BA Real Estate market to take a dive before the end of the year.

[Jeremias]

I'M panic selling but i doubled the price lol

Our kind of panic! That's the spirit in any case, don't give away your assets easily!

 

[Pierre Smith]

I too am highly skeptical that prices will drop significantly in our ex-pat BA hoods.

Of course, you'll have foreigners who are done, and a few local people who tried their hand at airbnb who want to cash out, so there will be sales. But my sense is that in the parts of BA that people like us would want to live, we won't see a significant rise in volume. We've had two rounds of sales in the past 20 years, weeding out the financially weaker folks in in Palermo, Recoleta, etc. and even Villa Crespo. I'd guess that almost all purchases have been cash only, and that at least 1/4 have been to SRLs/SAs.

So, maybe on Miami Beach or in Paris or Montreal or even Mexico City, you have investors who have over-extended themselves buying centrally-located properties to list on Airbnb, and they may now be forced to dump them. But in BA, the most financially vulnerable long having been weeded out, these owners that remain are not facing mortgages, purchased for a manageable price, and can hold.

 

[Ries]

I think they all sold and left, or most of them. I can't imagine how the market will crash. But I guess if the market is depressed for an extended period of time, then many will be forced to sell at a much lower price. Also is it easy to wire a few hundred k of dollars into Argentina ? I did the black way wiring the money without proper docs in 2010, eventually Marci bailed me out. If they go back to the stupid rule that CFK enforced, there will be no dollars comes into Argentina.

I know a good half dozen expats who still own properties that they rent on air bnb, none have sold and left. Certainly, there were a lot of people who drifted in during the period in the late 2000s when it was very cheap, and everything was going up every year in value- but most of those people left at least 5 years ago.
And yes, there are still people thinking about buying here, after it becomes possible to visit again, hopefully by fall.

 

[NeoWonk]

We all suffer to some extent from normalcy bias. Most folks think things will go back to where they left off - say like after the 2008 financial crisis - the so called 'Great Recession'.

This is NOT just another recession folks. Things are not going to return to where they were before. This will be the worst financial crisis of any of our lifetimes. And it will get proportionally worse the longer the lockdowns last.

Most folks live hand to mouth. They won't be able to pay their rents. Landlords won't be able to pay their mortgages without the rent income. It will spiral out of control.

Bankcrupcy courts will be jammed for years. Expedited bankrupcy procedures will have to be put in place.

We'll all Argentina. The USA (and all other countries) will be forced to adopt Argentina financial magic of printing away debts.

Globalization is OVER. Countries will turn inward.

Unfortunately large businesses will be bailed out. Small businesses will be left by the side of the road.

Nouriel Roubini describes it this way. We're either going to have a "Greater Recession" or a "Greater Depression". That is, the best case is we have a recession that is worse than the Great Recession of 2008. Worse case is we have a depression which is worse than the Great Depression of our fathers or grandfather's time.

An Insight Into the Concept of Normalcy Bias in Psychology

In psychology, there is a concept known as normalcy bias, which explains why most people underestimate the threat associated with natural disasters like hurricanes and floods, and why people are plagued by inaction during a crisis.

psychologenie.com

 

[FallenAngel]

Some posters in this forum are suffering from an extreme amount of delusion, IMO. I think it is a bias of assuming an asset they hold will never go down. The reality is real estate prices are going down and will go down anymore. Here are the reasons:

• There are actually a decent amount of houses mortgaged. Macri worked very hard to increase access to mortgages
• The capital class in Argentina is especially harmed by this event. The very people who tend to buy lots of real estate. Many of them may be selling this real estate to cover other debts even if the real estate itself has no mortgage
• The argentine's most likely to hold a large real estate portfolio is the same class of argentines that likely have a 2nd,3rd passport. They are just like american expats. They may abandon a sinking ship especially because AR real estate produces such low yields. They can sell here and buy in europe and get better yields, better jurisdiction.
• Tourism is 12% of buenos aires economy. Kiss that goodbye for the foreseeable future. It will not bounce back instantly. Let alone every other aspect of Argentine's economy that has been destroyed.
• Unlike some countries Argentina cannot help save it's business class. It does not have the financial power and access to debt markets to do it. Thus, any stimulus will be underwhelming. Many industries will face severe contraction simply due to liquidity issues. This will affect the real estate market as real estate is only valuable if it is connected to something. Real estate connected to a dead economy, no jobs, no commercial activity is not valuable.

The analysis on this forum seems as simple as "they don't have a mortgage and thus can hold out forever". That is not how it works. When an economy dies people need to move on. Some will migrate to Europe. Some will need capital to start a business. Some will have their parents die and they don't want their parents old house. There are many reasons to sell and sells will still happen. The issue is there are very few buyers who are willing and able and that situation is unlikely to change.

 

[on the brink]

Argentines are for the most part loath to leave Argentina. I know plenty of people with the resources, the means, and even properties in other countries, who don't even think about leaving.

Strange as it may seem, they LOVE Argentina, and won't consider living anywhere else. This may have to do with the incredible strength of personal relationships here - not only blood relatives, but also lifelong friends dating back to elementary school.

They complain endlessly, but believe Argentina is the most beautiful country in the world - beats me why, but they do.

Anyway, I don't know a single person willing to leave. They talk about it, but don't.

 

[Pierre Smith]

I second that too. I've regaled people here with stories about South America - crossing the Panama canal, being kidnapped in Peru, batting around Uruguayan wine country with a certain American actor - and nothing is as shocking to most people as the ultra low migration rates. Even the Argentines that leave almost all return.

It's wild!

Argentines just want to be in Argentina. They're like the French, in that, even when you do find them in numbers - such as in Miami - they have a very hardcore Argentine friend circle and lifestyle.

It's very strange! But surely one of the reasons all of us like it there so much.

 

[Jeremias]

I second that too. I've regaled people here with stories about South America - crossing the Panama canal, being kidnapped in Peru, batting around Uruguayan wine country with a certain American actor - and nothing is as shocking to most people as the ultra low migration rates. Even the Argentines that leave almost all return.

It's wild!

Argentines just want to be in Argentina. They're like the French, in that, even when you do find them in numbers - such as in Miami - they have a very hardcore Argentine friend circle and lifestyle.

It's very strange! But surely one of the reasons all of us like it there so much.

It's not really strange though.

Argentina is evidently one of the very best countries to live in if you have a good bit of money. You can live with no worries, no war, no pollution, great outdoor activities, tons of fun activities in BsAs, splendid food and wine and many pretty women, plus there is a nice latin, friendly culture, lots of pre and boliches and nobody works like crazy. So, yes, it's normal that Argentines would want to remain in their big country. Except the most industrious and bold, maybe.

 

[elgordito]

Argentines are for the most part loath to leave Argentina. I know plenty of people with the resources, the means, and even properties in other countries, who don't even think about leaving.

Strange as it may seem, they LOVE Argentina, and won't consider living anywhere else. This may have to do with the incredible strength of personal relationships here - not only blood relatives, but also lifelong friends dating back to elementary school.

They complain endlessly, but believe Argentina is the most beautiful country in the world - beats me why, but they do.

Anyway, I don't know a single person willing to leave. They talk about it, but don't.

Couldn't agree more. I think a lot of people underestimate the difficulties of emigrating, especially as a lower/middle class worker. For many/most of us here we're lucky in the sense that we're relatively well-off and don't necessarily have to work or find a well paid job to maintain a decent lifestyle here in Argentina. So we don't have to really worry about financial problems, plus there's the added advantage that the cost of living here is a lot cheaper than where most of us come from.

My parents emigrated from Hong Kong/China to Europe so I'm a second-generation immigrant myself. Many of my friends from HK who have EU/US passports continue to work and live in HK despite complaining all the time about the various issues and problems (usual suspects in developed cities/countries: high property prices, rising COL, wages not catching up etc.) for them it is ultimately still a better option to stay than to leave. It's not just about finding a decent job, it's also about the social circle that you've built up over the years, language, family, etc., and ultimately it's not like if you emigrate all your problems get solved immediately.

 

[FallenAngel]

2001-2005 saw about 300,000 argentines leaving the country. Problematically is it is generally the richest, smartest, and most skilled argentines. I would not be surprised if the current crisis sees double the number.

More importantly would be how much argentine capital will leave argentina. Even if some people do not feel like going towards the exit is right for them they may very well feel like their capital going to the exits is right for them.