Housing market situation

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PXYC
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Re: Housing market situation

Post by PXYC » Tue Oct 01, 2019 6:00 pm

I recently went from Providencia to Cajón del Maipo by car, and going up Las Condes > Vitacura > Barnechea it amazed me all the new buildings constructed with 21 floors or more. I live very near to work, so I walk short distances, and for long distances I usually travel under the earth, so seeing the city by car really amazed me, it's actually a whole medium european city (housing for 1 million people?) that Chile constructed beetween this space in less than a decade (well I arrived to Chile in 2015 and I don't remember all those buildings then). :)

Well this is just my visual perception anyway.

It kind of defeats the idea of investing, with rents being so cheap and all, and this new construction increasing the offer. Like in Providencia I can find 1b apartments in the likes of 400 lucas and there's this feeling that prices have been slowly lowering, while my salary has been moderately increased since 2015. :lol:

I really don't understand how come doesn't the housing market crash, it's magic to me, but I guess buying prices will continue to increase with this new lowered interest rates, so really the money I'm saving not buying will continue to be "eaten" by the prices increase I guess.

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Re: Housing market situation

Post by admin » Tue Oct 01, 2019 6:27 pm

Baltimore wrote:
Mon Sep 30, 2019 12:09 pm
1) Most chileans don't invest in anything other than real estate, they don't trust/understand other things like bonds or stocks because "you can at least touch a house".

I have a former classmate that now has 12 apartments for rentals. He makes a good salary working for a mining company. As soon as he saves enough for a 20% down payment, he buys another one. Rent from the first N-1 apartments count as extra income, so he basically doesn't run out of room to borrow more money. The only investment analysis involved is: "Can I pay the mortgage with the rental price if I put 20% down? If yes, buy"

2) Lots of chileans see the purchase of a house or some property as a milestone of adulthood, not as an investment. I can't tell you how many of my friends and members of my family have bought properties by only looking at whether they can get a mortgage or not. If they qualify for a mortgage they get it, if not, they try to come up with a larger down payment by borrowing money from close relatives.

Comparisons to fundamentals, such as price-to-rent ratio, are unheard metrics for 99% of the population. This is something I really miss from the US, real estate firms or platforms that offer tools such as:
https://www.zillow.com/rent-vs-buy-calculator/
https://www.realtor.com/mortgage/tools/ ... alculator/

Whereas in Chile, the real estate firms or platforms give you these tools:
...none


3) There are tons of cash available due to low interest rates, lots of money coming from other investment vehicles finding a safe haven. I don't buy the thesis that poor urban planning is pushing up prices, zonal restrictions have been lifted before with a null effect on prices.



Screen Shot 2019-09-30 at 11.19.11 AM.png
well, foriegners can debate all the finer details of how real estate markets and investment should work, as far as most chileans are concerned it is a tried and true method of building wealth for the last several generations, at least. So far they have been right, even through various instabilities back in say the 70s and 80s. those with property, were able to ride out whatever else was going on in the economy.
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Re: Housing market situation

Post by Britkid » Tue Oct 01, 2019 6:36 pm

PXYC wrote:
Tue Oct 01, 2019 6:00 pm
I recently went from Providencia to Cajón del Maipo by car, and going up Las Condes > Vitacura > Barnechea it amazed me all the new buildings constructed with 21 floors or more.
Thanks for your insights. That would be a very strange route to the Cajon de Maipo though. I suspect you went up the Camino de Farellones which I don't think is part of the Cajon de Maipo.

PXYC
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Re: Housing market situation

Post by PXYC » Tue Oct 01, 2019 7:25 pm

Britkid wrote:
Tue Oct 01, 2019 6:36 pm
PXYC wrote:
Tue Oct 01, 2019 6:00 pm
I recently went from Providencia to Cajón del Maipo by car, and going up Las Condes > Vitacura > Barnechea it amazed me all the new buildings constructed with 21 floors or more.
Thanks for your insights. That would be a very strange route to the Cajon de Maipo though. I suspect you went up the Camino de Farellones which I don't think is part of the Cajon de Maipo.
Ahah I don't know, I went trough a never ending road to restaurant Dona Tina, passing trough a big sodimac and hospital fuerzas armadas, and after the restaurant we tried to go to santuario de la naturaleza which i think is cajon del maipo?

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Re: Housing market situation

Post by Britkid » Tue Oct 01, 2019 8:00 pm

Where you went is North East of Santiago, Cajon de Maipo is South East.

PXYC
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Re: Housing market situation

Post by PXYC » Tue Oct 01, 2019 9:53 pm

so there goes my biased view on the santiago housing market and general geography :lol:

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Re: Housing market situation

Post by Baltimore » Tue Oct 01, 2019 11:18 pm

admin wrote:
Tue Oct 01, 2019 6:27 pm
Baltimore wrote:
Mon Sep 30, 2019 12:09 pm
1) Most chileans don't invest in anything other than real estate, they don't trust/understand other things like bonds or stocks because "you can at least touch a house".

I have a former classmate that now has 12 apartments for rentals. He makes a good salary working for a mining company. As soon as he saves enough for a 20% down payment, he buys another one. Rent from the first N-1 apartments count as extra income, so he basically doesn't run out of room to borrow more money. The only investment analysis involved is: "Can I pay the mortgage with the rental price if I put 20% down? If yes, buy"

2) Lots of chileans see the purchase of a house or some property as a milestone of adulthood, not as an investment. I can't tell you how many of my friends and members of my family have bought properties by only looking at whether they can get a mortgage or not. If they qualify for a mortgage they get it, if not, they try to come up with a larger down payment by borrowing money from close relatives.

Comparisons to fundamentals, such as price-to-rent ratio, are unheard metrics for 99% of the population. This is something I really miss from the US, real estate firms or platforms that offer tools such as:
https://www.zillow.com/rent-vs-buy-calculator/
https://www.realtor.com/mortgage/tools/ ... alculator/

Whereas in Chile, the real estate firms or platforms give you these tools:
...none


3) There are tons of cash available due to low interest rates, lots of money coming from other investment vehicles finding a safe haven. I don't buy the thesis that poor urban planning is pushing up prices, zonal restrictions have been lifted before with a null effect on prices.



Screen Shot 2019-09-30 at 11.19.11 AM.png
well, foriegners can debate all the finer details of how real estate markets and investment should work, as far as most chileans are concerned it is a tried and true method of building wealth for the last several generations, at least. So far they have been right, even through various instabilities back in say the 70s and 80s. those with property, were able to ride out whatever else was going on in the economy.
I think by now I know as many examples of people buying cheap land in the south during the 90s and now selling it for like 20 times the price as people buying expensive apartments or houses in Providencia, Las Condes or La Reina and not making any money at all after reselling 20 years later. Actually, I know some that bought new shiny houses or apartments and that lost money. Ask owners of nice apartments bought near Alcantara or El Golf that were made in the 90s how much they paid and much they could sell or rent those apartments for now. The problem is that many think in nominal terms, 80M in 1994 (price of a really nice apartment back then) are 224M now when adjusted for inflation.

Back in the 70s and 80s you didn't have LarrainVial or teams of comercial engineers doing computer-aided analyses to find where to invest all over the country. It's surprising to see all the platforms online offering parcelas in the south with all the information in English and prices in USD. I have my Facebook full of ads offering me real estate investments near the beach, in the south, in Estacion Central, etc etc. Whatever information asymmetries or lack of commoditization of land or real estate that existed in Chile up until the late 90s I think have been disappearing over time. So I am not really sure if taking the last 30-40 years of trends and projecting that straight into the next 30 years is a reasonable assumption given how much the market has changed. Granted, property can go up in value if cities have nice things to offer (network effects), but with all the available information, money, software, and institutions betting on land today from all over the world, I find it hard to believe that current prices would not reflect expected appreciation for the future.

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Re: Housing market situation

Post by Baltimore » Tue Oct 01, 2019 11:28 pm

PXYC wrote:
Tue Oct 01, 2019 6:00 pm
I recently went from Providencia to Cajón del Maipo by car, and going up Las Condes > Vitacura > Barnechea it amazed me all the new buildings constructed with 21 floors or more. I live very near to work, so I walk short distances, and for long distances I usually travel under the earth, so seeing the city by car really amazed me, it's actually a whole medium european city (housing for 1 million people?) that Chile constructed beetween this space in less than a decade (well I arrived to Chile in 2015 and I don't remember all those buildings then). :)

Well this is just my visual perception anyway.

It kind of defeats the idea of investing, with rents being so cheap and all, and this new construction increasing the offer. Like in Providencia I can find 1b apartments in the likes of 400 lucas and there's this feeling that prices have been slowly lowering, while my salary has been moderately increased since 2015. :lol:

I really don't understand how come doesn't the housing market crash, it's magic to me, but I guess buying prices will continue to increase with this new lowered interest rates, so really the money I'm saving not buying will continue to be "eaten" by the prices increase I guess.
I live in a 100sq mt nice apartment in Las Condes and pay ~530k per month. The owner had it posted for 650k at portalinmobiliario, I offered 500K a couple years ago and he accepted. I have three more couples of friends living nearby, one couple in Pocuro paying a similar amounts for big and nice apartments as well. Same situation for all of them, all ended up renting for like 70%-80% the posted price at portalinmobiliario. I know that these properties sell for about 200M-230M, price-to-rent ratios north of 30 years.

A couple of months ago one of our bathrooms required big repairs, the bill was 550K. I was nice not to have to pay for that :)

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Re: Housing market situation

Post by 41southchile » Tue Oct 08, 2019 7:57 am

So Piñera says that due to the drought, more people will move south. Surprise surprise, tell us something we didnt know already and haven't known for about the last friggin 10 years , at least, people have been leaving Santiago for the South.
In saying that though , its not only the drought though that causes people to flee Stgo. Its more due mismanagement of Santiago and the zona central (probably all of chile actually) in the last few decades by politicos on the right and those businesses that under their xhilean version of the neoliberalism (yes the meaning is interpretative) have disregarded every other non monetary consequence in their quest to have a little bit of power and a lot of pesos.
Then of course Mix that it in with the pseudo socialists and burrocrats on the left and their ideas for saving the country (mixed in with making/skimming money) and you have the perfect recipie for mediocrity and a semi functional large metropolis and you can start to work out why Santiago is the way it is today.
Of course not all Santiago ills can be laid at the door of the politicos, in fact maybe its surprising how functional the city is , despite their efforts . It's also a combined effort of individuals and citizens too, who seemingly dont seem to give a shit about anything outside their sphere of knowledge. I guess it's the chicken or the egg senario, what came first ? The self interested and or incompetent politician or the self interested unaware of anything else outside their bubble citizen?
Times they are a ch ch changing though, there are some
signs of green shoots in Santiago.
Anyones guess, Because it sure as hell isn't just the weather that is causing people to leave Santiago for the South mr Piñera, it maybe one thing in a long list but there are plenty more on that list.

https://www.emol.com/noticias/Nacional/ ... chile.html
I can't decide for you. You'll have to make up your own mind.

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Re: Housing market situation

Post by mem » Tue Oct 08, 2019 9:03 am

When Pinera says south I wonder how far south is he thinking. I know there is zero issue with drought in inland region 9. I guess I assume at least Bio Bio and south is his thinking.

Wish there was a city as developed as Santiago further south and as far inland as Santiago

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41southchile
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Re: Housing market situation

Post by 41southchile » Tue Oct 08, 2019 9:33 am

mem wrote:
Tue Oct 08, 2019 9:03 am
When Pinera says south I wonder how far south is he thinking. I know there is zero issue with drought in inland region 9. I guess I assume at least Bio Bio and south is his thinking.

Wish there was a city as developed as Santiago further south and as far inland as Santiago
Yeah nothing really, in terms of other Cities in Chile like you describe. I imagine he means South of the Biobio , which is where they want to try and pump water from, which just seems like another grandiose idea of a politician, (like China and their mega water canals which have the same flaws). There is an enormous amount of waste of water already in central valley, one example is shitty 19th century irrigation canals that leak like sieves and evaporate a lot of water. Nah, let's not worry about that but let's build a friggin big ass canal and Pipes from the biobio that will take over a decade.
I can't decide for you. You'll have to make up your own mind.

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Re: Housing market situation

Post by Baltimore » Tue Oct 08, 2019 11:59 am

41southchile wrote:
Tue Oct 08, 2019 7:57 am
So Piñera says that due to the drought, more people will move south. Surprise surprise, tell us something we didnt know already and haven't known for about the last friggin 10 years , at least, people have been leaving Santiago for the South.
In saying that though , its not only the drought though that causes people to flee Stgo. Its more due mismanagement of Santiago and the zona central (probably all of chile actually) in the last few decades by politicos on the right and those businesses that under their xhilean version of the neoliberalism (yes the meaning is interpretative) have disregarded every other non monetary consequence in their quest to have a little bit of power and a lot of pesos.
Then of course Mix that it in with the pseudo socialists and burrocrats on the left and their ideas for saving the country (mixed in with making/skimming money) and you have the perfect recipie for mediocrity and a semi functional large metropolis and you can start to work out why Santiago is the way it is today.
Of course not all Santiago ills can be laid at the door of the politicos, in fact maybe its surprising how functional the city is , despite their efforts . It's also a combined effort of individuals and citizens too, who seemingly dont seem to give a shit about anything outside their sphere of knowledge. I guess it's the chicken or the egg senario, what came first ? The self interested and or incompetent politician or the self interested unaware of anything else outside their bubble citizen?
Times they are a ch ch changing though, there are some
signs of green shoots in Santiago.
Anyones guess, Because it sure as hell isn't just the weather that is causing people to leave Santiago for the South mr Piñera, it maybe one thing in a long list but there are plenty more on that list.

https://www.emol.com/noticias/Nacional/ ... chile.html
You should go right now take all your savings and buy as much land as possible in the south before other people hear about this secret! ....oooh wait a minute :shock:

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