I Have Some Doubts About the Claim That an Apartment Is the Answer to Wealth

One thing comes up often at gatherings. "You should have bought an apartment back then." People who bought a few years late feel regret, people who bought early feel relief. If the conversation stopped there it would be fine, but usually it continues like this: "Real estate is the only thing that makes money."

That statement is half right and half dangerous.

Why everyone went in on apartments

The reason is simple. Over the past several decades, property was the most reliable path for household assets to grow in Korea. Bank deposits barely kept up with inflation, stocks swung wildly, and house prices generally rose. Among the things office workers could do with their monthly savings, nothing else produced a result that visible.

Up to that point the answer looks like "so buy." But plenty of people did not. People who had nothing, who entered late, who bet their whole life on one unit. The same market was stairs for some and a cliff for others.

Two ways wealth grows

Wealth grows in roughly two ways. One is creating new value. The other is moving before others do. Real estate sits closer to the second. When the whole market rises it looks as if everyone becomes rich together, but in reality the people who already owned take more, because the latecomers' money is what fills the early owners' gains.

So "real estate is always right" should be rewritten as "real estate was always right." With a shrinking population, rising rates and cooling willingness to buy, nobody can promise the same formula still holds. Look at the testimonials of people who hit the ceiling of that market and the common point is one thing: at the time, the decision looked like the only option.

So my conclusion

A home is a place to live. Living where you want to, and can afford to, comes first. A home as an investment is the next question. When spare money appears, not putting it all in one basket is what lasts. Keep some in interest and dividends, in things that keep turning even a little.

If a home you bought by following others improved your life, that is lucky. But an endeavour you started by following others usually wobbles somewhere in the middle. Before deciding, ask yourself once: "Is this a choice that fits me, or one that others called correct?"

That one question makes you a few years from now hurt less.