[Book Sip] How to Prepare for the Perfect Timing 'Jibi Onda'

Some sentences encapsulate the entire content of the book itself, while others instantly reach the reader's heart, creating a connection with the book. We excerpt and introduce such meaningful sentences from the book. - Editor's note

It seems that mortgage loans will exceed the 7% range for the first time in 13 years. The 30-somethings who jumped in late in recent years with all-in borrowing might suffer irreversible severe damage. To prepare for this, the author goes beyond the simple cyclical theory of "prices have risen a lot, so it's time to fall," thoroughly analyzes various real estate data, identifies causal relationships, and forecasts a highly probable future.

[It was not that the increase in single-person households caused the surge, but that strengthened regulations increased single-person households]

The investment and financialization of the housing market are the most important prerequisites for judging and forecasting the real estate market. The government cited the increase in single-person households as one of the causes of the housing price surge. The basis for this judgment was that single-person households buying homes increased significantly since 2017. However, the analysis of causality was incorrect. Did single-person households really increase, causing apartment prices in Gangnam to rise? Rather, the essence was that as regulations on multi-homeowners were strengthened, households separated, and investment-purpose single-person household purchases increased. Also, actively separating households to participate in the subscription market was another cause of the increase in single-person households. Ultimately, it should be interpreted that the housing market took on an investment character, leading to an increase in single-person households.

[Demand fluctuates regardless of population or income]

Generally, housing demand is thought to be determined by population, number of households, and income. If population or number of households increases, housing demand can increase. If income decreases, housing demand decreases. On the other hand, population, number of households, and income, which determine housing demand, have a trend-like nature. In other words, once they start to change, they continue in the same direction (if increasing, continue increasing; if decreasing, continue decreasing) for a certain period. Population does not suddenly increase in one year and then decrease. The same applies to the number of households and income. However, from 2008 to 2010, housing demand fluctuated sharply every year. Therefore, it can be judged that housing demand, which determines housing prices, is not the trend-like population, number of households, or income.

Let's also look at housing supply. Generally, housing supply refers to the total amount of housing. The cause of the housing price increase from 2016 to 2021 lies in the decrease in housing supply. However, during the same period, the total housing stock continuously increased. Housing supply can be judged by apartment pre-sales and move-in volumes. However, in Seoul, apartment pre-sales and move-in volumes did not continuously decrease but fluctuated. This shows that housing supply may differ from the generally thought pre-sales and move-in volumes.

Jibi Onda (The House is Coming) | Written by Lee Kwang-su | Wiseberry | 266 pages | 16,800 KRW