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

[EL_TIGRE_de_Tigre]

This will be studied in eco

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.

Fallen,

This is just a great post that lays out everything as I know it to be.

What a great, accurate insight you just shared with the board.

Thanks and nice job!

 

[garryl]

This will be studied in eco

Fallen,

This is just a great post that lays out everything as I know it to be.

What a great, accurate insight you just shared with the board.

Thanks and nice job!

That is true. But I think tourism contributes 12% to the entire GDP is too high. Argentina only has 6m visitors per year.

 

[garryl]

Number of tourists in 2019:
to Argentina 6m
to Vietnam 18m
to Thailand 35m
to Greece 38m
to Mexico 44m
to China 62m (tourist only)
to Italy 62m
to France 80m

 

[Ceviche]

One of the best things about Argentina is that it has few tourists.

 

[NeoWonk]

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.

In 2000 Argentina went into a depression and the rest of the world was still doing fine. This time the whole world is going to be in deep sh1t.

Countries will be putting on restrictions with foreign workers. When you have massive unemployment the first thing you do is restrict foreign workers.

Although half a million Argentines might dream of getting that old high paying job in Europe, those jobs are long gone.

They will stay home and suffer - because there will be no alternative...

 

[Rich One]

Many Nostradamus on this Forum , will see after the end of Fernandez`s period who was right.
Fernandez kicked the debt ball for the next President . Maybe if reelected will solve the Problem ..LOL

 

[Ceviche]

Although half a million Argentines might dream of getting that old high paying job in Europe, those jobs are long gone.

So true. I have friends in mid and last 20's who dream of some dream job awaiting them in Italy or Spain and desperately trying for Italy or Spain citizenship.

 

[Ries]

I am extremely interested in more information about the statement "There are actually a decent amount of houses mortgaged. Macri worked very hard to increase access to mortgages".

Although its true that the variable rate mortgages (in dollars) are down to around 30% interest rate now, from highs recently of over 40%, I have never met anyone who had a mortgage in Argentina.

What is the percentage that constitutes "a decent amount"?
10%?

I have never seen anyone claiming more than 6%, but I cant find any really current info online.
In the USA, the rate is around 60% of homeowners.

 

[semigoodlookin]

I am extremely interested in more information about the statement "There are actually a decent amount of houses mortgaged. Macri worked very hard to increase access to mortgages".

Although its true that the variable rate mortgages (in dollars) are down to around 30% interest rate now, from highs recently of over 40%, I have never met anyone who had a mortgage in Argentina.

What is the percentage that constitutes "a decent amount"?
10%?

I have never seen anyone claiming more than 6%, but I cant find any really current info online.
In the USA, the rate is around 60% of homeowners.

I know several young couples in their twenties who have mortgaged. Of course, that speaks nothing of whether there has been a meaningful increase in mortgages, other than to say I didn't know anyone with a new mortgage until about 3 years ago and now I know a few.

 

[Ries]

Again, I am interested to know if the actual percentages are enough to affect the sales and price behavior or real estate sales in a depression, which is certainly coming. If its under 10%, and its people with apartments in brand new buildings that they have very little equity in, then I could see those units depreciating a lot- but they are usually pretty worthless, in my mind, anyway- crappy construction, and, once the pool pump dies, little to attract buyers.

I dont doubt prices will come down.
I just dont think the basic instinct of argentines, to hold on to apartments that are owned free and clear, will change.
I know people who fled the country during the Military Dictatorship, but didnt sell, and some still live overseas, and still own granny's flat in recoleta.
Argentines trust real estate, and basically cannot be evicted or foreclosed on, in the vast majority of cases.
And I foresee a LOT of people refusing to pay rent, and refusing to move out.
I do not foresee the army evicting them.