Blog Is it Convenient to Sell or Buy a House in the Metropolitan Region in 2023?

This is a question that many homeowners ask themselves, especially in the current context of economic recovery, increased housing demand, and rising prices. However, the answer is not as simple as it seems, and depends on several factors that must be considered before making a decision.

The Last Decade.

Firstly, it is necessary to consider the evolution of the Chilean real estate market in the last decade, which has shown sustained growth both in the number of transactions and in the value of properties. According to the Residential Real Estate Price Index (from the Latin American Center for Economic and Social Policies UC), the average price of used homes in the Metropolitan Region has increased by 67% between the first quarter of 2013 and the second quarter of 2023, from 2,149 UF to 3,591 UF. This increase is explained by the greater demand for housing, driven by demographic growth, increased per capita income, access to mortgage credit, and government incentives. In addition, the supply has been limited by the scarcity of urban land, higher construction costs, and delays in municipal permits. So, ultimately today it is much more convenient to sell a property compared to the period from 2013 to 2020.

Are We in a Good Time?

Secondly, it is necessary to evaluate the owner's plan regarding their home. If their objective is to exchange it for a better or bigger one, they should know that it is not easy to find a good opportunity in the same sector or commune, since prices have gone up for all types of properties. In addition, they must consider the costs associated with the sale and purchase of a home, such as taxes, commissions, notarial expenses, and legal procedures. These can represent between 5% and 10% of the property's value, reducing the profit margin and affecting their borrowing capacity. On the other hand, if their intention is to sell to invest in another type of asset or business, they must consider that housing is a safe and profitable long-term investment that generates rental income and protects them from inflation and currency devaluation.

Before Making a Decision.

Thirdly, it is necessary to consider the common inconveniences that homeowners face when they decide to sell their home. One of them is the time that the process can take, which depends on the location, condition, price, and demand for the property. According to data from the real estate portal Portalinmobiliario.com, the average time for selling a home in the Metropolitan Region was 8 months in 2022, which implies having patience and availability to show the property to interested parties. Another inconvenience is the emotional stress that can arise from letting go of a property that has sentimental and family value, especially if it is the house where children were raised or important moments were experienced. Overvaluations in prices based on sentimental origins may occur, which are usually relevant to the seller and not so much to the buyer. In conclusion, and as explained later through a general market analysis, selling a house in the Metropolitan Region can be a good option if there is an attractive offer, urgent liquidity needed, or if they want to radically change their lifestyle. However, if they do not have an urgent need or a clear project, the most recommended is to keep their property and take advantage of its benefits as a heritage asset. Remember that housing is more than a material good, it is also a space where a family's history and identity are built.

How Has it Been in Recent Months?

Real Estate Market Analysis: According to the results, the Chilean real estate market contracted in 2022, due to the pandemic and its economic and social effects. The number of buying and selling transactions decreased compared to the previous year and the average of the last five years. Prices showed negative annual variations throughout 2022, which were explained by the value of used properties. The Metropolitan Region contributed the most negative contribution to the Housing Price Index (IPV), for all quarters of 2022.

However, the real estate market showed signs of recovery in 2023, driven by economic reactivation, increased demand, and a shortage of supply. The sale of new homes grew 68% by August, with greater dynamism in apartments than in houses. The average price of new homes also increased, with steeper increases in houses than in apartments. The real estate market is projected to grow at a compounded annual rate of 4.10% between 2023 and 2028.

In Summary.

In conclusion, the market is overvalued mainly due to the excessive accumulation of offers for sale or rent. Aggravated by social problems in Chile. Those who want to sell will have to establish a well-tuned strategy or set prices between 5% and 10% of the market average for the same sample. I hope this has been helpful.

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