Explain It To Me: Pesification and Real Estate Prices

[PhilinBSAS]

I believe that some of you have a false sense of security.

As far as having happened before then my only direct witness is what is neatly summarised here in 2001

http://www.guardian.co.uk/world/2001/dec/23/argentina.sophiearie?INTCMP=SRCH

Cristina and the K Band may seem incredibly inept but for many people here their policies are what pulled the country out of the mire.*

Nestor or Menem wow some choice they had.

*Note please Im not saying I agree with that sentiment only that is what the majority of voters until recently seemed to believe. Will probably get trolled for saying that anyway )

You tell me whether you think it is as bad now as then?

Local people have had it even worse than that prior. You must have heard the stories of the hyperinflation when the price tickets in the supermarket were getting changed as quickly as it was taking to walk around the store.

So at the present moment and immediate future not secure - totally erratic and way unpredictable just saying it is par for the course here and time says the economy bounces back again

Portenas carry on and as for the keep calm bit well yes that would be an extraordinary first.

Really a lot more insecurity at the moment elsewhere e.g in Greece or Spain.

 

[Tourist2008]

I have to agree with Surfing

In the short term (6 months or so) the real estate prices will either fall or more likely the market will dry up, as sellers wait to see what happens.

If you are a seller needing dollars you have a problem. If you are buyer with dollars then this is an opportunity.

I have no doubt that los KK will hold this policy, and maybe even tighten it through to the 2013 elections.

 

[surfing]

I'm sure that if I had a time machine I could go back to 2001 and find that the average person on the street thought nothing really bad was going to happen. Throughout history there have always been those who saw trouble coming down the road and those who denied it to their own eventual detriment. Bottom line is that the best way to predict the future is to examine what happened in the past.

 

[Gringoboy]

I see that AFIP has now declared that dollars may only be bought (at the official rate) and authorised by them, for TRAVEL ONLY.
I assume that if you need them for other purposes you have to jump through the hoops.
How lovely.

 

[ndcj]

In the medium to long term, this will only affect people entering the market for the first time or leaving the market permanently (sell your property and leave Argentina). If the market permanently "corrects" to tracking the parallel rate of the US dollar, then it won't make much difference at all.

Any restrictions you have as the seller will equally apply to every other seller, and real estate pretty close to a closed loop. The same is true of the declining value of real estate in the US -- if you sell your house to buy a different house, it's a zero sum game largely. Your house is worth less, but so is the next house you buy.

In the short term, two things are happening. The liquidity of the market is much less than it recently was and if you're buying and you have dollars, you've got a pretty powerful negotiating position.

In the medium to long term, these currency controls may even have the effect of strengthening the value of real estate as one of the few readily accessible hedges against inflation.

 

[syngirl]

The question is , will sellers continue to market their properties in dollars and the just convert to dollars at some point in the contract stage ?

Or will the Government seek to control the estate agents and insist that they publish property prices in pesos only ?

Supposedly there will be multas for any transactions in dollars. Frankly, this is how it should be if they are serious about pessifying the system. I'm sick and tired of opening up the clasificados and everything for alquiler is advertised in USD despite the fact that it is already illegal.

There won't be the ability to "just convert to dollars" at some point -- most people do not have enough dollars on hand to buy right now and can't get approval from AFIP -- the market is at a standstill. And if it's already at a standstill that means that most people just aren't willing, or can't afford, to take the 30% hit of buying USD on the black market.

 

[PhilinBSAS]

I'm sure that if I had a time machine I could go back to 2001 and find that the average person on the street thought nothing really bad was going to happen. Bottom live is that the best way to predict the future is to examine what happened in the past.

Not how I remember it. Everyone was expecting daily "really very bad" stuff with the helicopter flying off the Casa Rosada (or was it your time machine?) a new president almost every week, the riots, the proliferation of the picateros, the nightly caserolazos! Full credit to the military for having stayed out of that one possibly the first time in Argentine history. you see people here all have had experience of "really bad" and also "really really bad"! You ask them!

http://quod.lib.umich.edu/j/jii/4750978.0012.206?rgn=main;view=fulltext

che amigo en su vida cuando era el momento de la peor gobierno y la crisis política. ahora? verdad!


Politically a revolution/counter-revolution was close in 2001 and economically? the banks were having their closed doors being broken down!

alternatively go see the exhibition at UBA School of Economics (although a bit too peronist for me)

Throughout history there have always been those who saw trouble coming down the road and those who denied it to their own eventual detriment.

Yes always pessimists and optimists The dismal science (Economics) tended to revel in the latter maybe should have carried on like that!

Bottom live is that the best way to predict the future is to examine what happened in the past.

Definitely learn what happened in history and best from original sources so seek out che amigo but corollary is dont expect it to exactly repeat itself ....

http://wiki.answers.com/Q/Who_said_Those_who_ignore_history_are_bound_to_repeat_it

"Those who ignore history are bound (or doomed) to repeat it" is actually a mis-quotation of the original text written by George Santayana, who, in his Reason in Common Sense, The Life of Reason, Vol.1, wrote "Those who cannot remember the past are condemned to repeat it." Rooted in the philosophies of Socrates, Plato, Aristotle and many others to follow. .......

Santayana's quotation, in turn, was a slight modification of an Edmund Burke (1729-1797) statement, "Those who don't know history are destined to repeat it." Burke was a British Statesman and Philosopher who is generally viewed as the philosophical founder of modern political conservatism

 

[dennisr]

I see that AFIP has now declared that dollars may only be bought (at the official rate) and authorised by them, for TRAVEL ONLY.
I assume that if you need them for other purposes you have to jump through the hoops.
How lovely.

And if you received dollars for travel and happen to cancel, they want their dollars back. AFIP is cross-checking with Migraciones to insure you did travel.
http://economia.iprofesional.com/no...ctar-a-quienes-pidieron-divisas-y-no-viajaron

 

[surfing]

Not how I remember it. Everyone was expecting daily "really very bad" stuff with the helicopter flying off the Casa Rosada (or was it your time machine?) a new president almost every week, the riots, the proliferation of the picateros, the nightly caserolazos! Full credit to the military for having stayed out of that one possibly the first time in Argentine history. you see people here all have had experience of "really bad" and also "really really bad"! You ask them!

http://quod.lib.umich.edu/j/jii/4750978.0012.206?rgn=main;view=fulltext

che amigo en su vida cuando era el momento de la peor gobierno y la crisis política. ahora? verdad!


Politically a revolution/counter-revolution was close in 2001 and economically? the banks were having their closed doors being broken down!

alternatively go see the exhibition at UBA School of Economics (although a bit too peronist for me)



Yes always pessimists and optimists The dismal science (Economics) tended to revel in the latter maybe should have carried on like that!



Definitely learn what happened in history and best from original sources so seek out che amigo but corollary is dont expect it to exactly repeat itself ....

http://wiki.answers.com/Q/Who_said_Those_who_ignore_history_are_bound_to_repeat_it

"Those who ignore history are bound (or doomed) to repeat it" is actually a mis-quotation of the original text written by George Santayana, who, in his Reason in Common Sense, The Life of Reason, Vol.1, wrote "Those who cannot remember the past are condemned to repeat it." Rooted in the philosophies of Socrates, Plato, Aristotle and many others to follow. .......

Santayana's quotation, in turn, was a slight modification of an Edmund Burke (1729-1797) statement, "Those who don't know history are destined to repeat it." Burke was a British Statesman and Philosopher who is generally viewed as the philosophical founder of modern political conservatism

I actually prefer:

"History doesn't repeat itself, but it does rhyme"

And when I referred to 2001 I was thinking of long before the helicopter which came (or rather, went) at the end of the year.

 

[Iznogud]

Well, one day I was doing fairly well and making U$D 3000+ a month and the next day all my clients but one were gone and I was reeling in $ 500 for a family of 4. Those $500 coudn't buy me many greenbacks back then, there were none to be had and all CC and other bills kept coming as if I was still making 3 grand.

I already wrote what happened with that meager check when it became a bank-hostage in a virtual account.

The hourly maid was payed "in black" in those days; with the sudden dissapearance of all available cash she was also out of business. She couldn't even afford to pay for her fares to go to work. Hers was a very common situation, the "informal" economy grinded to a screeching halt for those employed in it.

Goods had no prices, since no one knew with certainty what would be the cost of restocking.

Whatever little (funny) currencies were still flowing around (in all their creative denominations according to locations) they had almost or no value left and better be transformed into something useful before the conversation was over.

Let's hope we do not experience that dreadful situation again.