There is no telling just yet! The Chinese property has been heavily inflated for a few years already, propped up with extensive government intervention and perverse incentives for local administrations to drive up land prices. There is no telling yet if this decline is
a) real (government-issued numbers are one thing, reality is another);
b) driven by the policies (or just the bubble bursting);
c) permanent. It may be a spike caused by the timing of a measure, or a financing roll-over, or whatever.
It's worth noting that month-on-month price fluctuations are prone to noise and are fairly poor indicators of a more general price trend. This is why the Case-Shiller housing indices are a three month moving average.
That said, no doubt there are declines to come in the Chinese property market.
It's possible that there are significant seasonal fluctuations in the market.
That said, the three-month average is still significantly negative: "Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December". And word on the street is that it's getting a lot harder to sell property.
I'd be interested to see a graph with average housing price data stretching back for the past few years.
You short commodities. A sharp downturn in the chinese housing market will cause a lot of Chinese to lose their savings which are tied up in property, causing a recession, and sharply reducing commodity prices.
This is something that the Chinese government wouldn't mind too much either because the rise in commodity prices beyond a certain point (and we're getting pretty close) will cause political disruptions- which is the absolute last thing that the government will accept.
There was a confluence of factors that drove the unrest these past few months in the middle east, but one of the biggest was the sharp increase in commodity prices, especially food and basic supplies.
I think the link is too far, so you'll be exposed to a lot more than just the housing market. In finance, if you have a certain bet, you bet on that (and hedge against all other changes), in order for your returns to be based on your bet.
Interesting... what about being long gold? I imagine that a housing crash in China would drive investors into precious metals due to the lack of options available for chinese savers.
If the Chinese market was more open, people would have already. The problem is that many players are large SOE's, with no publicly traded stock, and certainly not available to foreign investors. Furthermore they're kept afloat by the government.
'Normal' Western financial doctrine doesn't apply in China's mercantilist 'market' (in quotes, because it's sufficiently different from what is considered a 'market' in the West that one can wonder if they're comparable).
There are two parts to a prediction, "what" and "when". Just getting that What part right, without also getting that "When" part right can lead to huge losses. Hell just look at LTCM, they almost brought the financial market down by be wrong, not about what would happen long term, but how long it would take to happen. Or to quote Keynes, "The market can stay irrational longer than you can stay solvent".
Can anyone qualified/familiar with the situation comment on what the probable effect the (likely) QE3 in June will have on the Chinese housing market and consumer buying appetite?
Every boom (90's internet, 2000's housing, oil, eventually China) always seems to be wrought with fraud and held together by matchsticks and glue. People thought oil prices were purely demand driven until we found out they were being bid up traders.
> People thought oil prices were purely demand driven
> until we found out they were being bid up traders.
Do you mean "bid up by traders"?
You're suggesting that oil prices are high because of a conspiracy? If so - no.
That's a "turtles all the way down" argument.
Prices need to be sustained by demand. Traders may make money via moves on the fluctuation. But buying a lot of oil in order to push the price up is not a business model. You have to store it (expensive), transport it, and then when you come to sell it the price will decline again. Not to mention the risk you incurr by holding it, and the opportunity cost of not using that money to do something else at the time.
An idea that does the rounds regularly is that a conspiracy of evil speculators permanently distort markets. I've never seen a situation where that was true. There may be periods where the market does odd things, and market manipulation does exist, but unless it's a locked-up market (like diamonds) or a true conspiracy of all the players (can't think of an example) it will eventually have to revert to the mean because the traders will start calling bluff.
Usually when you see people blaming speculators it's someone trying to cover up ineptitude or corruption by picking an easy target.
When this kind of talk gets momentum the results can be bad. A common target during collapsing bubbles is short-sellers (people who borrow stock, and sell it, with the promise to re-buy it and give it back to its original owner at another time, possibly tomorrow). Short-sellers contribute to price discovering in markets, and this is a good thing. But during bubbles, people who know about shorting can do well when others are doing badly, so they're an easy target.
US regulators stroked this theme during the economic crisis and introduced measures that limited short-selling for a period. In doing so, they contributed to the crisis because short-sellers provide a lot of the liquidity behind money markets. Cuffing short-sellers removed their liquidity pool from money markets, which was already under strain.
>Usually when you see people blaming speculators it's someone trying to cover up ineptitude or corruption by picking an easy target.<
I lived through the California energy crisis and there was no crisis. It was a gigantic manipulation. Videos of energy traders laughing their butts off at grandmothers dying of heatstroke. Oil doesn't need to jump into the hundreds every time someone screams in the Middle East.
Analysts in every profession know the whims of their markets. Some of the movements are reality based, some are based on perceptions. Commodity trading (specifically oil) is highly profitable. It can be hacked by the people who know the ins and outs. They'll never tell you, but it can. Most everything can be hacked in some way. I highly doubt the few who are able to profit from the ignorance of millions will confess that some troubles in the Middle East don't significantly impact the supply chain. Or that the price of oil shouldn't jump as wildly as it does. Or even that the oil price seems to reflect the greed of traders chasing historical highs. Not buying it.
I don't know about the Californian energy crisis, but maybe this is an example of a situation where the players are in alignment.
Spikes in oil prices can be caused by panic in an industry. For example, if I ran an airliner maybe I'd seek to lock in fuel prices via forward trades. There's a risk I'd pay a high premium for the period, but I'd judge that as being bettter than the risk that I'd go out of business.
And spikes can be caused by speculators. But my point was that in liquid markets things will revert to a mean that is backed by whatever the real demand is. Pushing prices up by buying and holding oil is not in itself a business model.
In california you had traders turning off power plants so that energy had to be purchased from other places at higher price. That is not speculating, that is blatant abuse and lack of properly written contracts. They exploited a loophole in a newly created market, this would eventually be fixed as the contracts would have provisions so that what they were doing would be prohobited.
> You're suggesting that oil prices are high because of a conspiracy?
Why a conspiracy? Traders do not have to collude for a bubble to occur - there's a positive feedback loop at work.
Even if you're convinced that the prices are already far above the sustainable level, it may still be rational to buy - as long as you're convinced that you will sell at the right moment. It's a chicken race. If you sell too early, other traders will beat you by profiting from the last period of growth.
If there was lots of oil sitting around in warehouses from people speculating on the price of it (or for another reason), I'd expect we'd hear about that in the news.
We've been hearing this about copper being stockpiled in China recently. In this case it seems to be not for speculation but due to a loophole in bank lending rules.
> If there was lots of oil sitting around in warehouses from people speculating on the price of it
People who speculate on commodities do not actually have to physically keep them. The commodities just change ownership, but not location. Only the final buyer actually picks them up.
Thanks. Hence my point that it's not turtles all the way down. Eventually there has to be some real demand to support a high price, or else the price will drop as traders trade away to avoid delivery.
> Eventually there has to be some real demand to support a high price
Yes, of course. That's why the bubbles burst. But before that, there's a ton of money on top of the real demand, invested only in hope that more people will invest more money in hope that more people will invest... so it goes until there are no more people willing to invest.
> or else the price will drop as traders trade away to avoid delivery.
The delivery is not the limiting factor. The traders just roll forward their contracts long before the actual delivery date.
Actually, oil traders did store millions and millions of barrels of oil in super tankers in the sea. This was after the recent collapse in oil prices, when the futures price was higher than the immediate price. Without any risk, they could hold onto oil for a year and know they could sell it at a higher price.
Another thing, is that speculators add stability to the market. They predict future demand, so they buy today - driving up the price, reducing use, and then sell tomorrow. If it weren't for speculators you'd see drastic rises in prices as increases in future demand would not be offset by previous savings.
I'm not against speculators. They are a useful part of the market.
But let's not pretend they can't have a negative effect on society. People are anticipating water moving onto the commodities market. If water somehow surges, that's not good for the people at the bottom. Super high oil prices are bad for the world economy. It's advantageous for oil market traders but bad for everyone else.
Of course if the price surges someone is hurt, but there are 2 outcomes:
1. If the price surges and it's due to improper speculation, then speculators will lose a lot of money - sure, people will be temporarily harmed, but it will be short term.
2. If the price surges and it's due to a good guess, then the surge is actually less than it would be in near future since people were able to increase the available supply, by reducing consumption due to higher price.
-- unless I'm missing your point, which I very well may be.
What I'm saying is, on top, the speculator is playing with numbers. He wins some and loses some. But at the bottom, very high prices could squeeze workers into homelessness and poverty. Living check to check (business or person) leaves little room for large price swings in necessities.
The initial investors are motivated to invest by the possibility of higher prices later on.
If there was no possibility of upside, they would not invest in the first place, meaning that it would be a given that nobody would have access to the resource.
If government was to make a decision to intervene and strip away investors' upside just when they get one, investors will remember this, and be less motivated to invest in that market in the future. The uncertainty about it affects other parts of the system - someone who gets burnt on one product is likely to be jaded about investing in unrelated products in the same jurisdiction.
It's important to look at the system as a whole. Speculators and short-sellers are net-positive on markets. If you take away their upside you'll remove them from the system entirely and everybody loses. It's important that we set rules for the game, and then honour them, except in situations where individuals do something outside of the principle of the rules, such as market manipulation.
Further up, you're repeating a meme seen elsewhere in this thread about oil prices being determined by speculators. I'm not sure how you believe this, because I don't think the evidence leads to that conclusion. The price meanders about but the curve is supported by underlying demand.
It's advantageous for oil market traders but bad
for everyone else.
How is it advantageous for oil market traders for the price to go up? Some will be short just as others are long, and there's no reason to believe there's more long guys than short guys.
Higher oil prices are likely to be goood for oil producers, but I don't understand how come to the conclusions you come to about about speculators.
In order for a speculator to lift the price and sustain it, they'd need to actually take delivery of oil and remove it from the system. If they're exiting before the delivery date then they're not generating underlying demand, which means they can't sustain an impact on the price of the underlying.
This thread was about speculators pushing prices higher, and I was outlining the only viable way where I saw that they could push prices higher, and then explaining why it didn't make sense as a business model.
>In order for a speculator to lift the price and sustain it, they'd need to actually take delivery of oil and remove it from the system.
No, when they buy a commodity on futures they own that product. It is out of the market at that point. Further trading can't go on on oil that was bought on futures, it's been sold before it was produced.
>This thread was about speculators pushing prices higher, and I was outlining the only viable way where I saw that they could push prices higher
But this can be done via futures as it has been with Gold. There is more than 10 time more gold "owned" by people than actually exists.
I see one of two things will happen. Our fictional speculator either accepts delivery of the thing, in which case they have to warehouse it and take the stuff away from market. Or, they form a new contract and sell in order to get it off their books. Which will have the effect of increasing supply and depressing the price.
But this can be done via futures as it has been with
Gold. There is more than 10 time more gold "owned" by
people than actually exists.
Do you have a reference for this?
With equities, when there's extra fractional-reserve style liquidity in the system due to shorting, you can tell because that info is available in Bloomberg. So if you see that there's more outstanding than exists, you could call bluff on the people with the outstanding positions.
I'm not sure if the same is true with commodity contracts.
>Our fictional speculator either accepts delivery of the thing, in which case they have to warehouse it and take the stuff away from market. Or, they form a new contract and sell in order to get it off their books.
Sure, but when they buy the futures those products are off the market. If speculators buy up everything via futures then that will drive prices up and they'll be able to dump it at a profit (well, the ones who get out in time will).
>Do you have a reference for this?
Here is a jumping off point [1]. Oh, and I was wrong. It's 100 to 1, not 10 to 1. From the wall street point of view they didn't even find this fact controversial. In the inquiry they just basically responded with "oh, no it's fine. You just don't understand". Right, never heard you say that before...
> If speculators buy up everything via futures then that
> will drive prices up and they'll be able to dump it at
> a profit (well, the ones who get out in time will).
Right - so that's definitely not a long-term business model for sustaining higher prices. Rogues might get away with short term manipulation, but if you were doing that and working for a firm, there's a fair chance they'd be locked up.
> Here is a jumping off point [1].
Thanks. ETFs acting on a fractional-reserve basis - interesting topic. That's different to futures though. I don't buy the ratios, either.
>Right - so that's definitely not a long-term business model for sustaining higher prices.
Ah, I apparently missed the part where this was suggested as a long term thing. In that case, you're right. This isn't a method for long term price manipulation.
>Thanks. ETFs acting on a fractional-reserve basis - interesting topic. That's different to futures though. I don't buy the ratios, either.
The info came from a Wall street exec who said that the ratios were easily 100:1, perhaps more but not to worry because blah blah, you can't understand, blah blah, gold futures, etc. I didn't glean much info from it because he didn't seem all that interested in giving much.
Will be interesting to see if this goes to other markets both within China (I can't imagine Shanghai is 'decoupled' from Beijing) and where it trickles over to (Sydney? Vancouver?).
Great point. lindsayrgwatt has picked examples from Canada and Australian - the two developed markets which some see to be overpriced and which haven't yet had a painful correction.
I am currently negotiating* a commercial (office) lease in Beijing and I can honestly say the market is ridiculously overpriced.
I have put in offers on a number of buildings in Beijing's Financial Street district[1] and there is literally no space available. There are tons of brand new, A-grade office buildings but they are all owned and less than 20% occupied by China Life, People's Life Insurance Company of China and other monolithic State owned enterprises that let the space sit idle and they leave the lights on all day and all night.
The best office building in Beijing[2], was leasing office space at 300-400RMB/sqm per month less than 12 months ago and now they are turning you away if you offer less than 750RMB/sqm. The wierd thing is, some random domestic Chinese "investment" firm will actually pay that rent and happily move in.
I do believe there is a major correction due, but the government does control the media so its hard to say how hard or soft the landing will be and how much we will hear about it.
To be honest though, 750RMB/sqm is still only not even 80 euros (115 USD). That's a discount price for office space in a remote industrial park in a provincial town here in the Netherlands. If that's considered widely overpriced in the top spot in Beijing, there's room left...
(Anyone have recent numbers on the price of office space in Manhattan?)
To a certain degree you're right, but when comparing economies that have roughly reached parity, a dollar to dollar comparison can give a rough estimate of the merit of valuations; and otherwise, it can be used to estimate the distance between economies. What I meant with my comment is that if the most expensive (? I'm assuming that here) real estate in Beijing is only a fraction of similar real estate classes elsewhere, the Chinese economy still has room to catch up with the real estate prices. It's not a particularly wise idea that the Chinese economy isn't up to par with the US and European economies of course, it just shows that maybe what is considered so heavily overpriced may not really be so in the medium term, if only the rest of the economy can keep up (which I doubt it can, but that's a different discussion).
"over-priced" is always relative to supply and demand. When supply exceeds demand and there is no correction, the economy moves in a distorted and irrational fashion, preparing the way for larger corrections in the future.
The parent had hard evidence supply seriously exceeded demand.
for someone that lives in shanghai, this is great news. housing in shanghai + beijing are ridiculous, i don't know why a house in shanghai (1000 sq ft/92 sq m) would be more expensive than a house in sf, nyc, seattle, boston, etc of similar dimensions. the running rate in a decent part of shanghai would be roughly 566,153.00 USD (for 1000 sq ft/92 sq m). this isn't even the nicest part of town, for that you'd be looking at 707,692.30 USD. take the average income of a person in shanghai which is about 461 USD /month, who could afford this?! it would take this person 38 years to save up to pay the 30% downpayment (if considering 0% inflation over that time period).
i know for fact that the government's recent policies have played a big factor in this drop in prices because they now limit people from buying a 3rd house and have finally decided to add property tax.
hopefully this trend will keep up--buying opportunity!
54 comments
[ 3.0 ms ] story [ 120 ms ] threadhttp://www.reuters.com/article/2011/04/14/us-china-property-...
a) real (government-issued numbers are one thing, reality is another);
b) driven by the policies (or just the bubble bursting);
c) permanent. It may be a spike caused by the timing of a measure, or a financing roll-over, or whatever.
The problem with bubbles is there's no staying still with them. It's exponential growth or .. exponential decline.
My guess is they'll make a desperate effort to "reflate" things to avoid that scary exponential decline part. We'll see what happens.
That said, no doubt there are declines to come in the Chinese property market.
http://www.economicsjunkie.com/beijing-property-prices-plung...
It's possible that there are significant seasonal fluctuations in the market.
That said, the three-month average is still significantly negative: "Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December". And word on the street is that it's getting a lot harder to sell property.
I'd be interested to see a graph with average housing price data stretching back for the past few years.
You have no doubt - have you taken a position in order to profit from the certainty? If not - is it possible you have doubts?
This is something that the Chinese government wouldn't mind too much either because the rise in commodity prices beyond a certain point (and we're getting pretty close) will cause political disruptions- which is the absolute last thing that the government will accept.
There was a confluence of factors that drove the unrest these past few months in the middle east, but one of the biggest was the sharp increase in commodity prices, especially food and basic supplies.
That's why hedge funds outperform on average.
'Normal' Western financial doctrine doesn't apply in China's mercantilist 'market' (in quotes, because it's sufficiently different from what is considered a 'market' in the West that one can wonder if they're comparable).
You're suggesting that oil prices are high because of a conspiracy? If so - no.
That's a "turtles all the way down" argument.
Prices need to be sustained by demand. Traders may make money via moves on the fluctuation. But buying a lot of oil in order to push the price up is not a business model. You have to store it (expensive), transport it, and then when you come to sell it the price will decline again. Not to mention the risk you incurr by holding it, and the opportunity cost of not using that money to do something else at the time.
An idea that does the rounds regularly is that a conspiracy of evil speculators permanently distort markets. I've never seen a situation where that was true. There may be periods where the market does odd things, and market manipulation does exist, but unless it's a locked-up market (like diamonds) or a true conspiracy of all the players (can't think of an example) it will eventually have to revert to the mean because the traders will start calling bluff.
Usually when you see people blaming speculators it's someone trying to cover up ineptitude or corruption by picking an easy target.
When this kind of talk gets momentum the results can be bad. A common target during collapsing bubbles is short-sellers (people who borrow stock, and sell it, with the promise to re-buy it and give it back to its original owner at another time, possibly tomorrow). Short-sellers contribute to price discovering in markets, and this is a good thing. But during bubbles, people who know about shorting can do well when others are doing badly, so they're an easy target.
US regulators stroked this theme during the economic crisis and introduced measures that limited short-selling for a period. In doing so, they contributed to the crisis because short-sellers provide a lot of the liquidity behind money markets. Cuffing short-sellers removed their liquidity pool from money markets, which was already under strain.
I lived through the California energy crisis and there was no crisis. It was a gigantic manipulation. Videos of energy traders laughing their butts off at grandmothers dying of heatstroke. Oil doesn't need to jump into the hundreds every time someone screams in the Middle East.
Analysts in every profession know the whims of their markets. Some of the movements are reality based, some are based on perceptions. Commodity trading (specifically oil) is highly profitable. It can be hacked by the people who know the ins and outs. They'll never tell you, but it can. Most everything can be hacked in some way. I highly doubt the few who are able to profit from the ignorance of millions will confess that some troubles in the Middle East don't significantly impact the supply chain. Or that the price of oil shouldn't jump as wildly as it does. Or even that the oil price seems to reflect the greed of traders chasing historical highs. Not buying it.
Spikes in oil prices can be caused by panic in an industry. For example, if I ran an airliner maybe I'd seek to lock in fuel prices via forward trades. There's a risk I'd pay a high premium for the period, but I'd judge that as being bettter than the risk that I'd go out of business.
And spikes can be caused by speculators. But my point was that in liquid markets things will revert to a mean that is backed by whatever the real demand is. Pushing prices up by buying and holding oil is not in itself a business model.
I was under the impression that airlines are already always buying fuel via futures regardless for planning purposes.
Why a conspiracy? Traders do not have to collude for a bubble to occur - there's a positive feedback loop at work.
Even if you're convinced that the prices are already far above the sustainable level, it may still be rational to buy - as long as you're convinced that you will sell at the right moment. It's a chicken race. If you sell too early, other traders will beat you by profiting from the last period of growth.
We've been hearing this about copper being stockpiled in China recently. In this case it seems to be not for speculation but due to a loophole in bank lending rules.
Maybe the oil was sitting in underground reservoirs? (i.e. people were extracting it more slowly)
People who speculate on commodities do not actually have to physically keep them. The commodities just change ownership, but not location. Only the final buyer actually picks them up.
Yes, of course. That's why the bubbles burst. But before that, there's a ton of money on top of the real demand, invested only in hope that more people will invest more money in hope that more people will invest... so it goes until there are no more people willing to invest.
> or else the price will drop as traders trade away to avoid delivery.
The delivery is not the limiting factor. The traders just roll forward their contracts long before the actual delivery date.
But let's not pretend they can't have a negative effect on society. People are anticipating water moving onto the commodities market. If water somehow surges, that's not good for the people at the bottom. Super high oil prices are bad for the world economy. It's advantageous for oil market traders but bad for everyone else.
-- unless I'm missing your point, which I very well may be.
If there was no possibility of upside, they would not invest in the first place, meaning that it would be a given that nobody would have access to the resource.
If government was to make a decision to intervene and strip away investors' upside just when they get one, investors will remember this, and be less motivated to invest in that market in the future. The uncertainty about it affects other parts of the system - someone who gets burnt on one product is likely to be jaded about investing in unrelated products in the same jurisdiction.
It's important to look at the system as a whole. Speculators and short-sellers are net-positive on markets. If you take away their upside you'll remove them from the system entirely and everybody loses. It's important that we set rules for the game, and then honour them, except in situations where individuals do something outside of the principle of the rules, such as market manipulation.
Further up, you're repeating a meme seen elsewhere in this thread about oil prices being determined by speculators. I'm not sure how you believe this, because I don't think the evidence leads to that conclusion. The price meanders about but the curve is supported by underlying demand.
How is it advantageous for oil market traders for the price to go up? Some will be short just as others are long, and there's no reason to believe there's more long guys than short guys.Higher oil prices are likely to be goood for oil producers, but I don't understand how come to the conclusions you come to about about speculators.
Store what? Commodities are typically traded in futures.
This thread was about speculators pushing prices higher, and I was outlining the only viable way where I saw that they could push prices higher, and then explaining why it didn't make sense as a business model.
No, when they buy a commodity on futures they own that product. It is out of the market at that point. Further trading can't go on on oil that was bought on futures, it's been sold before it was produced.
>This thread was about speculators pushing prices higher, and I was outlining the only viable way where I saw that they could push prices higher
But this can be done via futures as it has been with Gold. There is more than 10 time more gold "owned" by people than actually exists.
With equities, when there's extra fractional-reserve style liquidity in the system due to shorting, you can tell because that info is available in Bloomberg. So if you see that there's more outstanding than exists, you could call bluff on the people with the outstanding positions.
I'm not sure if the same is true with commodity contracts.
Sure, but when they buy the futures those products are off the market. If speculators buy up everything via futures then that will drive prices up and they'll be able to dump it at a profit (well, the ones who get out in time will).
>Do you have a reference for this?
Here is a jumping off point [1]. Oh, and I was wrong. It's 100 to 1, not 10 to 1. From the wall street point of view they didn't even find this fact controversial. In the inquiry they just basically responded with "oh, no it's fine. You just don't understand". Right, never heard you say that before...
[1] http://www.fool.com/investing/general/2010/04/05/is-your-saf...
Ah, I apparently missed the part where this was suggested as a long term thing. In that case, you're right. This isn't a method for long term price manipulation.
>Thanks. ETFs acting on a fractional-reserve basis - interesting topic. That's different to futures though. I don't buy the ratios, either.
The info came from a Wall street exec who said that the ratios were easily 100:1, perhaps more but not to worry because blah blah, you can't understand, blah blah, gold futures, etc. I didn't glean much info from it because he didn't seem all that interested in giving much.
Australian housing might have jumped the shark already - there's been lots of noise about this over the last couple of weeks. http://www.google.co.uk/search?q=australian+housing+market&#...
I have put in offers on a number of buildings in Beijing's Financial Street district[1] and there is literally no space available. There are tons of brand new, A-grade office buildings but they are all owned and less than 20% occupied by China Life, People's Life Insurance Company of China and other monolithic State owned enterprises that let the space sit idle and they leave the lights on all day and all night.
The best office building in Beijing[2], was leasing office space at 300-400RMB/sqm per month less than 12 months ago and now they are turning you away if you offer less than 750RMB/sqm. The wierd thing is, some random domestic Chinese "investment" firm will actually pay that rent and happily move in.
I do believe there is a major correction due, but the government does control the media so its hard to say how hard or soft the landing will be and how much we will hear about it.
[1] http://en.wikipedia.org/wiki/Beijing_Financial_Street
[2] http://en.wikipedia.org/wiki/China_World_Trade_Center_Tower_...
* hence why I am posting anonymously.
(Anyone have recent numbers on the price of office space in Manhattan?)
You have to take into account taxes, salaries, property prices, the economy and a lot of other things. IMHO
The parent had hard evidence supply seriously exceeded demand.
What do you have in that department?
i know for fact that the government's recent policies have played a big factor in this drop in prices because they now limit people from buying a 3rd house and have finally decided to add property tax.
hopefully this trend will keep up--buying opportunity!