The current state of China’s real estate sector presents contradictory assessments that are often difficult to understand. There has been a “mini recovery,” whose impact is yet to be determined. It is in fact difficult to understand if the downturn has slowed, stopped, or if a recovery is in fact underway. Beginning in October, after the weeklong National Day festivities, the CSI300 index (which measures the health of the largest corporations on the Shanghai and Shenzhen stock exchanges) of the real estate sector grew much more than the overall index, lending credibility to those who believe the crisis is nearing its end. Along the same wavelength comes news of increased acquisition of land by construction companies. In September fully 15 companies bought land, in contrast to only 8 in August, setting the record for 2012. Commercial real estate for lease has also seen a climb. This may be a sign of significant financial availability, ready to be pumped into the market as soon as restrictive government policy shows signs of moderation. Aside from these indexes and their cautious optimism, there is a reinforced consciousness that to breathe life back into the economy, which in 2012 will see its slowest growth in 23 years, the real estate sector cannot be ignored. The increase in construction of public infrastructure suggests a similar movement in private construction. In any case, the signs are still to weak to certify a real reversal of the trend. Even if sales have improved, they are nowhere near where they were two years ago. Many homes remain unsold, as well as shopping centers, office buildings, and even entire cities that remain virtually empty. They are the result of a series of measures imposed by Beijing in April of 2010 to keep the real estate bubble from bursting. The size of the bubble – and the vivid memories of the American and Spanish disasters – so alarmed the government, that it raised taxes on second homes, tightened access to mortgages, and imposed a higher down payment for purchases. The challenge was met; at least, the burst of the bubble was avoided. Luxury housing came to a halt, ending speculation tied to premium construction projects. Two crucial aspects, however, suffered a negative effect: the overall health of the economy, and the availability of affordable housing for the Chinese middle class. The Chinese middle class is still unable to buy a house without making significant long-term sacrifices. These potential buyers are being penalized because of the real estate market’s propensity for speculative construction. Instead, a social housing project would be politically viable, economically sustainable, and more useful to society. The Chinese leadership ought to refine its choices, to encourage certain aspects while penalizing others. Real estate entrepreneurs should look towards better solutions that are just as profitable. Vanke, the second largest company in the real estate sector, has already built micro apartments in China’s most congested areas. It is a choice that may end up being very forward-looking: not only has rent in most cities already become unsustainable, but 50 million families – out of the 230 million living in urban areas – live in unsanitary conditions without access to basic services. Building the opportunity for people to improve their quality of life may end up being a more lucrative business than building luxury high rises or villas destined to remain unoccupied.