Housing market situation

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Re: Housing market situation

Post by admin » Wed Nov 28, 2018 6:09 pm

Some of these I have already described, but this will put them in context of distortions.

Here is some crazy distortions, all in the same condominium just outside of Frutillar a couple Km.

First property I bought, 5000 square meters was for 17 million pesos, near the front of the condo. Think like 7 years ago. The same day, I looked at another property in the same condo for 20 million, but all the way at the back. Typically the lots up front in a development tend to appreciate faster. The lot in back though was nice.

Fast forward about 5 years, I had not been paying much attention to the market values around, but I was guessing the value of that went up to about 40 to 50 million. The 2 hectare property, sharing the property line with my property and outside the condo so no water rights, sells for the equivalent of 80 million pesos per 5000 square meters. It was on the market for about 6 months. My wife and I even met with the real estate agent, but we had other things going on. That was a couple of years ago, prices have moved more than that. So, I would say it has a market value of about 100 million right now, mas o menos.

About the same time, 5 years later, we are talking to the real estate agent that had originally showed us the property in back. It was still on the market for 20 million pesos after 5 years. I knew the real market value was closer to 50 million. As soon as I heard that, I called my brother to see if he wanted to go in half. It was a go. I called the real estate agent. He had just signed the sales contract 30 mins before, and one of my other neighbors bought it. That one still ticks me off. After 5 years, to miss it by 30 mins.

Oh, well. Moving on.

Second lot I bought, the seller wanted 35 million. More towards the back, but not all the way. We were going to buy it on mortgage, so the bank sends out an appraiser. I go out with the appraiser, she had not appraised anything in Frutillar in a couple of years. She determines the property is worth like 20 million. Which, under the circumstances, I was just going to bite my lip and not say anything. We wanted a low ball appraisal, even though that 20 million was no where near market price, to use to negotiate with the seller. We got if for 28 million. I flipped that property to my sister in law that afternoon for like 32 million. She did not have the money at the moment, but we knew she would shortly, and the property was perfect for her and the family. So we bought it, held it for 6 months, sold it to them.

A friend, last year, bought a property 4 lots up the road from that one, for 50 million, and further to the back of the condo.

We then bought the lot next to my sister in law, with a house. The bank appraiser, essentially pegged the raw land without the house at 80 to 100 million pesos. So, according to the bank, my sister in law's lot moved from 28 million to over 80 million, in about two years. :roll:

The irony is, before we bought that property, we bought another from the same seller on the other side of the condo. Basically there are two roads in our condo. We paid 35 million for that lot, about a year and half ago. Now, directly next door to that lot, like sharing a fence next door, with no view of the volcano or lake due to some trees blocking the view, there are three lots in a row for sale, for 50 million each.

But, the even stranger thing is. If you drive out of Frutillar, about 9 to 10 km, around the lake, they are selling lots for 100 million or more. We are walking distance to town, vs. a fairly long drive that is basically on the edge of the municipality. Another 100 meters, and you could not even really say you lived in Frutillar.

The only thing that really makes sense out of those numbers, is the level of promotion involved when they are sold. Those lot's being sold at 100 million or more outside of town, have a big fancy web site, a national real estate agent, etc. Really, when I finally decide to cash in, I could do the same thing just as easily and make these properties sound like the best thing since sliced bread. For the time being, I am just going to quietly keep acquiring lots as I hear about properties coming up for sale that are at distorted prices.
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at46
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Re: Housing market situation

Post by at46 » Wed Nov 28, 2018 6:29 pm

Baltimore wrote:
Wed Nov 28, 2018 5:12 pm
It seems like most Germans are pretty happy renting though...

https://qz.com/167887/germany-has-one-o ... hip-rates/
I think the German bankers are pretty happy the Germans, who are mostly renters, ''actually pay more for housing—as a percentage of disposable income—than housing-crazed countries like the US, Spain and Ireland.''

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Re: Housing market situation

Post by at46 » Wed Nov 28, 2018 6:46 pm

tiagoabner wrote:
Wed Nov 28, 2018 5:05 pm
2500€ is almost 2 million pesos, actually. But yeah, there's always a disconnect between wages and the interest rates.
Did you look it up on xe.com? :)

I was using info from a friend who just moved to Munich for a salary of 58K per year which comes to just over 2500 per month after taxes. Which would be around 1.2 million here I think, given: You would need around 3,063,463.28CL$ (4,016.04€) in Munich to maintain the same standard of life that you can have with 1,800,000.00CL$ in Santiago (assuming you rent in both cities). This calculation uses our Cost of Living Plus Rent Index to compare cost of living. This assumes net earnings (after income tax).

The funny thing is he was making 1.2 million here but with his current salary of 2500 Euro in Munich he feels like he has to be more economical with his spending habits there. And he's renting in a shitty part of town, too.

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Re: Housing market situation

Post by admin » Wed Nov 28, 2018 7:02 pm

i guess the market is so good, even the goverment is selling:


https://www.df.cl/noticias/economia-y-p ... 80706.html

pinera tried to dump some of the property held by the military in his first administration. dont think it went anywhere. we even looked at a small military base for sale for a client back then that had a hotel for the officers. it came with a helocopter pad and sensors on the fence line.. the price was too high as i recall.
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Re: Housing market situation

Post by at46 » Wed Nov 28, 2018 7:41 pm

mem wrote:
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'm not sure what you mean about Venezuela. The table shows it has a 4.277 billion current account surplus. Which is only 109 times better than the US and about 23 times better than the UK, btw :) The figures are computed on an exchange rate basis, so dollars in, dollars out.

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Re: Housing market situation

Post by 41southchile » Wed Nov 28, 2018 10:56 pm

So my suegro has been down from Arica for the last week, where he lives is to the north of Arica, he is literally one of the last houses before the desert border with Peru, he likes to joke that he is the first line of defence from those dodgy Peruvians.
Anyway, he bought his one hectare section about 13 years ago for 10 million pesos, today 1 hectare sections are going for 300 million there, in the driest desert in the world
Apparantly he reckons that Arica is going to be turned into a tax free zone, not a duty free , but tax free like the Bahamas, as in no income or corporate taxes for those that base themselves there, not sure if it's true, someone in the know told him he said, but he raises an interesting point , it could be a very strategic plan, and there is some big investment going on in Arica . .........
Ignorance more frequently begets confidence than does knowledge: it is those who know little, not those who know much, who so positively assert that this or that problem will never be solved by science. - Darwin

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Re: Housing market situation

Post by admin » Thu Nov 29, 2018 6:27 am

perhaps he ment free of taxes, paid to chile. it is the taxes to peru that will get you. :lol:
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Re: Housing market situation

Post by admin » Mon Dec 03, 2018 11:27 am

first we had robo signings in the states. now we will have robo appraisals.

so seems the u.s. fed is proposing that houses be apraised by computer algo rather than humans. yea that does not sound like it will end well.

https://m.slashdot.org/story/349140
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Re: Housing market situation

Post by admin » Mon Dec 03, 2018 2:22 pm

11 months of advances for the chilean construction sector:

https://www.df.cl/noticias/empresas/inf ... 05410.html
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Re: Housing market situation

Post by paladin » Tue Dec 11, 2018 8:26 pm

There’s certainly no lack of demand in El Golf for apartments. In the last two weeks, two apartments came up on portalinmobiliario , that I liked the look of, One was sold before I could even go to see it, and the other sold today, even though the corredora said she’d let me know if anyone made an offer, which she didnt. We know that corredoras are not qualified in this country and the vast majority are just bored housewifes trying to make some money, but they really are the worst I’ve ever come across. There are also two other apartments I’ve asked a corredora various times in the past 3 weeks, but havent even had the courtesy of a reply.

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Re: Housing market situation

Post by mem » Tue Dec 11, 2018 9:53 pm

If they dont reply it is probably already sold or at least an offer accepted.

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Re: Housing market situation

Post by at46 » Tue Dec 11, 2018 10:03 pm

If you're planning to buy with cash vs. a mortgage, let them know right away in your initial email. That usually puts you in the front of the queue.

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