I’ve been watching regional real estate, both residential and commercial, for several years now, and am continually baffled by the herd mentality that seems to cloud people’s judgment (much less so in the commercial sector).

On my recent trip to China, I saw very disturbing levels of development–there were skyscrapers shooting up from every available lot it seemed–yet witnessed little evidence that the demand for space will continue. In Shanghai, and perhaps a few other areas we visited, entire skyscrapers were being built on spec. That might not seem like such a big deal, but when there are 15-20 buildings being constructed (30-50 stories each) within your peripheral vision, it becomes less reasonable to take such a risk as a developer. Then throw into the mix rising wages, international trade issues, and the general stability of the global economy, and things become a bit more dicey.

The US market, depending on what area you look at, is finally showing consistent signs of a broader slowdown. The New York Times has an excellent article today that is well worth reading, covering the slowdown and its impact on the economy: Housing Slows, Taking Big Toll on the Economy .

TAGS: Real Estate | United States | China | Shanghai | Commercial Real Estate | Residential Real Estate | Skyscraper | Office Space | Real Estate Bubble

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