The Beijing Municipal Bureau of Statistics reported this month that housing sales in the city dropped 40% last year. Chinese economists have predicted that housing prices will drop 15% to 20% in Beijing this year. Shanghai has experienced a similar decline.
"You can look at this perhaps as a healthy correction in the market," Kuijs said.
In the longer term, he said, "China's urbanization and overall development is going to lead to a very large additional demand for housing in the city."
Before that happens, the situation could get worse. Most of the real estate has been financed by Chinese banks, which have avoided writing down the loans. Eventually, they will be forced to, and that probably will have a ripple effect throughout the economy.
"At the end, somebody is going to have to pay the piper," real estate expert Rodman said.