is this the right time to buy a flat in Argentina?

[earlyretirement]

Let's put this to a simple test next week. If anyone is walking past a real estate office in CF, just go in and ask to see the properites that could be bought in dollars or Euros for half the listed price.

Then please post the name of the office and any links to the properties that are available at such a deeply discounted price.

LOL. EXACTLY Steve! I didn't see your post before when I just posted mine above (and for some reason I don't have the option to edit my post).

But it's laughable when I read in the paper or on internet message boards, people are willing to give 25% to 50% discounts for getting paid in USD. Very funny.

The thing people forget about is unlike the USA or Spain or UK or other places.....real estate in Argentina is NOT leveraged and owners paid cash for them and own them outright.

Unless an owner is absolutely desperate to sell, owners can just sit on them for long periods of time until they find the offer that they like. And in the meantime, just rent them out either short or long term.

The biggest threat to property prices in the future, IMHO is AFIP. Because in some cases they are asking the local buyers to justify the income to purchase and in other cases they aren't. If they keep up the pressure for locals to justify all their income then property prices will go down.

With the vast majority not declaring anywhere close to their true income.....this is the biggest unknown. I've had friends that got offers to purchase their properties in cash with USD but AFIP is asking how they got the income and the deals are falling apart.

Other deals the buyers aren't asked to provide anything.

But owners are NOT discounting huge amounts to get paid in US dollars.... properties have been priced in USD for a LONG time and I don't see that changing anytime soon.

 

[earlyretirement]

Also, I forgot to mention that locals ARE trying to lowball owners and see if owners are motivated or desperate. I met an American ex-pat trying to sell her property. She has a DNI so she doesn't have to apply for a permit to sell.

She has had it for sale for a long time as it's a bigger expensive property. She has only gotten lowball offers from people trying to pick up something cheap. I've heard the same thing with some of my friends. They have all been refusing the lowball offers and just waiting for things to improve with the restrictions/controls.

Most wise owners just tell their listing agents not to even bother them with an offer less than $X. That's what I did. I told my realtor not to even think about accepting a reserva unless it was under a certain amount. And not even to mention it to me as I didn't want to waste my time or energy on it.

That's the way to go unless you are desperate. Sure, there will always be some desperate people (death in family, etc) but most of the time it's different because I've noticed there is a bigger support system in Argentina. If someone loses their job, they can depend on their family for support. Whereas in a place like the USA or UK people are more leveraged and living paycheck to paycheck and don't want to ask their family for support.

Also, even when there is a death in the family in Argentina and property is inherited or passed down. Very rarely does it just pass to one person. In the times I've seen it happen, there have been squabbles in the family (usually between siblings) on price or if they even want to sell.

And they have to have agreement by everyone to sell it. I just haven't seen the desperation to sell in Argentina compared to other places I own real estate.

 

[Raymond]

I have a good friend who is a realtor and he tells me that he has sold more properties in 2012 than 2011 . The main reason that sales have gone down he says is that there are much less properties for sale . If you look at the newspapers there are 50% less adds to sell than last year . There is very little desperation from the sellers and if they decide to sell there maybe 10% to 20% discount for cashsales if the price is already high.

 

[ghost]

Let's put this to a simple test next week. If anyone is walking past a real estate office in CF, just go in and ask to see the properites that could be bought in dollars or Euros for half the listed price.

Then please post the name of the office and any links to the properties that are available at such a deeply discounted price.

Pedantic, Steve. I should have said "deep discount". I've seen several very nice deals go down in the past 4 months that were deeply discounted because the buyer had dollars and could move them to accounts outside of AR. However, these are deals or the way in. What happens on the way out ie selling the property, may be a different story.

 

[el_expatriado]

With the appearance of the dual exchange rates and the blue dollar, everything priced in pesos in Argentina has been devalued about 40%. That means salaries, services, consumer items, etc. But since properties have been historically priced in dollars, sellers are unwilling to discount their property 40% as well.

Property prices will come down. You can't have a 40% devaluation without any shift in property prices. That's why if you offer to pay someone in USD you can easily get a 10-15% discount off of the asking price. You're not going to get 50% off, though. In my opinion prices need to drop 10-20% for the market to reactivate again.

We are still not in a situation where there are desperate sellers like in 2001/2002. People don't need to sell their property in order to get money to eat. If you really want to save you need to wait for a real crisis here. We're not there yet.

 

[GS_Dirtboy]

Yes, I would say it is a good time to buy IF:

1. You have a reason to regularly be in Buenos Aires. Either for work, family, tango, whatever. When you are not here you can rent your flat with any one of the top rental agencies. My company operates in the Luxury end of the market and we have seen practically zero decline in true luxury rentals even with all of the craziness here. We have seen a decline in non-luxury rentals.
2. Both you and the seller have accounts abroad between which to transfer your monies.
3. The seller has everything in white. That means their escritura (deed) has documented their purchase for the full sale price and the full size of the property. They also need to have documented their payment of all taxes and the source of the funds for the purchase.
4. You pick your flat carefully. There is often an incredible difference in the "rentability" of flats that are only two or three blocks apart. Don't buy something only on the basis of what you like. Buy something with the features that will have it generate income for you.
5. You want to be here for awhile. Awhile is relative, but trying to flip a property you bought last year because now you've decided you want to live in Costa Rica isn't going to get you income. I agree with El Expatriado; prices are going to retract 10-20%. The buyers now are bottom-feeders looking for highly motivated sellers (divorce, death, change in work status). If you are seriously interested in getting property here there are good properties for sale that will generate income and appreciate (btw - as of now you don't pay capital gains tax) but those properties are not at deep discounts.

Good luck!

 

[Rich One]

I would buy a flat in Pocitos Montevideo, rent it in USD, and with the rent money pay a temporary apt in B.A.for the months when I'm here....? Or live in Montevideo and invite friends over? Managing a property from a distance is a pain...!
In Uruguay can move dollars in and out easily.
Not the right time to buy in B.A.

 

[earlyretirement]

Property prices will come down. You can't have a 40% devaluation without any shift in property prices. That's why if you offer to pay someone in USD you can easily get a 10-15% discount off of the asking price. You're not going to get 50% off, though. In my opinion prices need to drop 10-20% for the market to reactivate again.

We are still not in a situation where there are desperate sellers like in 2001/2002. People don't need to sell their property in order to get money to eat. If you really want to save you need to wait for a real crisis here. We're not there yet.

Yes, I agree that prices should come down. But even back before these controls, many times you could negotiate a bit less than a 10% discount off the asking prices.

One thing about Porteños is they typically already inflate the asking prices knowing full well a buyer will be making a lower offer. (It's like a chess game to the locals).

I agree with el expatriado that the time to buy real estate there will be to wait until the real crises (and it is coming). If you want to buy, buy then and there are always more motivated and desperate people during a crises. Even if they are financially stable, you always get a % of the population in any crises, panic and want to "get out". THAT will be the time to buy.

 

[mariano-BCN]

Any ideas when "THAT" will be the time to buy then, when the crisis will be reality down there in Argentina? 1, 3, 7 years?
I agree: the best moment to buy was in 2001-2, next crisis is the time to buy, for sure!
A question: does anybody know how much is the euro now in the parallel market?

 

[GS_Dirtboy]

Unfortunately, I dropped my crystal ball in Mrs. Myrkel's 3rd grade art class. Haven't been able to predict anything since then, including women.

The right time depends on your motivation. If you are looking for steals and deals then you should wait until/if there is a crash and frenzy. If you have a reason to come here now, all of the other criteria are aligned, and the property serves your purposes, then you should start shopping in prepartion for the 10-20% reset. Best guess is the next 3 to 6 months.