Housing market situation

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StrawberryHeartsForever
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Housing market situation

Post by StrawberryHeartsForever » Wed Jun 21, 2017 6:53 pm

So I have noticed that many new builds don't seem to be selling. Lots of offers starting to be made buying two together, deposit paid in quotas etc. With even more buildings being constructed are we going to start seeing a drop in prices? Ive seen used buildings overpriced and keeping fingers crossed I will have more options soon.

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Re: Housing market situation

Post by admin » Wed Jun 21, 2017 8:05 pm

Yea the real estate market is soft, but also hard to say how soft due to the time of year. The winter is always slow, especially for anything outside of santiago.
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Re: Housing market situation

Post by admin » Thu Jun 22, 2017 6:36 am

O.k., got a min to get back to this.

There is a short list of what I see going on in the real estate markets in Chile in 2017 winter, in no particular order.

1. it is winter. People tend to buy in the summers a second home or investment property; but, also people tend to buy a new place to live before the kids start school. So like February. Not a lot of moving in the middle of the school year, in the fall you have tax season, etc. Normal seasonal stuff.

2. Bachelet's wonderful economy stimulating tax reform related to real estate created a bubble before it went in to effect, some of that stock of housing is still being worked through, and so on. At the same time, tends to discourage real estate investment; especially when the stock market alternative has been ripping along at 15-20% or better returns. Hard to cash out the porfolio, for a question mark about returns in real estate right now. call this just better returns somewhere else right now.

3. They just lowered interest rates again, so there might be a bit of trading up right now. I just seen an article that due to the drop in office prices in santiago right now, a lot of companies that are doing o.k. are trading up to larger office spaces, creating a glut at the lower end where other companies that might occupy them are struggling.

At the same time I suspect a lot of the larger builders, want to dump their stock of housing and other projects that are not performing as well, as they are financed at a higher interest rate. I highly doubt many of them are under water, simply if they can free up capital they can start new projects at lower interest rate that will provide a higher return.

4. The economy sucks. see number 2 for one reason, but Bachelet is working hard at fixing the problem by leaving office and taking her morons that could not run an apple cart, let alone an economy, with her.

5. Presidential election. Probably a lot of investors holding their breath to see which way this election breaks, before making any decisions about deploying new capital. Lot of hope (perhaps too much) being invested in Pinera winning, and some sort of reform the stupid tax reform being implemented. I have seen a lot of smaller businesses struggle this year with an increased corporate tax rate that went in to effect, along with an economy that was within a rounding error of contracting last quarter. If pinera does not win, there will be a super smack down of the Chilean economy, even if just temporarily.

I might caution, that like always, the super popular localized Chilean markets are a bit softer, but still moving along. They always have some demand. Less sought after local markets, take the brunt of the beating during these soft periods. Off the top of my head, apartments in Los condes to the Mountains, Puerta Varas, Frutillar, are all doing pretty well. Don't know about vina and the coast, have not been paying much attention, suspect they are soft but still there is almost always someone with cash to spend there. seen a few auctions in that area recently, but nothing special. Not sure about Pucon area, it typically is always a mess, and tends to follow the demand for second homes from the middle class in Santiago. So, probably getting beat pretty bad right now. Still, have not seen a lot of auction action up there recently, so might be holding it's own.
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41southchile
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Re: Housing market situation

Post by 41southchile » Thu Jun 22, 2017 9:24 am

StrawberryHeartsForever wrote:So I have noticed that many new builds don't seem to be selling. Lots of offers starting to be made buying two together, deposit paid in quotas etc. With even more buildings being constructed are we going to start seeing a drop in prices? Ive seen used buildings overpriced and keeping fingers crossed I will have more options soon.
More a stagnation of prices for a while or maybe small drops buy certainly no crash or drops which would make it worthwhile not to buy now on the horizon, see admins answer for best response. Most of the storm has been ridden through, its only the really desperate now, which there probably are a few there, but certainly no mass house price crash from what I've heard and read lately on the topic.
In the Lakes Region Chile for 6 years. It looks like New Zealand in some ways, and is nearly at the bottom of the world too, but there the similarities end.

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El Chupacabra
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Re: Housing market situation

Post by El Chupacabra » Thu Jun 22, 2017 9:38 am

admin wrote:
4. The economy sucks. see number 2 for one reason, but Bachelet is working hard at fixing the problem by leaving office and taking her morons that could not run an apple cart, let alone an economy, with her.
LOL :lol:
Living the life!

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Re: Housing market situation

Post by admin » Thu Jun 22, 2017 9:52 am

41southchile wrote:
StrawberryHeartsForever wrote:So I have noticed that many new builds don't seem to be selling. Lots of offers starting to be made buying two together, deposit paid in quotas etc. With even more buildings being constructed are we going to start seeing a drop in prices? Ive seen used buildings overpriced and keeping fingers crossed I will have more options soon.
More a stagnation of prices for a while or maybe small drops buy certainly no crash or drops which would make it worthwhile not to buy now on the horizon, see admins answer for best response. Most of the storm has been ridden through, its only the really desperate now, which there probably are a few there, but certainly no mass house price crash from what I've heard and read lately on the topic.
actually, after all the Bachelet screwing around with the housing market, construction industry, and overall economy, I expect there to be a housing shortage at some point. At least in the most high-demand / fast growth areas. How far that is away? No idea. When the prices move again, they are really going to move.
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StrawberryHeartsForever
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Re: Housing market situation

Post by StrawberryHeartsForever » Thu Jun 22, 2017 1:13 pm

Thanks for the input both of you!

at46
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Re: Housing market situation

Post by at46 » Fri Jun 23, 2017 12:21 am

StrawberryHeartsForever wrote:So I have noticed that many new builds don't seem to be selling. Lots of offers starting to be made buying two together, deposit paid in quotas etc. With even more buildings being constructed are we going to start seeing a drop in prices? Ive seen used buildings overpriced and keeping fingers crossed I will have more options soon.
I think deposits are usually paid in quotas, so that's not crisis related. I went to price an apartment in the middle of Viña recently, a really good location and good builder, green stage, and the building was almost completely sold out.

Jamers41
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Re: Housing market situation

Post by Jamers41 » Fri Jun 23, 2017 1:13 am

I'm sure the admin is right on the distortion that happened with the housing market in 2015 (and very likely still affecting us).......everybody and their goldfish rushed to buy properties "IVA free" pre January 1st 2016 and now a bit down the road a good percentage of those people either never followed through after signing the "promesa" or bit off more than they could chew and now are having trouble paying for and keeping a house/apartment that they really should never have gotten into. I personally know a couple that's in this type of situation now that the family breadwinner is currently unemployed. Obviously this applies more to the true Chilean middle class, and not the same type of people that look at properties that "gringos" might find attractive (a new 55 square meter apartment in Ñuñoa or 75 sq m. house in Maipu for example).

paladin
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Re: Housing market situation

Post by paladin » Fri Jun 23, 2017 8:15 pm

The market certainly isnt soft where I have recently bought apartments in the Manuel Montt metro station area, and El Golf. If the place has a parking space and close to a metro, they get snapped up really fast, just as they do when you offer them out to rent.
I've found that investing in property ,not new ones, as I'm against them for various reasons, prices never go down. They may stagnate when the economy slows but unless owners are forced to sell for some reason, they just hold off until things improve; they dont drop their prices. So my theory, which seems to have worked for me, at least, is that property is never "expensive" . Rather buy now if you have the financing , than sit around with the false hope that maybe if you wait a bit, it will be cheaper, because it wont . When people say "expensive" , I ask " compared with what ?

StrawberryHeartsForever
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Re: Housing market situation

Post by StrawberryHeartsForever » Sat Jun 24, 2017 12:18 pm

Paladin thanks for that info. I am wanting to buy a family appartment not to rent out. We do not have too much money to play with so I think that now is as good as time as any.

StrawberryHeartsForever
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Re: Housing market situation

Post by StrawberryHeartsForever » Sat Jun 24, 2017 12:19 pm

And thanks for all the other comments they are helping me to make a decision.

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