing market based on the experiences of another nation that differs in so many significant ways. Finally, the article provides a description of some of the worrisome similarities between the Chinese and American housing markets. To the extent the previous analysis may have comforted the reader into believing that the Chinese market is unlikely to experience a downturn anytime soon, this last discussion will create some apprehension by highlighting some of the ways in which China might, in fact, be heading down the same path as the United States.

Though I was a bit disappointed that Professor Stein reached no strong conclusion (remember he is a lawyer), the article’s analysis struck me as very sound and very thorough and I highly recommend his article for anyone interested in China’s real estate market.

What do you think?