The Real Estate Fictionization: Related to the Theory and Empirical Analysis of United States Subprime Mortgage Crisis

Real estate is a dualistic industry. On one hand, it is a subsector of real economy; on the other hand, it has an attribute with very strong fictitious economy, mainly reflecting in such aspects as the strong price fluctuation, autonomous capital proliferation and capital fictionization. As a result, when analyzing whether the market price of the real estate deviates from its value, we should not only take into account of housing price-to-income ratio, real estate vacancy rate and housing price-to- rent ratio from the point of real economy, but also the money supply, interest, credit and finance liberalization from the point of fictitious economy. Taking the U.S. subprime mortgage for an example, it is meaningful but defective to analyze the emergence of the U.S. bubble just only standing on the side of real economy. The subprime mortgage crisis is not just a price bubble, but also a credit bubble on the basis of currency and financial derivative products. In conclusion, this article holds that it makes much more sense to judge and forecast the trend of the real estate market by using fictitious economy than by applying real economy. Further, the management of real estate bubble can not be separated from the support of monetary and financial policies.