"Focus on the Gap Rather Than Returns"... The Key to Moving to Better Locations is the 'Difference Between Assets'

In the real estate market, what is more important than the rate of increase in asset value (return) is reducing the 'absolute amount gap' between the asset currently held and the target asset in a better location. An analysis has emerged stating that in a bull market, even if returns are similar, the price gap widens as the absolute price of the asset increases, making the management of the gap between assets for upgrading more crucial than simply tracking returns.

The Difference Between Returns and Absolute Amounts... A Key Indicator for Moving to Better Locations

According to the content of a video from author Song Hee-gu's YouTube channel, real estate prices have a structure where better locations and lower-tier locations are interconnected. For example, price changes in Jamsil affect Olympic Park Foreon, which in turn creates a chain reaction leading to Godeok, Sangil, Myeongil-dong, Guri, and Dasan. In this process, during a bull market, prices in different regions tend to move together, so there may not seem to be a large difference in terms of returns.

However, the video emphasizes that returns and absolute amounts must be strictly distinguished. If a 1 billion won asset rises by 10%, it increases by 100 million won, but if a 2 billion won asset rises by 10%, it increases by 200 million won. Even if the return is the same, the actual increased amount differs by two times. Therefore, the essence of real estate investment is not simply calculating by what percentage one's house has risen, but checking how the price difference between the house one owns and the house one wants to buy next changes.

For example, if one currently holds an asset of 800 million won and hopes to move to a 1.2 billion won house, the number to pay attention to is not the return on the asset, but the '400 million won' price difference between the two assets. In other words, real estate investment can be defined as a process of reducing the gap between assets to move to the next stage, rather than an act of increasing returns.

The Strategy of Experts is to Establish an 'Movement Plan' in Preparation for Bear Markets

The attitude toward responding to market volatility is also important. The video explains that while expensive assets may rise by a higher ratio in a bull market, they also have the characteristic of falling by a larger margin in a bear market. A representative case is when apartment prices in the Gangnam Area undergo significant adjustments. Utilizing these gaps in price adjustment to move to a better location or to preoccupy redevelopment/reconstruction areas can be an effective strategy.

The speaker points out that simply claiming house prices will fall is different from establishing a plan for what to do in an actual bear market. He explained that amateurs obsess over the potential for their own house prices to rise, while experts focus on establishing specific execution plans, such as where to move when the market collapses, whether to go for redevelopment, or whether to buy an apartment for actual residence.

Since the timing, magnitude, and duration of a bear market are unpredictable areas, it is more important to establish a 'direction of movement' to execute when a downturn occurs, rather than trying to time the market. The advice is that a specific roadmap according to market trends is needed, such as non-homeowners looking for cheap buying opportunities and homeowners securing opportunities to move to better locations.