A house is a home for someone’s dreams
MY neighbor Nards lived in an old house with a large garden presided over by a majestic tree. About 10 years ago, Nards retired and put the house up for sale. He sized up a few potential buyers and chose a young family that wanted to preserve the tree. The price? P9 million.
Our neighborhood is near schools and jobs. You could call Nards’ price a one-off bargain, but other sellers here have adopted the same generous approach to young buyers. To protect my village from property vultures, Nards isn’t his real name and mine will stay unknown. In contrast, most young families in Metro Manila have no hope of buying a house. Beat-up houses in Parañaque are offered at P20 million. P5 million buys you a condominium with little more than a toilet, a bed and a couch. It isn’t unusual for newly married people to commute a total of six hours a day from Calabarbulacanzon.
This unhousing of our nation has both intrigued and horrified me. Over the last year, I have talked to more young people just to understand. Most are responding with plans to move to Canada, the US or Australia. Parts of our society are breaking under the weight of this. Most schools are only partially open or only offer online classes because teachers no longer can afford to commute to work every day. Hospitals have acute shortages of nurses. Most of the new architects see to go to the Middle East.
Our property market is destroying our country. Condominium developers can raise enormous amounts of money by pre-selling. A developer does not pay for the land on which his condo sits with cash, he makes up a crazy price for his finished units and pays the landowner in these inflated units of exchange. The price that some landowners got in pretend condo unit prices is now the expected rate for all transactions in the area. People who want to build houses, factories, schools or offices are priced out of the market.
I used to walk around my village for hours chatting with Nards and his friends. I have a sense that their friendly pricing had some reason to it. They loved the community, and they wanted young people to have a place in it.
A lot of our actions feed this property beast. By understanding them and acting appropriately we can give our young people a chance.
Imagine this: You buy a farm lot in Calabarbulacanzon. The per square meter cost is a fraction of that in your neighborhood. You click the “buy” button. A friend of mine almost did that a few weeks ago. Luckily, he checked and found the price per square meter was five times the last known transaction. Had he clicked “buy” all the online brokers would have adopted that new per-square-meter price for the area. If that had happened, most young families who were hoping to settle down there would have been priced out of the market (it’s a normal community, not a rich enclave).
Once you have bought your own house, you will begin to have savings since you do not pay rent. As you advance in your career or business you become an economic power in your own right. You buy condos or worse get together with friends and lock up whole floors of them. Please avoid this. It feeds the beast. If you must speculate, try the stock market. Companies need capital and normally produce some returns. Leave housing to the people who need a place to live.
Sometimes, I drive around with young folks looking for starter homes. After checking that cars actually both fit in the garage, that there are no signs of floods, fault lines or high transmission lines nearby (all of the above popped up), I teach them my buying logic.
Make sure your place is close enough to work to not be sickened by the commute. Avoid projects with flashy marketing and flashy salespeople. Try to talk to the actual seller, not a middleman who may be working with other middlemen. A friend looked at a house in my neighborhood. It took days to get the price because the middlemen were adding their markups. Finally, they quoted P41 million. My friend walked. The ultimate buyer paid P29 million.
Go around the neighborhood to see rentals. Rentals reflect a decently functioning pricing mechanism unmuddled by the “tataas ‘yan” used to distract from suntok sa buwan offers. I target paying no more than 15 years realistic rent expectation as my purchase price. Be prepared to walk away.
At the end of the day, a house is home to a young family’s dreams. What’s wrong with letting them have it?
Jun Harvard is the pseudonym of a gent who graduated from Harvard in the 1990s. Returning immediately to the Philippines, he started a career in the burgeoning tech sector. After a decade in the corporate world, he has settled into a decidedly more artisanal career where he has found contentment.