That is a good reason DC prices are stable, but the international financial community is going to eventually enforce austerity on the US, as we can't continue to act as if we are playing with monopoly money. Even in monopoly, you run out of money and property to hock and end up out of the game. If you disagree with the policies of the current administration, you are racist, count me in that category. Putting criminals in prison for crimes doesn't make the jury racist any more than disagreeing with the modus operandi of what I consider an administration that violates the core of American economics to be off base. There will be civil war in the US if the status quo goes on much longer.
The basis of bubbles is that financial reality is not recognized while the bubble is going on. Asian countries have traditionally carried evergreen notes that eventually implode to place the country in a position of financial and economic imbalance. China can't continue to buy the minerals and petroleum they need if they don't continue to earn ever increasing amounts of foreign income. The US and Europe cannot continue to finance their trade deficits and let China continue to steal their technology and continue as modern economies. Germany is also a big exporter, but its people have shown increasing unwillingness to finance their trade with countries that can't pay. The only thing holding Europe together is make believe, pretend and extend finance. Don't believe the case in China real estate is any different. I have read there are 65 million empty housing units in China. These don't stand there without some kind of pretend and extend. It is costly to maintain empty real estate. I find it doubtful the entire batch is free and clear, as we are talking about a minimum of 125% of Chinese GDP. People eat something. They use energy, the economy consumes capital.
In the case of China, I have heard as much as 65% of its economy is capital investment. Where is it coming from? Bank credit is my best guess, for the most part. If per capita income is $6000 a year, which is roughly what the GDP divides into, where are they getting $3 -$4 trillion a year to pour into building cities in the middle of nowhere that stand empty? Medicine and housing already have to consume a large part of the income of the typical Chinese family, not to mention education, food and energy. I have seen an article that proposed that a significant portion of what is called trade surplus is actually smuggled investment into the economy. China holds a huge foreign reserve, not because it earned such a huge amount of money as much as to protect itself from the flight of hot money. Japan and the US have what amounts to zero interest rates, while China not only has rates in the mid single digits, but there is a huge bet on yuan appreciation against the dollar.
What happens when it is recognized that the Chinese investment game is a tale told by an idiot? Remember, only 35% to 40% of the Chinese economy is dedicated to consumer goods. It isn't beyond reality that half or more of their expenditures to expand could disappear, along with the wealth that such misallocation of capital entails. We could see a third of the Chinese GDP disappear over night. Much like the boom areas of the US during the bubble, huge slices of the economy flat disappear for years at a time. The great secret is that the one child policy in China already has the economy over a demographic barrel and that Chinese are already living in homes they can afford. Thus we can't look at this matter as if they are going to suddenly grow into this bubble. Just like the US stock market, which is being supported by direct flows from deficit spending, this cannot go on forever. The depression in the US is going to depress the birth rate as well, leaving our own housing bubble as a huge economic overhang, not to mention the games being played by our own bankers, allowing bad loans to exist to avoid facing the write offs.
The big deal about US housing prices is that housing and its forever upward trend in price produced the credit bubble to start and there is nothing other than fantasy finance to take its place. The deficits are all about propping economies around the world, allowing the US consumer to continue to over spend. It was the very engine of upward housing prices that produced the fuel for the engine, a sort of fast breeder reactor of its own.