Love lives of Chinese men suffer from housing boom

In China's big cities, real estate's expensive and young women are in short supply. If the population spread more evenly into cheaper parts of the country, would it be easier for a guy to get a date?

Vincent Thian / AP / File
A Chinese elderly couple sit near the Tiananmen Gate in Beijing, Thursday, Feb. 24, 2011. Today, there are fewer women than men in China's biggest cities. If the population spread across the country into new cities, maybe romance would come easier for some men, writes guest blogger Matthew E. Kahn.

[Editor's note: The author updated this post 4/16/11.]

China's urban marriage market is taking some predictable turns as young women are in scarce supply. This article argues that the young women have the bargaining power and they want to date a man with a car and his own apartment. In the big cities, housing is so expensive that many young men can't afford their own apartment.

Here is an excerpt from the original New York Times article:

“Sometimes I wonder if I will ever find a wife,” said Mr. Wang, who lives with his parents, retired factory workers who remind him of his single status with nagging regularity. “I feel like a loser.”

There have been many undesirable repercussions of China’s unrelenting real estate boom, which has driven prices up by 140 percent nationwide since 2007, and by as much as 800 percent in Beijing over the past eight years. Working-class buyers have been frozen out of the market while an estimated 65 million apartments across the country bought as speculative investments sit empty.

So, the urban economists have a simple solution to this matter of the heart. China needs an "escape valve". In the United States, hundreds of millions of people have sought out new cheap housing in "new cities" and have been happy to settle in such places as Tampa, Dallas, Las Vegas and Phoenix. These folks can travel to the "Superstar Cities" on the coasts or merely watch Kobe and Jerry Seinfeld on TV. They have been free to choose to locate in a less expensive city and thus to be able to afford more housing.

Yes, Shanghai and Beijing are tremendously costly but within a system of cities with easy cross-city migration --- why won't new cities arise that are analogous to Houston or Las Vegas? One answer is that the powerful state may slow down this migration (either intentionally or unintentionally). In a free market capitalist economy, firms follow people and people follow jobs. If both firms and people want cheap land then they can co-ordinate and locate in a Las Vegas.

In the case of China, is the powerful state guiding economic activity to specific locations (either through handouts or subsidies) or is it allowing free market forces to playout? I predict that the dudes' problem will go away if the free market is allowed to operate in China. China's population will spread out into new cheaper cities and romantic bliss will ensue.

In understanding the causes of high urban prices, we can't ignore the supply side and the ability of developers to build new housing and the incentives of those holding inventories of existing apartments to sell them. On the developer side, researchers such as Ed Glaeser and Joe Gyourko have argued that high home prices in the United States is associated with land use regulation. Albert Saiz has documented that steeply sloped land is hard to build on.

I bet that these same factors matter in China. If the state owns the land, how does it decide how much land to devote to development? If it devoted more land in other cities to development, how would this affect apartment prices in those areas?

Why are speculators holding inventories of apartments and delaying selling them now. They must have expectations of being able to sell them at much higher prices in the future. If Chinese urbanites in non-superstar cities --- could contract with developers to build them simple housing, then market forces would create the equivalent of a Levittown in China's cities. If such speculators knew that urbanites could build their own homes or contract with a low cost developer rather than bidding for a speculator's property, then this would convince the speculators to lower their prices and sell their stock of units.

Competition chips away at monopoly power.

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