The Smartest Man in China

The smartest man in China is Mr. Wang Liang, a resident of Beijing.

For people on average incomes in Beijing and Shanghai, a regular two-bedroom apartment may cost them 20 to 30 years' income, far higher than the international average of six years. In a healthy market, landlords can reach the break-even point after receiving rents for 16 to 25 years. But in Beijing and Shanghai, they need 36 to 42 years to get the cost back, according to China Index Academy, a real estate research institute. "Buying an apartment, or more accurately, snagging a home at the moment, is no different from putting a time bomb beside you," said Wang Liang, a college teacher who gives up his previous plan to buy a home in Beijing.

Mr. Wang (no offense!) made the smartest decision of his life.

20x-30x average annual income for Beijing and Shanghai. These ratios are reminiscent of the strawberry picker out in California would bought a $700k house, and we all laughed at that. Yet there are millions of Chinese caught up in this mania. It's Dubai x100.

And the international average for mortgage loans is 6x income? It should be along the lines of no more than 2x-3x income. Anything more and I don't see how the buyer can sleep at night. If my mortgage was 6x income I'd have ulcers.

For those of you who think the grass is greener on the other side of the fence and you want to jump over (pick your reason: You don't like Obama, you're a gold bug, you believe in chemtrails, America is doomed, neocons run everything, etc.), I think you're making a big mistake. If you vault over the fence you may find yourself landing in a yard infested with fire ants and mounds of dog crap from a Great Dane.