It's the Apartment, Stupid!

From the apartment speculation boom that started in the 1980s until the recent real estate bubble that burst in the early 2000s, Koreans’ changing attitudes towards where they live and how they save and spend might all be rooted in the apartment.

 

A Midsummer Night's Grumble, 2013

On a summer night in the middle of a heat wave, members of the women's association of an apartment building are sitting around a table outside and chatting. At first, cookies, fruit, and drinks are laid out. Soon instant cup noodles appear. It will not be a short session.

"The government seemed pretty determined on April 1st. But, even their measure to boost apartment prices isn't doing anything. They are saying it looked like the prices were budging a little, and the market was becoming more active. But pretty soon everything sank back to before."

"You're right. I guess what people are saying is right; apartments aren't going to be good investments anymore."

"What am I going to do? I made my children drop two after-school classes because I have to make the interest repayment..."

"Selling at a bargain price now is not an option. We can only sit back and hope that the prices will go up again."

There is more grumbling. Someone continues.

"Forget it. There's no hope any more. The prices for jeonse are skyrocketing but no one's buying or selling. It's because buyers are sending a clear message that they will wait until prices drop more."1

"I think we have done all we can. All members of the association agreed not to sell the apartments below a certain price. We've even chased the real estate agent out from the neighborhood who opposed us and tried to make deals at lower prices."

"I remember. I still clearly remember all the criticism in the media. Everything went down the drain."

Another woman who had been quiet says, "Well, whatever they say, an apartment is an apartment. We have to hold on no matter what and not sell at low prices for whatever reason. I'm sure one day that will do us good for sure. In a country like this, the amount of land is so limited and there are so many people. How can apartment prices not go up? It's those who are getting out and selling at bargain prices that are public enemies."

"Who would've wanted to sell for less? They were probably stuck in a tight situation."

"Who's right and who's wrong here? Has it not been, indeed, the well-chosen investment in apartments in the right areas that have yielded a profit many times over the annual salary of any decent employment?”

For about the last 40 years, apartments have been considered a sure cash cow in multiplying assets, the so-called wealth effect in economics. With the prices of apartments skyrocketing, the size of ordinary people's spending grew. "Let me put that on my credit card. I can pay back the loan all at once when I sell my apartment later."

The discontent with the relative deprivation on the renters’ side grew even deeper. At long last, they also opened their wallets. It was a spending out of despair.

The national economy was going fine. A national spending spree. Not only the haves, but also the have-nots, all stepped forward as agents of consumption. The warning from a minority, that this kind of "spending on the brink" can jeopardize the future of the country, was buried in silence. Even after the terrible experience of the 1997 Asian financial crisis, we remained ambivalent.

The indifferent passing of time brings us to that night during the summer of 2013. The people of the women's association of the apartment building gathered and lamented. What should they do? They can talk on all night long until they are blue in the face, but they cannot come up with an answer. The current selling price is 20 to 30 percent less than what it was at its highest. They wondered, then will the price go up if I just hold on to it?

Only the wind would know the answer; it is more frustrating on a windless day like today. It is late into the night. The women get up off their seats and head home. Who was it that said that apartment buildings are concrete cabinets that isolate people from the outside? Of course, no matter what happens inside, no one from the outside will know.

Rather, apartment buildings became more attractive because they are a closed space. The desire and intention was to be off-limits to the nearby villages and other apartment complexes. Therefore, apartment buildings were referred to as gated communities bolted shut. Although, generally speaking, a human being ought to live in a space open to the outside world, such was the state of our apartment buildings.

After the women leave, the crumbs and the ripped bags from cookies and instant cup noodles half-filled with leftover broth are left lying around. Late into the night, the old security guard on his last round picks up the garbage, dragging his body already tired with all the running-around he had to do during the day for all sorts of requests from the residents. Unlike before, nowadays is it not true that just dealing with package deliveries—receiving them, recording them, and calling each apartment to have people come and pick them up—puts him in a state of mental exhaustion?

 

The Myth of the Eternal Winning Streak of Apartments Is Over

Nothing but apartment buildings. Even looking around in every direction, it is impossible to find scenery devoid of the towers of apartment buildings. South Korea has become a republic of apartment buildings. The assessment that the country was pulled up off the ground by apartments and is suffering because of them is probably not a great exaggeration.

Let us leave the buildings constructed in the center of Seoul during the period of Japanese occupation: Toyota Apartments and Naeja Apartments. The first apartment complex constructed by our own hands was the Jongam Apartments of 1959. Later, in 1964, the Mapo Apartments, a luxury building by the standard of that time, was constructed. However, people considered apartment buildings housing for the poor and shied away from them.

People live above people; people live below as well. Apartments were a thing of mystery for the traditional way of thinking. People were afraid of carbon monoxide poisoning—understandable given the method of heating with coal briguettes at the time.

At the time, Seoul was more than a full house with people moving in from the countryside without any plans. They just built illegal plywood shacks high up on the hillside, finding unoccupied spaces. In the order of arrival, they went higher and higher up toward the top, and the new appearance of Seoul became one that didn’t befit a nation's capital. Out of desperation, public housing project apartments were created. They were constructed recklessly, and in the early spring of 1970, even resulted in the collapse of a building. In the concrete piles of the crumbled Wau apartments, the lives of 33 residents were lost.

As real estate development in the Gangnam area of Seoul made progress, the construction of apartment buildings sped up. However, apartment buildings were still unpopular. Construction companies were busy covering costs by selling apartments at low prices; the ones with better cash flow waited for further opportunities while using their buildings as workers’ dormitories.

However, the apartments were silently changing our lifestyle. A revolution in modus vivendi. Our mothers and sisters whose backs were hunched over in traditional kitchens worked standing upright in modern kitchens. The central heating system prompted the complete removal of coal briquette heaters. The skin on the hands and faces of children as well as adults started showing the color of a better life.

More and more, the number of people rushing to sell their houses to move to apartment ...