Housing market situation

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Baltimore
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Re: Housing market situation

Post by Baltimore » Tue May 07, 2019 2:59 pm

Here is a good article about the widening gap between home prices and income in Santiago. I wonder if those two curves can keep moving farther apart from each other indefinitely.
https://www.latercera.com/nacional/noti ... ssion=true
Screen Shot 2019-05-07 at 1.52.51 PM.png
And a couple of hints to why this is happening.

http://www.elmercurio.com/Inversiones/N ... ncial.aspx
https://www.elmercurio.com/Inversiones/ ... arios.aspx

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Re: Housing market situation

Post by admin » Wed May 08, 2019 10:29 am

well, i still think there is a vast under reporting of household income and wealth in chile on the one hand, and fairly high concentration of wealth of chile around santiago on the other hand.

can people get carried away with over concentrating their investments in apartments? sure.

you also need to look at how older buildings and apartments depreciate in chile. they depreciate more like cars, than residential property. crappy old ugly buildings vs. new shiny better built buildings simply dont hold the value in the market place anymore.

you pretty much draw a line at say anything 2001 and earlier is simply not worth what a newer apartment might go for. so there is some replacment going on in the market.
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Baltimore
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Re: Housing market situation

Post by Baltimore » Wed May 15, 2019 11:13 pm

"When the only thing you have is a hammer, everything looks like a nail...."

From tomorrow's issue of Diario Financiero (www.df.cl)
portada.png
Screen Shot 2019-05-15 at 9.46.36 PM.jpg
Screen Shot 2019-05-15 at 9.45.44 PM.jpg

thisisreallycomplicated
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Re: Housing market situation

Post by thisisreallycomplicated » Thu May 16, 2019 12:35 am

This seems like a good thread to ask this question... Do Chileans tend to borrow a lot on their home equity?
“Now it’s conspiracy – they’ve made that something that should not even be entertained for a minute, that powerful people might get together and have a plan. Doesn’t happen, you’re a kook, you’re a conspiracy buff!” – George Carlin

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41southchile
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Re: Housing market situation

Post by 41southchile » Thu May 16, 2019 1:50 am

Baltimore wrote:
Wed May 15, 2019 11:13 pm
"When the only thing you have is a hammer, everything looks like a nail...."

From tomorrow's issue of Diario Financiero (www.df.cl)

portada.png

Screen Shot 2019-05-15 at 9.46.36 PM.jpg
Screen Shot 2019-05-15 at 9.45.44 PM.jpg
I've said before and I'll say it again, there is no way I would invest in an appartment in Puerto Varas. I can't really speak for Santiago, but if it's like anything else in this country I would say those that got in first have made their money and are most likely getting out now just as everyone else is clamoring for their piece of the action crashing it for everyone. The last in so to speak, still I guess they are needed for the others to get out.
The appartment market in Puerto Varas has already hit its peak and is on the way down, the short term rental boom (arbnb) is history as upper middleclass wannabes stretched themselves for an overpriced box they are now left paying off and can barely get 30000 a night rental. Its pissed the hotels off and now its coming to the attention of the local politicos. (So that gig will be up soon, forcing some more to bail out)
The oversupply has seen some appartment projects stall and others finished and virtually empty.
The ineptness of local government (and central govt) through poor planning and bad governance has killed the golden goose of Puerto Varas and many people want to get a few more kilometers out ( which I'm really happy about to be honest) The lake , the lake for gods sake, the supposed jewel of Puerto Varas gets sewerage in it when ever it rains, the fish are dangerous to eat due to parasites, the chimney smoke is unbearable in winter, the traffic and streets are a sad joke now, etc etc etc etc etc.
Puerto Varas should never have had that many appartments, I can see why so many locals are so pissed. They have been trying for over 5 years to get a new town plan to restrict things because the old one is from like the 80s and there is nothing stopping developers doing whatever. 5 years later and they are still unable to sort their shit out, but it's too late now, they might be able to affect some things in the future whenever it gets over the line, but probably not.
I love visiting Puerto Varas, but between 9am and about miday or later at night for a meal but outside those times I try and stay away now, it just annoys me too much.
Like I say , whenever something is good you can guarantee it won't take long before everyone jumps in and ruins it for everyone and theres plenty of people willing to let them in at any price so they can make a quick buck.
Having had a corrupt mayor and now a tipsy dirty old hasbeen, who tries to kiss young female singers on the lips, hasn't really helped the situation either.

http://www.cronicalibre.cl/2014/07/21/p ... a-braunau/

https://www.13.cl/programas/bienvenidos ... oso-contra
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Re: Housing market situation

Post by admin » Thu May 16, 2019 11:34 am

as i read that article above,

https://www.df.cl/noticias/mercados/bol ... 95328.html

what struct me as not making sense was the estimated nearly 5 million people in dicom as dead beat debtors, in a population of 18.5 million. that number just does not square with reality in any form.

so, that would mean something like over 50% of the adult population is in dicom, once you subtract children from the population, etc, and then put a 7 year statute of limitations on debts, etc. sounds like dicom has more debtors than live people.
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Donnybrook
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Re: Housing market situation

Post by Donnybrook » Thu May 16, 2019 11:38 am

41southchile, the exact same thing happened to Viña del Mar with huge buildings stretching across what used to be sand dunes. Pucon used to be a pleasant town to visit in summer, now worth avoiding, especially in February.

Baltimore
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Re: Housing market situation

Post by Baltimore » Thu May 16, 2019 12:04 pm

admin wrote:
Thu May 16, 2019 11:34 am
as i read that article above,

https://www.df.cl/noticias/mercados/bol ... 95328.html

what struct me as not making sense was the estimated nearly 5 million people in dicom as dead beat debtors, in a population of 18.5 million. that number just does not square with reality in any form.

so, that would mean something like over 50% of the adult population is in dicom, once you subtract children from the population, etc, and then put a 7 year statute of limitations on debts, etc. sounds like dicom has more debtors than live people.
Yeah, that number is odd. I wonder if what they mean is "number of delinquent accounts in Chile", not "number of people with delinquent accounts". Regardless, it is still a high number with a solid upward trend.

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Re: Housing market situation

Post by Baltimore » Thu May 16, 2019 12:28 pm

thisisreallycomplicated wrote:
Thu May 16, 2019 12:35 am
This seems like a good thread to ask this question... Do Chileans tend to borrow a lot on their home equity?
I cannot give you a solid statistic on this, but based on people I know in low, medium, and high income levels, my answer is yes for both low and medium levels. As soon as they have access to a credito hipotecario (job contract+20% down payment), they buy a property, although this might be changing for millenials.

For people in high income brackets, it depends. Friends that come from money buy properties with little or no leverage, most of them can afford gigantic down payments using inheritances or direct financial support from their families. I also know some that borrow money from companies owned by their family, as "soft loans". I know many of these have bought big apartments or houses in San Carlos de Apoquindo, Lo Barnechea, Vitacura, etc.

Friends that do not come from money, but that make good money today, are more shy about buying properties and using leverage because the areas where they want to live have really bad price-to-rent ratios (Vitacura, Lo Barnechea, Las Condes). In those areas in Santiago a mortgage with a 20% down payment gives you a pretty bad deal compared to the alternative of renting and investing somewhere else (e.g., a rental property somewhere else or using a different investment instrument). If for some reason the economy goes south, they are well aware that if they need to step out from their properties, there is no way that they will be able to cover the mortgage with the current rental prices. Think of apartments or houses that you can rent for $600.000 - $900.000 that would require mortgages of $2.000.000 per month with a 20% down payment. Add gastos comunes of $350.000 per month for a nice a apartment and things start looking not so rosy if you need to run away from your property, put the apartment up for rent, but it remains empty for months.

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Re: Housing market situation

Post by fraggle092 » Thu May 16, 2019 2:12 pm

Chileans, like people everywhere have been sold the "natural living" myth, which here basically comes down to having a pretty view from their apartment windows. But they want those natural surroundings without sacrificing any mod cons. In practice this means that areas of natural beauty are often transformed into high-rise ghettos, a version of Santiago-by-the-Sea. (or Lake)

In their self-interested way, the protagonists don't want to understand that they are harming the environment they claim to love by building there. And this will continue, as long as there is money to be made by the inmobiliarias and the property investors, right down to the AirBnb level. Hay que aprovechar....

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Re: Housing market situation

Post by admin » Thu May 16, 2019 5:12 pm

well most of that credit bubble is the frigen banks' here own fault. a bank is basicalyy in the pay day loan biz in chile. no checking acount in the country happens without millions of pesos of consumer credit attached. in fact, they wont open you a checking acount if you dont quantify for credit cards, consumer loans, etc, etc. you cant just have an account to put money in and, as many banks have put it, be a "real" customer.
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Re: Housing market situation

Post by admin » Thu May 16, 2019 5:23 pm

yea, I am taking the attitude right now of not buying any real estate untill this "boom" blows up.

i got one little property deal for myself i am closing right now, on a rural property that i own half already and my partner made a great offer for me to buy them out cheap.

guess what they want the money for?

to put a down payment on an apartment in santiago.

other than that i am just waiting. in a couple years, like it always does, , the economy will hick-up. all these over stretched buyers will panic sell or default. there will be a pile of deals on the market.

no need to rush. i got plenty of real estate already. when i see things hit the minus 25% of market price or better, then i might start nibbling. not going rush around bidding against all the window shoppers for property i dont even like.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
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