[비즈한국] People are cold and calculating when buying a home. They weigh how many minutes it takes to get to the station, where the schools are, and how many new apartments are being built in the vicinity. They compare different buildings and floors within the same complex and negotiate for days to shave a few million won off the price. However, the moment the contract is signed, something strange happens. The once-meticulous analyst disappears, and is replaced by someone who defends their own home. Disadvantages turn into circumstances, inconveniences become habits, and vague development plans are accepted as confirmed futures.
The question that current homeowners need to ask is this: If you did not own this house today, would you pay the current price to buy it again? If you find it difficult to answer, it is time to start evaluating. The reasons that were necessary when you bought the home are also necessary while you own it. Choosing not to sell is, after all, a decision to continue allocating your capital into that property.
The recent market makes this question even more pressing. In a survey conducted by the Korea Real Estate Board as of September 28, Seoul apartment sale prices rose 0.09% from the previous week, but the rate of increase has slowed for five consecutive weeks. Prices in Gangnam, Seocho, Songpa, and Yongsan have fallen, while Seoul jeonse (charter rent) prices rose by 0.19%. The speed of sales and the pressure of the rental market are different, and trends are diverging even within Seoul. It is a market where it is difficult to explain the future of all homes under the single address of "Seoul."
In times like these, the most dangerous saying is the conviction that "real estate always goes up eventually." It is a statement that omits which house in which region was bought for how much, how much it costs to maintain, and how long one must hold onto it. Even if prices rise in the long term, your profit only materializes if you can maintain ownership until that point. If you cannot return a deposit or handle interest payments in the middle, the price in the distant future is meaningless.
Conversely, the judgment that "it has risen a lot, so I must sell" is also crude. Price appreciation and loss of value are two different things. If it is a place where job accessibility is improving, living infrastructure is strengthening, and the supply of alternative housing is limited, there is a valid reason for a price higher than in the past. Whether to hold an asset cannot be decided solely by past growth rates. You must verify if there is demand willing to pay that cost to move in going forward.
The first criterion is to distinguish between the house I like and the house the market chooses. A wide living room and a quiet walking path may be precious to the owner. However, the next buyer might prioritize commute times, and the next tenant might look first at schools and convenience. My satisfaction is the basis for residential value. That alone cannot lead to the conclusion that someone else will pay a higher price.
The starting point for verifying that demand is the rental market. You must look at how much similar homes are contracted for, how long it takes to find a tenant, and the difference between new contracts and renewals. If jeonse asking prices are rising but actual contracts have stalled, it is difficult to conclude that demand is strong. Conversely, if rental properties at reasonable prices are consistently being absorbed, you can confirm the foundation of housing demand. The process of ongoing contracts is more important than a single number.
However, one should not accept a rise in jeonse prices as a guarantee for a rise in sale prices. For rental demand to shift to buying demand, income, equity, and loan capacity must be supported. Sale prices can remain stagnant even while jeonse prices are rising. Jeonse is an important clue to reading housing demand. You must connect that clue to purchase prices and financial conditions to make an investment judgment.
The second criterion is to accurately read the time and scope of supply. There is a large gap between the fact that supply has been announced and the fact that there will be a house to move into next year. You must check when authorized housing projects will break ground and when they will be completed. Looking only at the numbers for an entire administrative district is insufficient. The key is what prices and types of housing are entering the living sphere that competes for the same demand as your home.
The appearance of a new apartment has different effects on existing homes. Roads and commercial facilities may be expanded, improving local living conditions. At the same time, if people can choose a more convenient new home for a similar cost, the competitiveness of older homes may weaken. You should not automatically calculate surrounding development as a positive factor. You must weigh whether a reason to choose your house remains after the development. Urban development does not guarantee the same profit for all owners.
The third criterion is the cost of ownership. People are sensitive to fluctuations in sale prices but tend to be dull regarding the money that leaves their pockets every month. In addition to interest, taxes, and maintenance costs, you must put future expected assessments and deposit repayments on your timeline. Even if paper profits are high, if you lack cash at a specific point in time, you lose your options. The fact that you own a good asset does not replace a good financial structure.
Reconstruction and redevelopment projects should be viewed with particular strictness regarding this issue. Many people talk about the expected price of a new apartment, but few calculate business delays and additional capital injections. Even if the value after move-in is high, if the costs to be borne in the process are excessively large, you should adjust your holding strategy. Business feasibility must be judged by looking at the value at the time of completion and the total costs to be incurred until then.
The fourth criterion is today's alternatives. What you paid in the past is important when calculating after-tax profit or loss. However, it cannot substitute for the reason to hold it going forward. If you get caught up in the idea that you will only sell after recovering your principal, you will look at your own purchase price for longer than the market situation. The next buyer is not interested in what you paid. They only judge whether this house is better than other alternatives.
For single-home owners considering an upgrade, it is necessary to pay attention to price differences. For example, suppose the home you own dropped from 1 billion won to 900 million won, and your target home dropped from 1.5 billion won to 1.3 billion won. Although the price of your current home decreased by 100 million won, the gap between the two homes narrowed from 500 million won to 400 million won. If transaction costs and loan conditions permit, the burden required to improve your living standards has effectively decreased. If you only look at the price drop of your own home, you will miss this change.
Of course, you should not calculate using the highest asking price for your home and the lowest "distress" price for the home you want to buy. You must verify the actual tradeable prices for both homes. The schedules for selling and buying, as well as financing the balance and moving plans, must also align. The opportunity for an upgrade can be found in price tags, but feasibility is decided by cash flow.
Multiple-home owners should write down the reasons for holding each house separately. Look to see if the profit generated from one home is masking the weaknesses of another. There is no need to maintain a house just because you have owned it for a long time if rental demand is weak, maintenance costs are rising, and transactions are infrequent. Conversely, there is no reason to dispose of a house with consistent demand and manageable costs just because you are pushed by market noise. More important than the number of houses is how each house contributes to the total assets.
This does not mean you should immediately sell a house you don't want to buy again. The conditions for holding versus buying new are not exactly the same. You must consider transaction costs already paid, taxes that will be incurred in the future, your family's living foundation, and moving costs. Accessibility to children's schools and workplaces, and long-standing care relationships, provide value to actual life. The evaluation of a primary residence does not end with capital gains. You must clearly acknowledge that value while also looking at its weaknesses as an asset.
The evaluation method is not complicated. You can write three sentences on a single sheet of paper: △What is the reason people will continue to move into this house? △Even if competing houses increase, what is the reason this one will be chosen? △Do I have the funds to hold it even if the price doesn't rise for longer than expected? If you can answer these three sentences specifically, you have a basis for enduring temporary price fluctuations. If the answer to all of them is "it will get better someday," you need to re-examine your holding strategy.
Next, you must set the conditions for action. Write down in advance what changes would prompt you to continue holding it, and what level of burden would trigger you to dispose of it. If rental demand is maintained and costs are manageable, there is a basis for waiting. If demand is weakening and cash shortages repeat, you should not spend your time on hope alone. The longer you delay your judgment, the more your options for selling and alternative assets may shrink.
Look at your home today through the eyes of a buyer who is seeing it for the first time. Put aside the address and brand for a moment, and verify the supply and demand, price and costs. Then you must ask: Would I pay this money to buy this house again today? If so, clarify your reasons for holding it. If not, make a plan for when and under what conditions to change it. Protecting the future of your home starts with acknowledging its weaknesses.