Will I miss out if I do not buy real estate early?

January 9, 2024 | 06:41 pm PT
If I can but choose not to buy a VND3.7 billion (US$151,981) house that later appreciates in value to VND4 billion, does that mean I missed out on VND300 million?

Recently, I have seen many fellow readers share their opinions about buying houses, with the gist being that they missed out on so much money because they waited for the price to drop but it ended up rising instead.

I, however, disagree with this perspective.

Detroit, once the largest city of Michigan and the automotive capital of the U.S., is now a city of deserted houses. It contradicts the common belief of a "slight decrease or plateau in price, followed by a sharp increase" often expected in the real estate market.

When discussing property prices, many confidently claim that they will only rise over time, suggesting any temporary stall is merely a setup for the next price surge.

If my memory serves me right, earlier in 2023, there was a discussion regarding buying gold bars as retirement savings where many advised that gold should be bought only in small amounts of up to ten bars, asserting that saving hundreds of bars would be a big loss when compared to investing in real estate.

However, in reality, those who invested hundreds of gold bars in real estate at the start of the year are likely regretting it now that their capital is stuck in properties.

On the other hand, those who bought a hundred gold bars for savings are probably overjoyed with their significant profits of at least 10%, twice the bank interest rate.

Hence, it is important to not overly glorify real estate investment as a guaranteed route to wealth by simply buying early.

Why do wealthy individuals buy real estate? Is it to showcase their wealth?

If you have the money and are not lacking houses, why are you rushing to buy more?

Even if house prices increase, you can still easily afford them. If the prices decrease, you benefit even more.

So, again I ask, why is there an urgency to purchase real estate right now?

Moreover, it is a misconception that wealthy investors control the entire real estate market.

The market itself determines prices. While the wealthy may attempt to manipulate prices, if the masses do not follow, they can find themselves in big trouble.

In the market, it is not just about the rich versus the less wealthy, it is also the big investors competing fiercely among themselves.

If you, believing yourself to be wealthy, carelessly enter the market, you might be in for a rough time.

A prime example is the stock market, where no one, even large funds, can avoid losses.

Regarding the scenario at the beginning, I believe the perceived loss of VND300 million is merely hypothetical.

VND300 million is just 5% of VND3.7 billion, which is similar to bank interest rates.

If at the year's start, instead of buying a house, that individual had saved their money, they would have still gained an additional VND300 million by the end of the year, allowing them to purchase the VND4 billion house, assuming the price did increase.

If the house price decreased or remained stable, they would have even more surplus.

Alternatively, investing in gold at the beginning of the year, with a 10% increase in value by year-end, would have yielded an extra VND200 million compared to the house with its increased price.

The current real estate market is rather stagnant, with prices in some areas rising and falling within a specific range.

Many people hastily overreact to slight price increases, assuming a prolonged uptrend is due, and do not consider the possibility of a price decrease waiting around the corner.

Conversely, a minor price drop leads them to expect further significant decreases.

This prevalent mindset often results in impulsive purchases during minor price increases or premature selling at a loss when prices dip slightly, leading to investment mistakes.

In a market that is currently sluggish, there can be short-term fluctuations as a "test" of supply and demand or market sentiment.

During such occurrences, those who maintain their composure and rational thinking are likely to be the most successful in the long run.

So what is your viewpoint on this matter?

Reader Hoang Tuy Phong

* This opinion was translated into English by AI. Readers’ views are personal and do not necessarily match VnExpress’ viewpoints.

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