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david218533
Joined: 02 Jun 2009
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cdninkorea
Joined: 27 Jan 2006
Location: Seoul
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 Posted: Sat Aug 24, 2013 11:00 pm Post subject: |
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I hope so, at least in Seoul. Real estate prices are ridiculous here. My wife and I were apartment hunting last year for our first jeonsae (전세) place, and it was shocking how the minimum price for anything decent (two bedroom place in a non-dilapidated building) was 150 million.
By contrast, jeonse for a Xii apartment in Busan, one of the most expensive buildings in that city, is only 200 million (meaning a non-luxurious but still decent place would be much less). |
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radcon
Joined: 23 May 2011
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| Posted: Sat Aug 24, 2013 11:36 pm Post subject: |
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| Jeonse in this economic environment? You must be joking. Last week I was going to do a wolse with 50 million deposit. It was a nice place. We were ready to sign the contract when the landlord decides to triple the deposit to 150. He said he needed the money to send his grandkids overseas to study. This meant that 1) he currently had no money and 2) he would be spending the 150 and not saving it so he could pay me back when it was time for me to leave. Thanks dummy for helping me dodge that bullet. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Sun Aug 25, 2013 1:14 am Post subject: |
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| The bubble was supposed to have burst 10 years ago. Then, it was 5 years ago. Nothing has happened. Either way, homes in some neighborhoods will always be in great demand, regardless of whether there is a bubble or not. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Sun Aug 25, 2013 1:18 am Post subject: |
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| radcon wrote: |
| Jeonse in this economic environment? You must be joking. Last week I was going to do a wolse with 50 million deposit. It was a nice place. We were ready to sign the contract when the landlord decides to triple the deposit to 150. He said he needed the money to send his grandkids overseas to study. This meant that 1) he currently had no money and 2) he would be spending the 150 and not saving it so he could pay me back when it was time for me to leave. Thanks dummy for helping me dodge that bullet. |
Yup, you definitely dodged a bullet on that one. I know far too many people who've been burnt that way. If he had declared bankruptcy, which is very likely, you'd have ended up getting in return the amount for which you'd have been insured by the government, usually 8 to 14 million. The only time one should pay jeonse is if one can be certain that the money will be going towards paying the mortgage and the owner hasn't gotten behind on the payments. |
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Titus
Joined: 19 May 2012
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| Posted: Sun Aug 25, 2013 8:01 am Post subject: |
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The takeaway from the American/Irish/Spanish bubbles that popped, and the AUS, Canadian, HK, SG, Korean bubbles that are going strong is that bubbles only deflate when the pool of available credit dramatically declines.
A home builder going bust doesn't portend doom. A bank going bust does. |
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Unposter
Joined: 04 Jun 2006
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| Posted: Sun Aug 25, 2013 5:18 pm Post subject: |
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Titus,
Interesting point.
My guess is that demand for jeonsae will lead to higher jeonsae prices until the price of jeonsae reaches a point where people will decide that buying makes more sense. At that point, some will say that the market has "corrected" itself. Assuming you do not beleive that the entire Korean economy will collapse, now may be the time to buy, while prices are low, before the market "corrects" itself and demand to purchase homes starts to increase. Of course, there may be some time before that happens but short of a total collapse of the Korean economy, it will eventually happen. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Tue Aug 27, 2013 8:26 pm Post subject: |
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| 12ax7 wrote: |
| The bubble was supposed to have burst 10 years ago. Then, it was 5 years ago. Nothing has happened. Either way, homes in some neighborhoods will always be in great demand, regardless of whether there is a bubble or not. |
I think when you look at the housing market nationally there really is no bubble.
It's essentially only Seoul, parts of Gyeeonggi, and maybe parts of Busan, that has seen this astronomical rise in housing prices. The rest of the country, even parts of Seoul, have very nice homes priced in that 200 to 500 million-won range.
One of the factors for getting a mortgage in Canada is by taking their take home income and times it by 10. The lower that multiplying factor is, the more likely the bank will give you a mortgage. And most Koreans fall in that x10 range.
Also, I have noticed, among many of the Korean teachers I work with (in the provinces btw), have amassed huge cash savings. Probably because they bought their homes 25 years ago. And many of them are thinking about buying homes in the Seoul area straight-out with cash for their kids/grand-kids. So you have a huge population in the provinces that can, and maybe willing to, pay these Gangnam prices. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Wed Aug 28, 2013 2:01 am Post subject: |
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| 12ax7 wrote: |
| Yup, you definitely dodged a bullet on that one. I know far too many people who've been burnt that way. If he had declared bankruptcy, which is very likely, you'd have ended up getting in return the amount for which you'd have been insured by the government, usually 8 to 14 million. The only time one should pay jeonse is if one can be certain that the money will be going towards paying the mortgage and the owner hasn't gotten behind on the payments. |
I always thought it went like this...
The owner goes belly up. The gov comes in first and takes any outstanding taxes. The renter (chonse) then comes next, and gets first dibs on the rest. The rest of the creditors follow.
| jvalmer wrote: |
| 12ax7 wrote: |
| The bubble was supposed to have burst 10 years ago. Then, it was 5 years ago. Nothing has happened. Either way, homes in some neighborhoods will always be in great demand, regardless of whether there is a bubble or not. |
I think when you look at the housing market nationally there really is no bubble.
It's essentially only Seoul, parts of Gyeeonggi, and maybe parts of Busan, that has seen this astronomical rise in housing prices. The rest of the country, even parts of Seoul, have very nice homes priced in that 200 to 500 million-won range.
One of the factors for getting a mortgage in Canada is by taking their take home income and times it by 10. The lower that multiplying factor is, the more likely the bank will give you a mortgage. And most Koreans fall in that x10 range.
Also, I have noticed, among many of the Korean teachers I work with (in the provinces btw), have amassed huge cash savings. Probably because they bought their homes 25 years ago. And many of them are thinking about buying homes in the Seoul area straight-out with cash for their kids/grand-kids. So you have a huge population in the provinces that can, and maybe willing to, pay these Gangnam prices. |
I'm a little foggy on the math, there, man. Just so I'm not messing up, do you mean that salary X 10 = rough amount of mortgage qualified for?
I think that's where you were going.
If so, you quoted "very nice homes" in Seoul for 200-500. That'd mean the incomes would have to 20-50,000,000 won range.
While many families I know make that here, I would be VERY cautious to say that "most Koreans fall in that x10 range.". I believe that's an over estimation of the average income.
As for very nice homes being in the 200 range in Seoul... that'd surprise me. But then again, I think I've found you and I have different standards of what constitutes "a nice home". |
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12ax7
Joined: 07 Nov 2009
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| Posted: Wed Aug 28, 2013 4:42 am Post subject: |
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| Captain Corea wrote: |
| 12ax7 wrote: |
| Yup, you definitely dodged a bullet on that one. I know far too many people who've been burnt that way. If he had declared bankruptcy, which is very likely, you'd have ended up getting in return the amount for which you'd have been insured by the government, usually 8 to 14 million. The only time one should pay jeonse is if one can be certain that the money will be going towards paying the mortgage and the owner hasn't gotten behind on the payments. |
I always thought it went like this...
The owner goes belly up. The gov comes in first and takes any outstanding taxes. The renter (chonse) then comes next, and gets first dibs on the rest. The rest of the creditors follow.
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Nope. In the case of a bankruptcy, the system is rigged in favor of the creditor. The creditor (typically a bank) gets all, pays taxes if any are due, and then ask the renter if he or she is interested in buying. If the renter refuses, the bank pays him or her the minimum required by law (whatever is guaranteed by the government, which is typically 8-14 million for most apartments) after the apartment has been sold at auction (for considerably less than they were asking the renter). |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Wed Aug 28, 2013 7:22 am Post subject: |
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| Captain Corea wrote: |
| While many families I know make that here, I would be VERY cautious to say that "most Koreans fall in that x10 range.". I believe that's an over estimation of the average income. |
No, I don't mean the average income is 20-50 million x 10. It's the mortgage that you'd qualify for.
Yes, I'd say most Korean families make in that 20-50 million/yr range. x10 is the mortgage they would be willing to grant you.
So, say you make 50 million x 10 = 500 million won. If you want to buy a home at/under 500 million you're in that x10 range. On the low end would be 20 million x 10 = 200 million won mortgage or under. And of course you put something down it reduces the mortgage. But knowing people, they'd just want a more expensive home. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Wed Aug 28, 2013 3:52 pm Post subject: |
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Well those numbers are still pretty much what I wrote, no? I'm missing the difference. (early morning fog)
Again though, I don't think MOST Koreans earn that type of money. And I don't think there are many nice homes in Seoul for 200.
Sometimes I think you have a very different view of homes and incomes in Korea than I do. We ran into this regarding "average apartment size" in another thread. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Wed Aug 28, 2013 4:54 pm Post subject: |
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| Captain Corea wrote: |
| Again though, I don't think MOST Koreans earn that type of money. And I don't think there are many nice homes in Seoul for 200. |
You really think most Korean households don't make over 20 million-won? That's just under $19,000US. I'd say most do. 20 million/yr isn't much money. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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jvalmer
Joined: 06 Jun 2003
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| Posted: Wed Aug 28, 2013 6:30 pm Post subject: |
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| Captain Corea wrote: |
| Again though, lets say 20... where are these nice places you speak of for 200? |
Ok, I'll admit in Seoul it's difficult. But half the country lives outside of the Seoul area. Put a bit down and you have a home for 200 million. Lots of homes outside of Seoul in that 200-500 million price range. In some of the smaller towns you might even have 2-room places listed for under 100 million, but those are hard to find. |
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