Housing market situation

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mem
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Re: Housing market situation

Post by mem » Sun Nov 25, 2018 10:25 am

My perspective is that when the global everything bubble pops/drifts down, there will be deflation in capex assets like real estate and vehicles, while there will be inflation in food and fuel.

It will be all about liquidity. It is always about liquidity.

People that have multiple properties and vehicles that lack liquidity will have to liquidate their capex assets to fund their operating expenses...food, fuel, etc. Driving a vicious cycle of over supply of capex assets.

So if you are prepared with cash when this happens you might be able to pickup some amazing property from a desperate seller, at centavos on the peso compared to the prideful prices of today

Of course if you just want to live in and bequeath your property to your children and you wont want to sell regardless of the market you will be fine even if you paid a lot more during these bubble years

at46
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Re: Housing market situation

Post by at46 » Sun Nov 25, 2018 3:26 pm

mem wrote:
Sun Nov 25, 2018 10:25 am
My perspective is that when the global everything bubble pops/drifts down, there will be deflation in capex assets like real estate and vehicles, while there will be inflation in food and fuel.

It will be all about liquidity. It is always about liquidity.

People that have multiple properties and vehicles that lack liquidity will have to liquidate their capex assets to fund their operating expenses...food, fuel, etc. Driving a vicious cycle of over supply of capex assets.

So if you are prepared with cash when this happens you might be able to pickup some amazing property from a desperate seller, at centavos on the peso compared to the prideful prices of today

Of course if you just want to live in and bequeath your property to your children and you wont want to sell regardless of the market you will be fine even if you paid a lot more during these bubble years
Por favor, what is the currency or basket of currencies in which your cash is denominated? Is it in the banking system, the stock market or under a mattress? :)

Liquidity is awesome, of course. The tricky thing is how to hold on to it given just how liquid and transmutable it is :)

The global bubble-trouble sort of comes down to US/UK and Germany/China, if current account balances mean anything at all. Chile can pop in and out of current account surplus/deficit in like weeks or even days with just a few good moves in copper. It's not a super good or a super bad position. It kinda allows us to sit here enjoying things we enjoy while we watch the big girls pulling each others' hair out.
https://www.cia.gov/library/publication ... 7rank.html

mem
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Re: Housing market situation

Post by mem » Sun Nov 25, 2018 8:51 pm

at46 wrote:
Sun Nov 25, 2018 3:26 pm
mem wrote:
Sun Nov 25, 2018 10:25 am
My perspective is that when the global everything bubble pops/drifts down, there will be deflation in capex assets like real estate and vehicles, while there will be inflation in food and fuel.

It will be all about liquidity. It is always about liquidity.

People that have multiple properties and vehicles that lack liquidity will have to liquidate their capex assets to fund their operating expenses...food, fuel, etc. Driving a vicious cycle of over supply of capex assets.

So if you are prepared with cash when this happens you might be able to pickup some amazing property from a desperate seller, at centavos on the peso compared to the prideful prices of today

Of course if you just want to live in and bequeath your property to your children and you wont want to sell regardless of the market you will be fine even if you paid a lot more during these bubble years
Por favor, what is the currency or basket of currencies in which your cash is denominated? Is it in the banking system, the stock market or under a mattress? :)

Liquidity is awesome, of course. The tricky thing is how to hold on to it given just how liquid and transmutable it is :)

The global bubble-trouble sort of comes down to US/UK and Germany/China, if current account balances mean anything at all. Chile can pop in and out of current account surplus/deficit in like weeks or even days with just a few good moves in copper. It's not a super good or a super bad position. It kinda allows us to sit here enjoying things we enjoy while we watch the big girls pulling each others' hair out.
https://www.cia.gov/library/publication ... 7rank.html
Actually, I dont think the current account balances can be measured evenly across all those countries ( look at Venezuelas place ouch) I certainly dont have a crystal ball, but I think there is a much higher chance of bank bailins across North America, europe, Australia, and maybe even Asia versus somewhere like Chile. The way I look at it, Chile will be one of the last places on earth to enact bailins...right up there with Switzerland and Andorra. I wouldn't put any hopium in anything north american or other European. But even still with the right parade of black swans things could change.

All that being said and denada, when it comes to fiat liquidity I am keeping 20-25% in the Chilean banking/brokerage system as CLP. Current accounts, brokerage, CD's, etc.
The remaining 75-80% of the fiat is in physial CLP outside the banking system. Not under a predictable pedestrian mattress, but not digital numbers in a bank ledger or brokerage either. While I trust the Chilean banks more than most any other banks on earth, I still prefer the luxurious comfort of knowing that the majority of the Chilean fiat is not digitized.

Alot of people that you might think are really wealthy are hogtied liquidity wise...living month to month. Overextended with loans. It wont take much to shake them out of the tree and there are several tranches below them that are very vulnerable as well. For those heavy in physical cash or something easily convertible to physical cash, I think there will be alot of opportunities to mop up

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Re: Housing market situation

Post by admin » Mon Nov 26, 2018 8:58 am

well, this expat scam in belize does not sound familier at all. :roll:

https://www.zerohedge.com/news/2018-11- ... 00-million

:roll:

amazing to me, that i have been seeing these expat scams in latin america since i was 12 years old running around the beaches of maztlan mexico. the owner of the resort we were staying in tried to sell my father a condo, then the entire tennis club. Too bad for him, my father was too cheap. think that place is now a parking lot. but, hey they just keep on rebranding them, for another generation.
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Re: Housing market situation

Post by admin » Mon Nov 26, 2018 12:52 pm

that is why they call cash a "medium" of exchange. your not suppose to keep it under your bed. your suppose to either spend it or invest it.

hanging on to cash is a guarteed way to loose money, by definition.

i think right now i have a few thousand pesos to pay for toll roads. a few hundred u.s. dollars i hang on to for travel emergencies, that has been tucked in my passport for years. a couple months worth of expenses in a checking account.

everything else gets invested, based on how soon i might need it / how liquid the asset is. at the far end of the "when i might need it" scale is real estate investments.

time is the only absulte value in the universe. use or loose it.
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Baltimore
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Re: Housing market situation

Post by Baltimore » Mon Nov 26, 2018 7:04 pm

From Diario Financiero, today:
Screen Shot 2018-11-26 at 6.59.11 PM.png

paladin
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Re: Housing market situation

Post by paladin » Mon Nov 26, 2018 8:03 pm

I agree completely with the principles used by admin. As he clears points out, the only guarantee with holding cash is to lose by inflation. After the last big earthquake that his us, and the atms couldnt work, nor could we use credit cards for a bit, I stuffed some billetes in a box, so that if something similar were to happen again, at least I’d be able to buy gas and food.
We’ve had loads of posts over the past few years, predicting a drop in property prices because of “ the bubble” which obviously doesnt exist, etc. I am an investor in apartments, not new as I dont want the nightmares, and all in high demand areas of Santiago. Prices in UF have continued to rise each year; not by the ridiculous amounts as we had a couple of years ago, but good returns, plus the rentals on top.
However, what I never invest in are Chilean quoted shares, that rise and fall for no real reasons apart from the fact that it’s the AFP’s that control the market .

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Re: Housing market situation

Post by Baltimore » Tue Nov 27, 2018 12:46 pm

Yeah, holding cash in the long term seems like a bad idea and the term "bubble" is rather vague to me, it's only clear in retrospect.

That aside, can the price of a security keep increasing at a faster rate of an increase in the dividends it pays in the long term? Can house prices in, say, Vitacura, Las Condes, Providencia, and Ñuñoa keep increasing at twice the rate of rental price increases in those areas indefinitely? So, for instance, the 400M apartments that today you can rent for nearly 1M per month will be worth 800M in 5 more years, but you will be able to rent one for 1.5M per month.

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Re: Housing market situation

Post by admin » Tue Nov 27, 2018 2:56 pm

just for fun, i did a search of when was the first time the word "bubble" was used on the forum in the context of real estate in chile. looks like it was around 2006-2007.

so we have been waiting for "the bubble" in chilean real estate to burst pretty much since the forum went live.
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Re: Housing market situation

Post by admin » Tue Nov 27, 2018 3:09 pm

that said, i have two antidotal bits of info from this morning.

opened the local paper to check the property auctions. for the first time, in a very very long time, there were none.

a family member has had a property up for sale in pichileume for several years, with very little action because it has a rediculas high price, even among properties with rediculas high prices. finaly got a serious buyer talking about buying it. we subdivided a former 5000 square rural lot, in to 500 meter urban lots (city urban zone expanded), to get more money out of it and make it easier to sell. buyer wants it all.

if this is a bubble, being chile and all, it will probably run its course untill prices smooth themselves out just from old age deflation.

which when i have seen bubble like localized real estate markets in chile, they tend to sort of slowly deflate / pause, as the rest of the economy catches up, rather than burst.
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Re: Housing market situation

Post by Baltimore » Tue Nov 27, 2018 4:03 pm

admin wrote:
Tue Nov 27, 2018 3:09 pm
which when i have seen bubble like localized real estate markets in chile, they tend to sort of slowly deflate / pause, as the rest of the economy catches up, rather than burst.
So you expect selling and rental prices to get back in line eventually in the future or is it totally fine for those two two climb at different rates?
rent-vs-buy-chart.jpg
rent-vs-buy-chart.jpg (60.45 KiB) Viewed 116 times
It is also interesting to see the evolution of inflation-adjusted average home values in the US as well, not that it applies to Chile, but...
case-shiller-chart-updated.png

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Re: Housing market situation

Post by admin » Tue Nov 27, 2018 5:24 pm

here is the problem.

the u.s. market, unlike possibly any other market in the world, has been systemitized, comoditized, and over anyalized, untill every last penny of value can be accounted for; thus, squeezed out of the markets. you have everyone from the banks and the fed, to insurance companies, state and local tax authority, and the local licensed apraiser that can agree on a the value of any property in the country within a few dollars.

you can't do that in chile. the goverment can't do that. the banks, the insurance companies, the tax authority; hell, i can't do that in chile, and i do it for a living.

if i sent a dozen apraisers to evalute a property, i would probably get a dozen diffrent values. yea, santiago has gotten a bit more refined, but you will still see 10, 20, even 100 million diffrence in ideas of what property is worth. even properties, right next door to eachother, that in almost every way are exactly compariable, will have radicaly diffrent prices on them.

the name of 5he game from an investment perspective, is identifying the ones that are grossly under market. that is still far more an art than anything else.
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