Ries
Registered
- Joined
- Mar 18, 2008
- Messages
- 3,386
- Likes
- 4,472
its true, the market sets prices. but "the market" is not the entire population of the country.
in the case of Buenos Aires, the market includes a lot of wealthy argentines who are parking their money in multiple apartments, as well as foreigners, neither of whom are dependent on the average working class wage.
I know a fair amount of argentines who own more than one apartment, and rent them out.
So the sales prices are not necessarily directly related to how much money your average worker has.
And the rents are then, to some degree, based on the sales prices- since there are, in 90 plus percent of the cases, no mortgages, there are relatively low fixed costs to leaving an apartment empty if you dont get your rent. Not like the USA, where high mortgage percentages mean the rental market is more quickly responsive to demand.
But in Canada, the USA, and places like Berlin or London or Mexico City, more and more, the foreign ownership further distorts the market- if you have enough excess money to just park it in an apartment in Buenos Aires or Vancouver, again, you are a much less motivated landlord.
The other big factor is the traditional Argentine dislike and distrust of banks, stocks, bonds, mutual funds, and so on- real estate has always been the preferred place for argentines to park their money. So housing prices, and, to a lesser degree, rents, are not very rational in their trends- in fact, when the economy gets worse, MORE money goes into real estate, unless a really serious crash like the corralito comes along. But that is a once in a generation thing, if that. The early 2000's prices were a historical anamaly, not some kind of regular cycle, and not a textbook economic case. Nothing in Argentina is a textbook economic case.
Many Argentine landlords also own apartments in Miami, or Madrid, or NYC- I know several who do- and thus their real estate opinions are not solely based on local economics, but on global ones.
in the case of Buenos Aires, the market includes a lot of wealthy argentines who are parking their money in multiple apartments, as well as foreigners, neither of whom are dependent on the average working class wage.
I know a fair amount of argentines who own more than one apartment, and rent them out.
So the sales prices are not necessarily directly related to how much money your average worker has.
And the rents are then, to some degree, based on the sales prices- since there are, in 90 plus percent of the cases, no mortgages, there are relatively low fixed costs to leaving an apartment empty if you dont get your rent. Not like the USA, where high mortgage percentages mean the rental market is more quickly responsive to demand.
But in Canada, the USA, and places like Berlin or London or Mexico City, more and more, the foreign ownership further distorts the market- if you have enough excess money to just park it in an apartment in Buenos Aires or Vancouver, again, you are a much less motivated landlord.
The other big factor is the traditional Argentine dislike and distrust of banks, stocks, bonds, mutual funds, and so on- real estate has always been the preferred place for argentines to park their money. So housing prices, and, to a lesser degree, rents, are not very rational in their trends- in fact, when the economy gets worse, MORE money goes into real estate, unless a really serious crash like the corralito comes along. But that is a once in a generation thing, if that. The early 2000's prices were a historical anamaly, not some kind of regular cycle, and not a textbook economic case. Nothing in Argentina is a textbook economic case.
Many Argentine landlords also own apartments in Miami, or Madrid, or NYC- I know several who do- and thus their real estate opinions are not solely based on local economics, but on global ones.
